Expression of Preferences: Front-running, Investor Activism, and Other Market Influences
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The last chapter focused on the systemic characteristics of international financial markets that help support the idea that these markets are not the efficient, abstract mechanisms neoliberalism proposes, but fairly organized networks of communication and cooperation between large investors. The potential power of these investors lies not only in the large amounts of capital they control as individual firms but also in the ideological norms and cooperative practices that unify their preferences to developing countries. This chapter, however, addresses the power individual institutional investors can and do wield over emerging market countries. It is divided into three sections. The first section discusses the practices utilized by investors to influence the direction of particular stocks and markets, and explores the increased potential for market manipulation, in particular front-running. The second section considers the presence of investor activism, or corporate governance, in the emerging markets and looks at some cases in which large investors attempted to change policy outcomes. The third section provides a brief glimpse at evidence that belies the presence of the power investors have over policy in emerging market countries.
KeywordsCorporate Governance Institutional Investor Fund Manager Large Investor Investor Activism
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