Investor Engagement Investors and Management Practice under Shareholder Value

RODERICK MARTIN
PETER D. CASSON
TAHIR M. NISAR

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© Roderick Martin, Peter D. Casson, and Tahir M. Nisar 2007
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First published 2007
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Typeset by SPI Publisher Services, Pondicherry, India
Printed in Great Britain
on acid-free paper by
Biddles Ltd., King’s Lynn, Norfolk
ISBN 978–0–19–920260–7
Contents
List of Tables xiii
Notes on Authors xiv
Abbreviations xv
1. Shareholder Value as Context for Investor Engagement 1
1.1. Introduction 1
1.2. The Theory of Shareholder Value 6
1.3. Preconditions for Efficient Capital Markets 8
1.4. The Rise of Shareholder Value Capitalism 11
1.5. Conclusion 17
2. Investor Engagement 19
2.1. Introduction 19
2.2. Conceptual Framework 20
2.3. Internal and External Contexts 23
2.4. Areas of Potential Investor Engagement 24
2.5. Conclusion 34
3. Institutional Investor Engagement Propensity 36
3.1. Introduction 36
3.2. Types of Institutional Investors 38
3.3. Rationale for Investor Engagement 41
3.4. Areas of Potential Institutional Investor Engagement 47
3.5. Conclusion 57
4. Forms of Institutional Investor Engagement 60
4.1. Introduction 60
4.2. Routine Institutional Investor Engagement 61
4.3. Extraordinary Institutional Investor Engagement 67
4.4. Conclusion 81
5. Private Equity Investor Engagement 84
5.1. Introduction 84
5.2. Private Equity Investment Arrangements 85
5.3. Case Studies 90
5.4. Conclusion 113
6. Managing Investors 120
6.1. Introduction 120
6.2. Managing the Boards of Directors 122
6.3. Managing the Investors 129
6.4. Limitations on Managing Investors 132
6.5. Conclusion 137
7. Corporate Governance Convergence in International Perspective 139
7.1. Introduction 139
7.2. The Case for International Convergence 141
7.3. Liberal Market and Coordinated Market Economies:
A Counterargument 145
7.4. Corporate Governance in Germany: Continuity or Change? 147
7.5. Restructuring the ‘Rhineland’Way: The Bayer Group Case 155
7.6. International Convergence? 163
8. Shareholder Value, Investor Engagement, and Management
Practice: a Normative Evaluation 169
8.1. Arguments for Shareholder Value 170
8.2. Arguments for Investor Engagement 181
References 189
Author Index 209
Subject Index 214