The influence of financial institutions and investor behaviour on company management practice

Abstract

New trends in investor behaviour have emerged in recent years. It is believed that activist investors involve themselves in the companies in which they invest through influencing company strategy and through using their knowledge and contacts to introduce portfolio companies to networks of suppliers and customers, professionals and alternative sources of finance. We carry out a case study research to examine these trends. The findings empirically confirm the importance of organizational structure for the process of investor engagement. They show that independent and more specialized investors are much more involved with their companies than captives. Experienced and knowledgeable partners are also more likely to offer advice and support services. We also find examples of investor influence in company management in areas such as strategy, human resource management and performance evaluation.