Which type of shareholders are usually regarded as having more influence over corporate governance?

Institutional investors are typically regarded as having more influence over corporate governance due to several key factors. They usually hold significant amounts of shares in a company, making their voting power more substantial when it comes to influencing decisions at shareholder meetings. Given their large investments, institutional investors often engage in active stewardship, which includes voting on corporate matters, advocating for changes in management or strategy, and holding companies accountable for their performance.

Furthermore, institutional investors often have the resources to conduct in-depth research and analysis of companies’ operations, ethics, and performance. This capability allows them to make informed decisions and exert pressure on corporate boards to align with best practices in governance and sustainability. Unlike retail investors—who typically hold smaller amounts of stock and have less direct influence—institutional investors can also collaborate and form coalitions to amplify their collective voice and effect meaningful change.

Preferred shareholders, while they do have certain rights within a company often related to dividends and liquidation preferences, possess limited influence over governance issues since they usually do not have voting rights. Bondholders, on the other hand, are creditors rather than equity holders; their influence is primarily related to financial health rather than direct governance, as they focus on the company's ability to meet debt obligations rather than shareholder interests.