Concerns over ‘ownership zoo’
The impacts of globalisation and the ever increasing diversity of ownership are the main challenges facing corporate governance, according to a report released by AMP Capital Investors.
The report was prepared for the International Corporate Governance Network (ICGN) conference held in Seoul.
Speaking at the conference, Yale senior associate dean for corporate governance Ira Millstein coined the term “ownership zoo”, referring to companies’ increasingly diverse ownership.
According to Millstein, shareholders of many companies can be described as a “zoo”, a collection of widely varying investors, including hedge funds, private equity, individuals, venture capitalists, mutual funds, pension funds, sovereign wealth funds, and state-owned enterprises.
“This increasingly diverse set of owners poses new challenges to company boards and management in terms of stewardship and governance. Diverse investors often have different agendas, reflecting their different time horizons and investment goals.”
Chairman of Sodali John Wilcox added: “Companies are understandably concerned about the diversity of shareholder interests. They are reluctant to give more leverage to aggressive, high-profile investors with short-term financial goals and questionable commitment to the business enterprise,” he said.
“At the same time, responsible, long-term investors rightfully demand a voice in decisions affecting the future of their investment.”
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