Major Fund Managers to collaborate on Governance

David Walker, a so-called City 'Grandee', suggests in a recent article that major fund managers should extend and intensify the practice of collaboration in order to improve shareholder stewardship. While this is going in the right direction - Pro Governance has for a long time argued that corporate governance can be decided if the top 30-40 investment institutions get around a table - it leaves open the question of how this collaboration should be organized (and more importantly, how its effectiveness should be monitored and judged).
In my opinion, the practice of meetings behind closed doors and endless discussions on an ad-hoc basis would not be acceptable. Only clear and public rules would be able to provide an effective way to police thousands of companies. This would also play into the hands of Mr. Walker's second suggestion, the monitoring of the activities of fund managers with respect to their governance practices.
But in both cases it requires the involvement of the (real) end investor, the savers that invest with pension funds, mutual funds or private banking firms. A survey of fund managers might be a worthwhile endeavour but not if it is just a box-ticking exercise without any further consequences.
Whether the improved shareholder stewardship will lead to greater economic productivity is something that is being discussed (especially in the United Kingdom) for more than 30 years. Intuitively one might think (and hope) so but it if far from being proven, Japan, Korea have done extraordinarily well for long periods of time and their governance practices were (and are) far from perfect.
Your comments please! Or is Corp Gov just a game played for and by insiders?
(4-Nov-2017)

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