This volume describes in detail the best practices being used to measure and enhance firm value while observing the rights of shareholders and managing the risks of dealing with them for long-term benefit of both companies and investors.

Covering 26 jurisdictions including in-depth review of Australia, Chile and Germany, this report focuses the role of institutional investors in promoting good corporate governance practices including the incentives they face to promote such outcomes.

This report reflects long-term, in-depth discussion and debate by participants in the Latin American Roundtable on Corporate Governance.

Presents findings and recommendations of a Senate committee that conducted hearings on the role and governance practices of institutional investors such as banks, mutual funds, life insurance companies, and pension plans. Begins with an overview of the characteristics of institutional investors in Canada, then discusses the following: governance of pension funds, including board member qualifications and stakeholder monitoring; established guidelines for governance; the governance of mutual funds; institutional investor activism, including representation on corporate boards; access to inside information; legal restraints on institutional investors, including absence of confidential voting for shareholders, restraints on communication among shareholders, and the difficulty in identifying shareholders; and the need for the foreign property rule that limits the foreign component in registered retirement savings plans and pension plans. Appendices include: examples of the use of derivatives to modify a portfolio; and guidelines from the Pension Investment Association of Canada, the Association of Canadian Pension Management, and the Office of the Superintendent of Financial Institutions.

Corporate Governance and Institutional Investment focuses on corporate governance and the legal nature of institutional investors in the corporate system. Its aim is to expose the complexity of the relationships that exist between companies on one side, and their shareholders, stakeholders, and monitors on the other. Various types of investors, including trusts and companies, are discussed, including how they function under different legal guidelines. The role of investment managers acting on the behalf of institutional investors is examined, as well as why fund managers overlook the corporate governance problems of their investee’s companies when they are performing well financially. This complexity is one of the main reasons why corporate scandals still occur, despite the existence of an extensive academic literature on corporate governance and the sustained efforts by the corporate community around the world. An analysis of how the monitoring role of institutional investors became effective in the light of company law and trusts is presented by using a comparative model involving the U.K., the U.S.A., Pakistan, and continental Europe. Financial scandals of the last decade such as Enron, Northern Rock, and the banking crisis are also examined. Finally, a review of regulatory approaches which rely upon formal rules and institutions backed by the state legal system, and non-regulatory approaches emphasizing the market mechanism and contractual arrangements, is included.

Corporate governance, the internal policies and leadership that guide the actions of corporations, played a major part in the recent global financial crisis. While much blame has been targeted at compensation arrangements that rewarded extreme risk-taking but did not punish failure, the performance of large, supposedly sophisticated institutional investors in this crisis has gone for the most part unexamined. Shareholding organizations, such as pension funds and mutual funds, hold considerable sway over the financial industry from Wall Street to the City of London. Corporate Governance Failures: The Role of Institutional Investors in the Global Financial Crisis exposes the misdeeds and lapses of these institutional investors leading up to the recent economic meltdown. In this collection of original essays, edited by pioneers in the field of fiduciary capitalism, top legal and financial practitioners and researchers discuss detrimental actions and inaction of institutional investors. Corporate Governance Failures reveals how these organizations exposed themselves and their clientele to extremely complex financial instruments, such as credit default swaps, through investments in hedge and private equity funds as well as more traditional equity investments in large financial institutions. The book's contributors critique fund executives for tolerating the "pursuit of alpha" culture that led managers to pursue risky financial strategies in hopes of outperforming the market. The volume also points out how and why institutional investors failed to effectively monitor such volatile investments, ignoring relatively well-established corporate governance principles and best practices. Along with detailed investigations of institutional investor missteps, Corporate Governance Failures offers nuanced and realistic proposals to mitigate future financial pitfalls. This volume provides fresh perspectives on ways institutional investors can best act as gatekeepers and promote responsible investment.