institutional investor

An organization that invests on a large scale in *securities, *bonds, and other assets. Institutional investors are often *pension funds or insurance companies and (owing to the size of their investments and the volume of transactions they can generate) they tend to enjoy significant clout in the corporate investment environment. In recent years institutional investors have altered the nature of *corporate governance by an increasing willingness to assert their power over the *boards of directors of corporations. This has reversed the trend of the dispersion of stockholder power following the end of World War II - as stockholding became more diffuse, it became increasingly difficult for investors to combine forces to challenge the directors of corporations. The large institutional investors have reversed this trend to a degree, with proactive involvement in the governance of the organizations in which they have invested. Major institutional investors in the United States include the *California Public Employees’ Retirement System (CalPERS) and the *Teachers Insurance and Annuity Association College Retirement Equities Fund (TIAA-CREF), both of which have addressed corporate governance policies in recent years.