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Institutional Investor Activism: Does the Portfolio Management Skill Matter?

  • Carlos F. alves


    (CEMPRE, Faculdade de Economia, Universidade do Porto)

  • Victor Mendes


    (CMVM – Comissão do Mercado de Valores Mobiliários)

Institutional investors are often seen as potential solutions for corporate governance problems and are requested to have a more active role in the monitoring and control of listed companies. In this paper we develop a model that, within a universal banking framework, allows one to conclude that, the greater the capacity of a financial group to generate capital inflows that react to the performance of mutual funds, the more the said attitude is likely to succeed. The paper also concludes that the efforts of supervisory authorities should be directed in particular to the relations between universal financial groups and companies in which these financial groups do not have a relevant stake.

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Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 184.

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Length: 19 pages
Date of creation: Jul 2005
Date of revision:
Handle: RePEc:por:fepwps:184
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  14. Judith A. Chevalier & Glenn D. Ellison, 1995. "Risk Taking by Mutual Funds as a Response to Incentives," NBER Working Papers 5234, National Bureau of Economic Research, Inc.
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  19. Prevost, Andrew K & Rao, Ramesh P, 2000. "Of What Value Are Shareholder Proposals Sponsored by Public Pension Funds?," The Journal of Business, University of Chicago Press, vol. 73(2), pages 177-204, April.
  20. Roger Otten & Dennis Bams, 2002. "European Mutual Fund Performance," European Financial Management, European Financial Management Association, vol. 8(1), pages 75-101.
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