Who Watches The Watchers? Institutional Investors, Corporate Power And Accountability In IT Sector
Ekta Sanganeria, Amity University, Kolkata
Executive Summary
Modern corporate governance depends heavily on investors to shape how managers act. These big financial groups hold a lot of power over multinational companies. There is very little oversight over how they use that power. The information technology sector adds complexity because of its fast growth and global reach. This study looks at the rules that are meant to hold institutional investors accountable in tech firms. Scholars say that when one agent watches another agent it creates agency problems in corporate structures. That’s why it’s important to look at the gaps in how institutional investors are monitored.
Current issues in governance are closely tied to institutional investors. These financial groups have a role in shaping how managers behave. They own amounts of stock in big companies but their influence is still not well understood. One area where this plays out is in the use of information technology. This paper aims to study the controls that exist over institutional investors in the IT field. Agency theory explains that multiple layers of management lead to relationships between principals and agents. Because of this the legal side of how these investors had overseen needs careful attention.
Most laws and regulations for investors do not require them to take more responsibility for their actions. Corporate law usually focuses on protecting the value of stock. It does not pay attention to protecting workers or society. In the IT industry this gap in the law allows companies to make cost-saving moves that hurt employees. Laws need to respond to the growing concentration of power in the hands of a few institutional investors. The idea of "watchdogs" is also important here. Often changes in laws come about because large economic players push for them. That means lawmakers should be required to think about interests when making rules about corporate governance in IT.
