"Institutional Investors play an important role in promoting good governance, however, this notion has its own pros and cons". What are these pros and cons ? Explain.

Institutional investors are financial institutions that accept funds from third parties for investment in their own name but on such parties' behalf. They include pension funds, mutual funds and insurance companies. Institutional investors are organizations which pool large sums of money and invest those sums in companies. Their role in the economy is to act as highly specialized investors on behalf of others. The Pros and Cons on the role of the institutional investors in promoting the good corporate governance may be listed as under: Pros Cons The institutional investors have significant stakes in the companies and so of the voting power. Mutual Fund Investors have the short term vision hence their performance measure-ment may not be a significant evaluation in assessing the corporate governance while making the investment decision. They are in better position to have the access of the information about the company. The investment objectives are also a deciding factor while making the invest-ment decision. The stock market performance can be visualised with the adoption of the better corporate governance. Institutional investors may off load the holding if there is mis-matching in their asset-liability / liquidity position. They may influence in attracting the Foreign Direct Investment in India. A common man's investment portfolio is affected with the decision of the investment by the institutional investors. Based on the experience of countries where shareholders activism is vibrant, such as for example Australia, France, the UK, or the United States, it is reasonable to expect that Indian institutional investor should use their ownership rights more actively.