The Role of Institutional Investors in Corporate Governance (Case study of Syrian Companies)

Abstract

The study aims to explore the role of institutional investors, who quantitatively control the market and exercise increased control over financial assets, in influencing the agency's relationship between shareholders and managers. The study of such a question highlights two contradictory forms of conduct of these institutions, which are effective on the one hand and negative on the other (voice or exit). Applying this influence on disclosure policies is a critical issue for corporate governance. The research focuses on analyzing complex ownership structures that feature at least two major shareholders. To achieve the study's objective, the researcher used the hypothetical-deductive approach to formulate hypotheses. The validity of these hypotheses was tested using the case study methodology on companies listed on the Damascus Securities Exchange. The results of the research confirmed the validity of these hypotheses. First, the managers of the investment institutions exert strong influence in order to effectively control the managers of the Syrian companies in question, reflected in one key point: transparency. The principle of transparency imposes on listed companies the need for a clear commitment to communicate with investors in order to provide them with the necessary elements for making factual investment decisions. Second, institutional investors' activity increases the frequency of individual meetings. In other words, this encourages the director to change his communication strategy from one-way to interactive.