Abstract:
In recent years there has been an increasing expectation that institutional investors should
become more active in the corporate governance of companies in which they invest. The plethora of
renowned corporate governance failures in the last decade has only added to this expectation. The
first part of this paper examines the central arguments supporting increased institutional
shareholder activism in corporate governance. The paper then explores, in the New Zealand context,
the constraints against increased involvement and argues that the proposition for institutional
investors as active shareholders is more normative than realistic, given both the legal and
economical barriers that actively discourage intervention by institutions in their investments.
