Financial institutions, intangibles and corporate governance

Abstract

Explores the central role that private information on corporate intangibles plays in the private corporate governance role of financial institutions (FIs). The institutional fund managers’ (FMs) private understanding of many qualitative or intellectual capital factors driving corporate performance was the basis for wide‐ranging corporate governance influence concerning financial performance and conventional Cadbury‐style corporate governance issues. This was primarily a private, implicit corporate governance process by FIs and their FMs during good corporate performance. Also reveals how the nature of FM corporate governance influence became more interventionist with adverse changes in corporate performance factors, in FI‐side influence factors and in environmental circumstances. The qualitative intangible factors, especially board and top management qualities, were central to this more proactive form of intervention. Finally, discusses the case results within the research literature on the corporate governance role of FIs, identifies new directions for research and discusses policy implications briefly.