Institutional investors are organizations that pull large sums of money together to invest in various sectors. These institutions include; private and public pension funds, open investment institutions, insurance companies, banks, and foundations among many other institutions. Institutional investors play a big role in encouraging development of a country. Institutional investors provide capital for investments. Institutional investors own over half the shares of all public companies in America. They fund development projects necessary for the growth of an economy by investing in them. This not only contributes in strengthening a country’s economy but also in creating job opportunities (Nix, Petra, and Jean Jinghan Chen 76). Institutional investors help in providing services needed in a country by investing in that sector. They contribute to the development of an economy enormously.
Institutional investors play an important role in the management of companies. Since they form the majority shareholders in most investments, they are obligated to check the management of these institutions to ensure that funds are not wasted (Blommestein, and Norbert Funke 43). Using their experience and expertise these institutions evaluate business decisions and help in managing institutions they invest in. the role of institutional investors in managing businesses cannot be overemphasized. Institutional investors take part in decision-making processes and thus ensure proper usage of funds. They have the mandate to review the works of a company. However, they should give the management of the company enough freedom to exercise creativity as long as his methods promote the well-being of the company. For institutional investment to be successful there must be cooperation between the investors. Different investors shave different aims in a company. These institutional investors must cooperate to make the investment successful.
Blommestein, H. J., and Norbert Funke.Institutional investors in the new financial landscape. Paris, France: Organisation for Economic Co-operation and Development, 1998. Print.
Nix, Petra, and Jean Jinghan Chen. The Role of Institutional Investors in Corporate Governance an Empirical Study.. Basingstoke: Palgrave Macmillan, 2013. Print.