As you may know, Sir David Walker is leading an independent review of corporate governance in the UK banking industry. One component of this review focuses on the role of institutional investors in engaging effectively with companies and monitoring corporate boards.
Apparently, Walker loves the influence of long-term SWFs on increasingly short-term financial institutions:
“They will help vis-a-vis UK institutions which have often taken short-term views.”
He makes a good point; SWFs are the longest-term investors out there. Therefore, giving them a bit more influence over corporate management would tend to move these firms’ time-horizons out a bit.
Still, it is remarkable to see a western country arguing for more SWF influence over their firms. While the guys at State Street (John Nugee in particular) have been arguing in favor of this for while, I think it’s the first time I’ve seen this argument by a public official.
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