Corporate Governance and Institutional Investment

Abstract

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.

About the Author

Dr. Malik M. Hafeez is an advocate and corporate consultant. He holds a Ph.D. in Corporate Law from the University of Aberdeen, U.K. and a Master of Law (L.L.M) from the University of the Punjab, Pakistan. Dr. Hafeez currently practices as an Advocate of High Courts of Pakistan and is a visiting faculty member and guest speaker for many universities in Pakistan and abroad. He is the founder of Hafeez Law Associates (HLA) at Bahawalpur, with offices also in Multan, Lahore, Islamabad, and Muscat.