The Role of Institutional Investors in Corporate Governance of Their Portfolio Companies – The Case of Croatia

The goal of this research is to examine the involvement of institutional investors in the corporate governance of companies in their portfolio by analyzing characteristics of institutional investors with respect to the type of investment, investment time horizon, and degree of involvement in the pro...

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Bibliographic Details
Published in:Croatian Economic Survey 2021-12, Vol.23 (2), p.15-129
Main Authors: Đunđek Kokotec, Ivana, Orsag, Silvije, Klačmer Čalopa, Marina
Format: Article
Language:English
Subjects:
Communication
Companies
Conceptual analysis
control mechanisms
Corporate governance
Executive compensation
Hypotheses
Informatics
Institutional investments
institutional investors
Investment advisors
Investment policy
Investors
Ownership
portfolio investment style
Portfolio investments
Portfolio management
Stockholders
Voting rights
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Summary:The goal of this research is to examine the involvement of institutional investors in the corporate governance of companies in their portfolio by analyzing characteristics of institutional investors with respect to the type of investment, investment time horizon, and degree of involvement in the process of managing a company. The paper will outline the attitudes of managers on the level of investors’ involvement in the governance process in order to identify determinants of investment decisions, decisions to take corrective actions to enhance corporate governance, or decisions to leave the ownership structure. A qualitative approach was chosen, consisting of a series of structural interviews with 25 fund managers of different types of institutional investors. The results indicate that institutional investors are involved in the corporate governance of their portfolio companies, and that control mechanisms they use include voting rights, direct communication with the management with the aim of discussing strategies for future development, and collaboration with other institutional investors in the ownership structure.
ISSN:1330-4860
1846-3878
DOI:10.15179/ces.23.2.4