What role do institutional investors play in corporate governance?
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Institutional investors play a critical role in corporate governance by holding significant stakes in companies and actively engaging with management. Their large investments grant them voting rights, which they use to influence decisions related to board appointments, executive compensation, and corporate strategies. By advocating for transparency and accountability, institutional investors ensure that companies act in the best interest of shareholders. For example, they may push for sustainable practices or improved financial reporting. Their involvement not only benefits the companies they invest in but also boosts investor confidence and market integrity.