Behavioural Biases of Japanese Institutional Investors: fund management and corporate governance

This study examines the behavioural biases of Japanese institutional investors and discusses implications for their role in corporate governance, based on the findings of a questionnaire survey of fund managers carried out in 2003. Statistical analysis of the survey results reveals a short‐term bias in fund managers’ investment time horizons, herding and self‐marketing to improve the appearance of portfolio performance under the pressure either of customers or of institutional restraints. We conclude that institutional investors’ behaviour contradicts their role as shareholders.