A conceptual mapping of the logics of institutional investors' corporate governance responsibilities: The case for "custodian" investor stewardship

Institutional investor activism has received increasing attention for corporate governance scholars and policymakers. The promise of institutional monitoring of corporations has fueled social expectations over institutional investors. In the aftermath of the financial crisis, recent corporate governance rules have attempted to frame and rule institutional investors' corporate governance behavior. We draw upon these rules and legal research to unpack the rationales of these specific expectations. Employing an institutional logics perspective, we map the different logics of responsibility which drive institutional investors' corporate governance behaviors. This help us critically examine the notion of investor stewardship and propose a unified framework for institutional investors' corporate governance responsibilities. First, we argue that the coexistence of contrasted logics creates new sources of conflicts of interests for institutional investors. Second, we remark that corporate governance rules for institutional investors do not meet social welfare concerns. We then propose a custodian logic of responsibility for institutional investors which combines monitoring concerns and a concern for responsible management.