...Hermes Fund Management Dr. Okan Geray 1. Is the role of institutional investors to influence the strategy of companies in which they invest? Yes, they are influence on the strategy for the company * Institutional investors are in a unique position to exercise influence over companies and to hold them accountable for good governance. Given the typically significant stake they hold, they have the ability to demand meetings with the senior management of companies, challenge them on issues of concern, discuss strategies for achieving the companies’ goals and objectives and be the leading voice of shareholders in demanding corrective action when wrongdoing occurs. * Thus institutional investors have a critical and proactive role to play in the governance of companies. They have better access to information and possess the resources to build the necessary monitoring Capabilities. Given their unique position of influence, there is a need to priorities their leadership role in governance. * Institutional investors are professional investors who act on behalf of beneficiaries, such as individual Savers or pension fund members, the categories of institutional investors are wide and can include Collective investment vehicles, which pool the savings of many, and licensed fund managers to whom these funds are allocated. * Hermes is a UK independent fund manager investing approximately £36 billion on behalf of over 100 clients, including pension funds, insurance...
Words: 663 - Pages: 3
...Take Home Quiz 1 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. The commonly accepted goal of the MNC is to: a. maximize short-term earnings. b. maximize shareholder wealth. c. minimize risk. d. both maximize short-term earnings and minimize risk. e. maximize international sales. 2. For the MNC, agency costs are typically: a. non-existent. b. larger than agency costs of a small purely domestic firm. c. smaller than agency costs of a small purely domestic firm. d. the same as agency costs of a small purely domestic firm. 3. Which of the following theories identifies specialization as a reason for international business? a. theory of comparative advantage. b. imperfect markets theory. c. product cycle theory. d. none of these. 4. Which of the following theories identifies the non-transferability of resources as a reason for international business? a. theory of comparative advantage. b. imperfect markets theory. c. product cycle theory. d. none of these. 5. Which of the following theories suggests that firms seek to penetrate new markets over time? a. theory of comparative advantage. b. imperfect markets theory. c. product cycle theory. d. none of these. 6. Which of the following is an example of direct foreign investment? a. exporting to a country. b. establishing licensing arrangements in a country. c. purchasing existing companies in a country. d. investing directly (without brokers) in foreign stocks. 7. According to the...
Words: 541 - Pages: 3
...How successful were the social reforms introduced by the Liberal’s in years 1906 to 1914 in improving the lives of the British people? Britain in the early 1900s faced a multitude of problems from poverty. Reports from Booth and Rowntree highlighted the extent of the problem so when the liberals came to power in 1906, they embarked on a series of wide-ranging welfare reforms that were designed to lift the most vulnerable members of society – the sick and infirm, children and the elderly – out of poverty. This was a massive change from the previous stance of “laissez faire” to direct government intervention. However, the success of the reforms and the impact they had on the problems that plagued Britain was questionable. Some historians have argued they were very successful. For example the liberals were able to provide more support than ever before to impoverished children. They passed the Education Act (Provision of school meals) in 1906 and the Education Act (Medical Inspection) in 1907. These Acts provided services to needy and vulnerable children for the first time ever. By 1914, a total of 14 million free school meals were being provided by LEAs and three quarters of LEAs were providing medical inspections. These reforms were designed to tackle the issue of disease as a result of poverty and to stop children being too hungry to learn. However there were drawbacks, in many cases nothing could be done to alleviate the problems identified such as the need for glasses for...
Words: 1252 - Pages: 6
...been replaced by institutional investors. This is also known as shareholding. Institutional investors play a very enviable role in corporate governance since the primary responsibility lies in side the board room, with the top management not with people and system imposed from outside. Looking at Board of Directors and investors, investors are seen as “sources of finance” or “partners in the enterprise”. This means that shareholders are seen as faceless, financial resource whose trust may be limited and need for checks and balances real? Or are they part of the business? Companies do take advice and guidance from their institutional shareholder in domestic and foreign business growth decisions (Stuffman 2008). This takes us to Hermes Fund Management, an institutional investment Corporation, which plays a strategic role in the activities of Total and Premier Oil. Total and Premier Oil has sought assistance from Hermes in managing business concern in Burma. This case study will show how trusted are Directors bearing in mind the interest or the shareholders. Shareholders are in turn given consideration and the respect for their membership in merit. Institutional Investors and Corporate Social Responsibility: As earlier stated, institutional investors are organizations which pool large sums of money and invest in securities, real properties and other investment...
Words: 3059 - Pages: 13
...Types of financial intermediaries Financial institutions are like most other businesses in that they exist to make a profit and this is maximized by minimizing their costs and maximizing their revenue. Like most firms they can only survive if they design and sell products and services that can meet demand at a reasonable profit level. We now proceed to look at some of the key types of financial institutions that are involved in the process of financial intermediation; that is, the transfer of funds between surplus and deficit agents. We distinguish between deposit-accepting institutions, such as banks and savings institutions, and other types of financial intermediaries, such as insurance companies, mutual funds/unit trusts, pension funds, hedge funds and private equity and the like. 3.7 deposit institution an institution such as a bank or savings institution that accepts cash deposits Deposit institutions Deposit institutions accept deposits from economic agents. These funds become their liabilities which they then on-lend to make direct loans or investments, which become their assets. Deposit-taking institutions aim to make a profit in the way of 'spread income' between the cost of the deposits that they accept and other sources of funding, and the return that they receive on their investment portfolio in the way of loans, equity stakes and other investments. Examples of deposit institutions include commercial banks, savings banks and building societies. The deregulation...
Words: 13846 - Pages: 56
...annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc.- (1) In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, in accordance with and subject to the provisions of this section, the whole of the amount paid or deposited in the previous year, being the aggregate of the sums referred to in sub-section (2), as does not exceed one lakh rupees. (2) The sums referred to in sub-section (1) shall be any sums paid or deposited in the previous year by the assessee— (i) to effect or to keep in force an insurance on the life of persons specified in sub-section (4); (ii) to effect or to keep in force a contract for a deferred annuity, not being an annuity plan referred to in clause (xii), on the life of persons specified in sub-section (4): Provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity; (iii) by way of deduction from the salary payable by or on behalf of the Government to any individual being a sum deducted in accordance with the conditions of his service, for the purpose of securing to him a deferred annuity or making provision for his spouse or children, in so far as the sum so deducted does not exceed one-fifth of the salary; (iv) as a contribution by an individual to any provident fund to which the Provident Funds Act, 1925 (19 of 1925) applies; (v)...
Words: 3074 - Pages: 13
...This case describes a decision facing the officers of the Solidarity Fund, a large pension fund operated by the Quebec Federation of Labor (QFL).The QFL had founded the Fund to provide members of its affiliated unions and others access to professionally managed retirement accounts. It also sought to create job growth in the province of Quebec and to support companies with good working conditions, positive relations with local communities, and a commitment to environmental responsibility. The goal of QFL was to extend access to manage retirement account for its members and to instill job growth. Another focus of the QFL was to support socially responsible companies that carried out their due diligence process successfully and paid special attention to employee working conditions. The controversy stemmed from the fact the Gildan Active wear and Montreal based textile and Garment that started in 1984 managed and operated three factories. Gildan owned and operated three factories and in effort to compete with Hanes and Fruit of the Loom, Gildan began to expand in 1995, Gildan contacted the Solidarity Fund for help in financing its expansion. Gildan grew drastically and even expanded some production to Honduras. Gildan believed that Honduras was the reason for its success as 80% of the jobs were held by women between the ages of 18 and 25. In 2002, the basic minimum hourly wage was 63 cents. An employee in Montreal earned more in one hour than a Honduran did in one day. The Solidarity...
Words: 328 - Pages: 2
...1.Recent Developments in the Implementation of Abenomics 2.What are ‘three arrows of Abenomics’? 3.Fundamental Principles of the Third Arrow and its Strategies for the Future 4.Examples of Individual Measures of the Third Arrow 5.Heading toward… Appendix: Improvement in Economic Conditions Primary economic indicators P3 P21 P26 P29 P50 P53 2 3 What’s New on ‘Abenomics’ Revision of the Japan Revitalization Strategy (P5-20) To realize sustainable economic growth from the positive economic momentum being generated by the three arrows of Abenomics, the Government has formulated a revised growth strategy. This includes several breakthrough solutions for issues outstanding from the initial Japan Revitalization Strategy formulated last year, such as labor market reform, improving agricultural productivity, and transforming the health-related sector into a growth market. In addition, the revised strategy provides direction on the resolution of important issues that Prime Minister Abe has promised to tackle at Davos Meeting in January, including further corporate tax reform, easing regulations in National Strategic Special Zones, forward-looking reform of GPIF's management and the advancement of women's roles in society. Approval of 30 bills related to the Growth Strategy Some 30 bills related to the Growth Strategy were approved during the ordinary diet session up to June 2014, including a bill for partial revision of the Electricity Business Act to liberalize the retail electricity...
Words: 14187 - Pages: 57
...Laws Governing the National pension scheme in Ghana The National Pensions Act 2008 is the prevailing law governing the pension scheme in Ghana. This law was passed to provide for pension reform to replace the then cap 30 and SSNIT law (Social Security and National insurance trust Law) which used to be the Law governing the pension scheme. The National Pensions Act, 2008 was to introduce a contributory new three-tier pension scheme. The Act state that the first tier provides a mandatory basic national social security scheme, a mandatory fully-funded and privately managed Provident fund and personal pension scheme as the second tier and a voluntary fully funded and privately managed provident fund and personal pension scheme. The first tier is managed by The Social Security and National Insurance Trust, the second and third tier is privately managed by approved trustees appointed by the Pensions Regulatory Authority with the assistance of Pensions Fund managers and custodians registered by the Authority. The second tier is an occupational pension scheme aimed at giving contributors higher lump sum benefits than the then SSNIT OR CAP 30 PENSIONS SCHEME. The third tier, apart from being voluntary provident fund and personal pension schemes is supported by tax benefit incentives to provide additional funds for workers who want to voluntary contributions to enhance pension benefits as well as workers who are not in the formal sector. It is not mandatory. Section 5 article 1 of...
Words: 396 - Pages: 2
...5923/j.ijfa.20130207.04 Role of Pension Funds in Financial Intermediation Ondabu Ibrahim Tirimba Finance and Economics Department, PhD Candidate Jomo Kenyatta University of Agriculture and Technology, Nairobi, Kenya Abstract This paper aimed at discussing the various roles that pensions play in financial intermediat ion. Descriptive research design was adopted with the population being all the available literature on the online web as pertaining pension funds and also financial intermed iation. Using key word characters, the search in itially identified 50 journals and after a tentative scrutiny, 37 journals were selected in a random sampling manner in o rder to give the birth of this discussion paper. The key objective of this article was to discuss the role of pension funds in financial intermed iation. A mong the roles identified in this paper were; provision of a mechanis m for pooling of funds and subdivision of shares, provision of ways to transfer economic resources, provision of ways to manage uncertainty and control risk, provision of ways to manage uncertainty and control risk, provision of pricing informat ion and the provision of ways to deal with incentive problems. This paper provides practical insights into the roles of pension in financial intermed iation and thus highlighting the key importance of such pension funds into the success of any economy. This paper is one of the very first to recognize the key roles that pension funds play in the 21st century. Keywords...
Words: 6254 - Pages: 26
...Introduction Institutional investors have become predominant players in the stock market, and their influence has been growing steadily in recent times. Due to their large shareholdings it is perceived that institutional investors can leverage their position and act as watchdogs against corporate abuse. There are however several practical considerations which serve as disincentives to shareholder activism. The assertion that institutional investors have the potential and the incentive to contribute towards improving the corporate governance regime of their respective portfolio companies is a contentious issue. Some commentators on this subject have made a positive assessment of shareholder activism but empirical findings give a checkered history of the efficacy of such institutional investor activism thereby casting a shadow of doubt on the role of institutional investors in corporate governance. The analysis of divergent theories on the incentives and disincentives governing the behaviour of institutional investors in this regard becomes pertinent. The questions that are sought to be addressed in this paper are as follows - a. What are the various incentives and disincentives to shareholder activism among institutional investors? b. What are the techniques which may be employed by institutional investors to monitor the companies in which they invest? c. What are the reasons behind shareholder passivity? Is this apathy rational in the context of institutional...
Words: 5083 - Pages: 21
...This case describes a decision facing the officers of the Solidarity Fund, a large pension fund operated by the Quebec Federation of Labor (QFL). The QFL had founded the Fund to provide members of its affiliated unions and others access to professionally managed retirement accounts. It also sought to create job growth in the province of Quebec and to support companies with good working conditions, positive relations with local communities, and a commitment to environmental responsibility. The dilemma concerned what the Fund should do about its investments in Gildan Activewear, a Quebec-based textile company. Human rights activists and investigative journalists had charged that Gildan’s workers in Honduras earned less than a living wage, worked long shifts, had excessively high production quotas, and breathed air filled with fabric dust. Just a few months later, a labor rights group issued a report claiming Gildan had fired Honduran workers who had tried to organize a union. These charges presented the Fund, which owned 14 percent of Gildan, with a difficult dilemma. The textile company had been an excellent investment; its stock had risen in value from just over $2 per share when the fund first invested to nearly $12. However, if the allegations were true, the company’s practices would run counter to the basic values of the Fund. Should the pension fund try to influence Gildan’s conduct? Should it sell its shares in protest? Or should it do neither? Kes ini menerangkan keputusan...
Words: 1226 - Pages: 5
...LESSON 12 DEDUCTIONS Dr Vandana Bansal STRUCTURE 12.0 Objectives 12.1 Introduction 12.2 Deductions from gross total income 12.3 Basic rules governing deductions under sections 80C to 80U 12.4 Deductions 12.5 Deductions to encourage savings 12.5.1 Deduction in respect of life insurance premium, etc.80C 12.5.2 Deduction in respect of pension fund 80CCC 12.5.3 Deduction in respect of contribution to pension scheme of central government 80CCD 12.6 Deductions for certain personal expenditure 12.6.1 Deduction in respect of medical insurance premium 80D 12.6.2 Deduction in respect of maintenance including medical treatment of dependent who is a person with disability - section 80DD 12.6.3 Deduction in respect of medical treatment - section 80DDB 12.6.4 Deduction in respect of repayment of loan taken for higher education - section 80E. 12.6.5 Amount of rent paid - section 80GG 12.7 Deductions for socially desirable activities 12.7.1 Donation to certain funds, charitable institution etc. (section 80G) 12.8 Deductions for persons with disability 12.8.1 Deduction allowed to a person with disability - section 80U __________________________________________________________________ 12.0 OBJECTIVES After studying the Unit you should be able to: • List the deductions available from gross total income • Know who is eligible for deduction • List the conditions for claiming deduction • Calculate the amount of each deduction ________________________________________________________ 12.1...
Words: 4690 - Pages: 19
...Report on Behavioral Economics. Topic: a Concept of nudge According to rational choice theory developed in the past century agents make their choice accordingly with common sense, carefully considering factors such as prices, taxes. Fines and etc. to get the highest possible benefit and they are exclusively motivated by their material self-interest. The problem is that in theory it works well, but in reality it is not. Dictator game and ultimatum game can be an excellent example of the failure of the rational choice theory: Let’s imagine that a subject (proposer) were given a fixed sum of money. He can leave an entire amount to himself or give a part of it to a stranger(responder), who can either accept or refuse the amount proposed1. In the case of refusal both subjects get zero. Fixed amount is known for both players. Rational choice theory predicts that a stranger should accept any amount because he cares only about monetary reward. However in reality people often want to give more than it is expected of them and often refuse to take the sum size of which appears to them unfair. Such people are willing to punish others at a considerable price for themselves. The reason is that human beings are guided not only by cold mind but also by social norms, emotions, fairness and reciprocity. One of the most important discoveries was the presence of two systems of human thought. The first – intuition- is fast, automatic, governed by habits, effortless and involves emotions. The second...
Words: 1734 - Pages: 7
...Act 766 National Pensions Act, 2008 ARRANGEMENT OF SECTIONS Section PART ONE—ESTABLISHMENT OF CONTRIBUTORY THREE-TIER PENSION SCHEME AND NATIONAL PENSIONS REGULATORY AUTHORITY Contributory three-tier pension scheme 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. Establishment of contributory three-tier pension scheme Object of the scheme Contributions to the scheme Management of the schemes National Pensions Regulatory Authority Establishment of the Authority Object of the Authority Functions of the Authority Governing body of the Authority Tenure of office of members Meetings of the Board Disclosure of interest Establishment of committees Allowances Regional and district offices of the Authority Ministerial directives Administrative and financial provisions Chief Executive Officer Functions of the Chief Executive Officer Deputy Chief Executive Officer Functions of Deputy Chief Executive Officer Appointment of Solicitor Secretary Appointment of other staff Funds of the Authority Accounts and audit Annual report and other reports Miscellaneous provisions to Part One Engagement of consultants and experts Prohibition of unauthorised disclosure of confidential information Power to inspect business premises Budget and work programme Regulations PART TWO—BASIC NATIONAL SOCIAL SECURITY SCHEME Establishment of the Trust 30. Basic national social security scheme 31. Exemption from the basic national social security scheme ...
Words: 30749 - Pages: 123
