S/HR/86. The institutional investors have the incentives and ability to monitor managers’ behaviour. Regulation should facilitate, and when necessary require such a monitoring activity

The focus of this paper is the issue of Institutional Investors’ (IIs) monitoring. Starting from the origin of the debate, raised to solve the agency problems generated by the separation of ownership and control, it is argued that, even if, in theory, the size of IIs' investments in a company, justifies the costs associated to the monitoring activity, in practice there are several obstacles with respect to that activity. Those hurdles are represented by a mix of disincentives and lack of capacity. In the final section it is discussed about the opportunity of a regulatory intervention aimed at facilitating rather than requiring such a monitoring activity.