Critically evaluate the role of institutional ownership in the occurrence of corporate scandals.

An increasingly important external control mechanism affecting corporate governance worldwide has emerged with the rise of the influence of institutional investors as equity owners (Huyghebaert & Wang, 2012). However, the recent empirical findings are mixed. On one hand, Pucheta‐Martínez & García‐Meca (2014) find that institutional directors are effective as monitors of management, which leads to higher corporate financial reporting quality. On the other hand, Burns et al. (2010) find that different types of institutional investors have different impact on the occurrence of financial misreporting.

Required: Critically evaluate the role of institutional ownership in the occurrence of corporate scandals. You should at least make reference to Pucheta‐Martinez & Garcia‐Meca (2014) paper.