Asset manager capitalism? The influence of institutional investors on corporate governance and the varieties of capitalism

Abstract

This thesis considers the link between changes in the shareholder ownership structure and the governance of firms. Making use of extensive interview data it assesses the governance activities of asset managers in Germany, the UK and the US. The thesis makes use of the varieties of capitalism framework to assess the extent of convergence or divergence between the respective national varieties. Since the largest asset managers are US firms, the institutionalisation of share ownership could be expected to lead to the Americanisation of global corporate governance. However, despite a convergence in form, no corresponding convergence in function is observed. Instead a considerable continuity in the heterogeneity of national models of capitalism is noted. This is due to national differences in the relative resourcing of active and passive asset managers, of proxy advisors and corporates as well as the approach followed by the respective governments. In the US, where index funds have a comparatively larger market share, the domestic regulatory approach results in a bigger potential for conflict between shareholders and corporate managers. In the UK and Germany, on the other hand, the relationship between asset managers and corporates is shown to be less antagonistic. This is due to the greater relevance of proxy advisors, the smaller market share of US index funds, the stewardship approach of domestic asset managers and because of the regulatory approach pursued by the governments in the UK and Germany, which seeks to balance expanded shareholder influence with greater consideration of stakeholder concerns.