Influence and intervention by financial institutions in their investee companies

Holland, J. (1998) Influence and intervention by financial institutions in their investee companies. Corporate Governance: An International Review, 6(4), pp. 249-264. (doi: 10.1111/1467-8683.00113)

Full text not currently available from Enlighten.

Abstract

This article describes the corporate governance role of financial institutions in their portfolio companies during typical co-operative circumstances and during periods of corporate need and difficulty. The breakdown of relationships and the use of the market for control is also explored. Confidential case studies were prepared from interviews with senior directors and fund managers in UK based financial institutions. The implicit influence process was constrained by FI unwillingness to interfere in good performing companies and by limited FI power in co-operative circumstances. However, the case FIs were able to use their quasi insider knowledge advantage to diagnose problem areas in strategy, management quality, and the effectiveness of the board, and their negative impact on financial performance. They kept this diagnosis in reserve until circumstances arose where they could exercise much stronger influence. The article ends by exploring this extensive private influence process within institutionalist theory and by discussing the implications of this behaviour for policy changes.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Holland, Professor John
Authors: Holland, J.
College/School:College of Social Sciences > Adam Smith Business School > Accounting and Finance
Journal Name:Corporate Governance: An International Review
Publisher:Wiley
ISSN:0964-9410
ISSN (Online):1467-8683

University Staff: Request a correction | Enlighten Editors: Update this record