Investors Strengthen Management Monitoring
After years of silence, Korea's institutional investors rolled up their sleeves to discipline 10 listed companies of which stocks performed poorly due to questionable and non-transparent business practices.
It is quite unusual for Korean institutional investors to vent anger at listed companies for their poor stock performance probably linked to opaque business practices and authoritarian corporate governance system.
Such fund management companies as Korea Investment Trust and Daihan said they will dispatch personnel to the annual shareholders meetings of the 10 listed companies whose stock performed poorly.
Targeted for discipline by institutional investors are those whose stocks performed poorly despite solid business performance. The blacklisted companies also include those suspected of having siphoned off funds to subsidize affiliate companies or running the companies in a non-transparent way.
Institutional investors have already sent questionnaires to the 10 blacklisted companies to get clarification. Yoon Sung-il, head of the investment strategy unit of the Korea Investment Trust said, ``Institutional investors have decided to join hands to take collective action against the 10 listed companies in question this year.''
He refused to identify the names of the companies but said that the institutional investors will exercise their collective voting rights as shareholders at the annual shareholders meetings of the 10 companies.
Unless these companies provide convincing reasons for the alleged illegal inter-subsidiary trading or below-the-market performance of their stocks, ``We will exercise our voting rights,'' he added. …