Introduction to \u3ci\u3eInstitutional Investor Activism: Hedge Funds and Private Equity, Economics and Regulation\u3c/i\u3e

The increase in institutional ownership of recent decades has been accompanied by an enhanced role played by institutions in monitoring companies’ corporate governance behaviour. Activist hedge funds and private equity firms have achieved a degree of success in actively shaping the business plans of target firms. They may be characterized as pursuing a common goal – in the words used in the OECD Steering Group on Corporate Governance, both seek ‘to increase the market value of their pooled capital through active engagement with individual public companies. This engagement may include demands for changes in management, the composition of the board, dividend policies, company strategy, company capital structure and acquisition/disposal plans which are normally regarded as governance issues.’ This article is the introductory chapter of Institutional Investor Activism: Hedge Funds and Private Equity, Economics and Regulation (Oxford University Press 2015). The book collects descriptive expositions and empirical analyses essential for an understanding of both varieties of interventionist shareholder. The twenty-one chapters detail these investors’ strategic approaches, the financial returns they produce, the regulatory context in which they operate, and the policy questions raised by their activities

Traditional and Innovative Approaches to Legal Reform: 'The New Company Law'

In this paper, we have distinguished three different positions along the reform strategy spectrum of company law. The first position is located on the left side of the spectrum and closest to stasis - where virtually no effective legal changes can occur and where only the idea of reform clashes with legal tradition and standardization pressures. An example of a jurisdiction that takes this position is Germany. Along or near the mid-point of the spectrum, company law changes are less impeded by tradition and standardization factors, but more influenced by interest group pressures. We see England occupying this position. Japan can be seen as a more adaptable jurisdiction located toward the right end of the spectrum and therefore better able to create and introduce more functional legal rules and institutions that turn the traditional view of company law around. It is submitted that Singapore is located on the right side of the spectrum as its legislature is aware of the need to adapt the legal system to international business practices in order to develop a distinct jurisprudence, acclaimed for its efficiency and integrity, which is set apart from the English legal system.Length: 36 pages