The Promise and Peril of the Institutional Investor

The rise in prominence and influence of the institutional investor over the last 30 years has been the source of great good for the American corporate scene. The modern corporate governance movement was initiated and propelled to spectacular success by the efforts of the institutional investor class. However, to the surprise of many, the power of the largest investors lately has been used in ways never contemplated a few years ago and may have a particularly negative impact of the future of our entire corporate system.

The institutions, as the agents of the investor, have become more politically oriented principals rather than the neutral, responsible stewards of other people’s assets. For boards and the investing public, this is a dangerous turn of events.

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About the Author(s)

Charles Elson

Charles Elson is executive editor-at-large of Directors & Boards.


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