THE ROLE OF INSTITUTIONAL INVESTORS IN ENHANCING CORPORATE GOVERNANCE

Abstract

This study examines the role of institutional investors in enhancing corporate governance. In particular, it looks into institutional investors, who currently hold a sizable share of Nepal's equity. Businesses are frequently characterized as ephemeral, narrow-minded owners who have no desire to participate in governance. We investigate whether institutional owners limit managerial discretion by limiting earnings manipulation in order to test the veracity of this claim. Numerous attempts have been made to develop corporate governance (CG) rating methodologies as a result of institutional investors' need to assess the CG practices of listed companies. In light of this circumstance, this paper makes an effort to measure how closely Greek large-cap companies adhere to global best practices. Specifically, we investigate the connection between accounting behavior measured by discretionary accruals and institutional ownership. Our results are in line with institutional investors' encouragement of myopic management practices as well as institutional monitoring. Additionally, we run triangular tests that look at the effects of managerial discretion on capital market pricing at various institutional ownership levels. Corporate governance that is efficient and founded on values is the responsibility of independent directors, institutional investors, and regulators. This essay discusses activism related to corporate governance.