Shareholders are growing increasingly active in the United States and elsewhere because they believe that better corporate governance will bring them higher rewards. Yet so complex is the relationship between shareholder activism and higher returns that repeated attempts by academics to show an irrefutable link between the two have failed.

With this in mind, McKinsey conducted three separate surveys to discover how shareholders perceive and, more important, value corporate governance in developed and emerging markets. Undertaken in cooperation with the World Bank, Professor Sangyong Park of Yonsei University, and Institutional Investor’s regional institutes, the surveys gathered responses from more than 200 institutional investors, which altogether manage about $3.25 trillion in assets (Exhibit 1).

The first survey, which examined attitudes toward investments in Asia, was conducted in September and October 1999 with Institutional Investor’s Asia Pacific Institute. The 84 respondents, 82 percent of which have invested in Asia, hold an estimated $1.05 trillion-plus in assets under management. The second survey, which looked at Europe and the United States, was conducted in October and November 1999 with Institutional Investor’s US and European institutes. The 42 respondents, 95 percent of which have invested in the United States and Europe, hold an estimated...