The Journal of Contemporary Issues in Business and Government is an open-access, peer- reviewed international journal dedicated to the exchange of original scholarly research that informs business decision making and/or government policy. The journal is cross-sectoral, interdisciplinary and eclectic, and contributions are welcome across a wide range of research methodologies (e.g., theoretical or empirical,usingeitherquantitativeorqualitativemethods)andtopics.
TheJournalof Contemporary Issues in Business and Government is a cross-sector, interdisciplinary scholarly journal published by Curtin Business School at Curtin University of Technology. The Journalaims to advance the science of management by publishing papers designed to inform management praxis through the dissemination of applied research. The Journal follows a double blind refereeing process and currently publishes two issues each year. Submission of a paper to the Journal is held to imply that it is original work and that it has not already been published or submitted for publication elsewhere. Potential authors are encouraged to communicate with the Editor-in-Chief about the possibility of publishing special symposia, papers and book reviews. Details of publication requirements and a sample copy of the Journalareavailableatwww.cbs.curtin.edu.au/business/research/journals.
Introduction The Australian financial medi a has in recent years been active in reporting perceived anger of shareholders on issues such as termination payouts and executive and director remuneration (for example, Boyd , 2005; Lee, 2005a), There has also been considerable political interest in extending regulation o f shareholder rights to enhance shareholder participation (priest, 2004a, 2004b). Issues relating to governance and performance taken up by shareholders and reported in the Au stralian and international financial press have included: campaigns to install independent chairpersons or independent dire ctors; campaigns against individual company's pay policies; and active support for, or opposition to, companyamalgamationsortakeovers(Boyle,2004;Buckley,2004;Borrusin,2006).
High profile campaigns, such as those in Australia focussed on AMP and National Au stralia Bank, generally catch the notice of the press. However, such campaigns affect a small proportion of listed companies directly. There has been growing media interest in assigning a role to institutional investors to participate as active monitors of corp orate performance (Mackenzie, 2004; Stapledon & Paatsch, 2004 ; BuffIni, 2005).
Recent research has suggested there is a positive relationship between institutional ownership and the outcomes of governance monitoring of management activities. Hsu and Koh (2005) have found that, in specified circumstances, institutional presence on the share register of Australian companies appears to be a proxy for governance mechanisms to mitigate aggressive corporate earnings management. Sharma (2004) has found that the likelihood of fraud decreases as the percentage of independent institutional ownership increases. These studies focus on the overall proportion of institutional investors' holdings in the firm, They do not consider the process through which these outcomes could have been delivered, nor whether institutional shareholders can be treated as a block or, alternatively, demonstrate a variety of responses to potential activism in relation to their share portfolios. Some international studies have differentiated between types of institutional investor. Bethel, Liebeskind and Opler (1998) found that acquisition of share blocks by some types of 'blockholders' had a positive effect o n performance. Chen, Harford and Li (2004) report that the presence of institutional investors influences the quality of acquisition decisions, although this is specifically related to large and primarily block shareholdings. Almazan, Hartzell and Stark s (2005) find an association between managerial compensation policies and institution al ownership, related to a measure which is a proxy for the payoff or incentives for institutional activism. In the research reported here, selected funds managers discussed their approach to active institutional monitoring of invested companies. This data provided an opportunity to consider the processes involved in monitoring corporate performance and managers' perceptions of the considerations which influenced the development of attitudes and policies towards monitoring of investedcompaniesintheindustry.
The data also allowed consideration of the processes and procedures through which the exercise of real influence within the invested entities is perceived to flow. It identified and underscored the notion that the funds management industry is unlikely to be homogeneous in its appro ach to active institutional monitoring and relations with invested companies. We suggest that future research seeking to measure the impact on performance of institutional investors in the share registry may need to utilise criteria to differentiatebetweencategoriesofinstitutionalinvestors.
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