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The role of institutional investors in enacting stewardship by corporate boards

Danielle A.M. Melis (Erasmus School of Law, Rotterdam, The Netherlands)
André Nijhof (Nyenrode Business Universiteit, Breukelen, The Netherlands)

Corporate Governance

ISSN: 1472-0701

Article publication date: 10 May 2018

Issue publication date: 27 July 2018




This paper aims to clarify the relationship between the voting and engagement behaviour of institutional investors, i.e. institutional investor stewardship behaviour, and the enactment of stewardship by corporate boards. In doing so, this paper contributes to the evaluation of contemporary corporate governance systems and provides recommendations for the redesign of these systems.


This paper is based on a qualitative exploratory descriptive research study into assumed, prescribed and the actual behaviour of institutional investors. Their behaviour is explored through a survey and in-depth interviews with global institutional investors.


The prescription of institutional investor stewardship behaviour and the exploration of actual behaviour from an investors’ perspective led to the conclusion that assumed institutional investor stewardship exists variously as either “in form” (i.e. measured by compliance to the relevant corporate governance code) or “in substance” (i.e. the actual behaviour from the investors and investee companies’ perspective). The results suggest that that institutional investors’ actual stewardship behaviour as global investors requires a nuanced conclusion about the existence of institutional investor stewardship.

Research limitations/implications

Although the number of semi-structured interviews with institutional investors was limited to just 14, these interviewees represent the majority share in terms of market capitalisation of Dutch listed companies. Additional research could clarify the perspective of other investors, such as pension funds and private investors.

Practical implications

The outcome of this research can serve as input for corporate governance reforms in the preambles of governance codes and the prescribed principles and best practice provisions of corporate governance and stewardship codes. This research identifies opportunities for further academic research to enrich the understanding of the role of institutional investors in enacting corporate stewardship.

Social implications

This paper contributes to furthering the understanding of the mechanisms by which institutional investors, through their behaviour, contribute to enacting stewardship through their corporate boards. This is an important part of the corporate social responsibility of institutional investors. It also triggers a dialogue about the social and environmental impacts of stock listed companies.


This paper fulfils an identified need to develop knowledge about new paradigms and offers a more integrated approach to corporate governance reforms in terms of the role of institutional shareholders in the promotion of good corporate governance.



The authors thank the Nyenrode Corporate Governance Institute of Nyenrode Business Universiteit for providing support that made it possible to do the research and publish this article. Furthermore, the authors thank the reviewers and editor of this journal for their valuable comments on an earlier version of this article.


Melis, D.A.M. and Nijhof, A. (2018), "The role of institutional investors in enacting stewardship by corporate boards", Corporate Governance, Vol. 18 No. 4, pp. 728-747.



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