Longer-term contracts between asset managers and their pension fund clients would lead to a significant improvement in corporate governance, according to a survey by Hewitt Bacon & Woodrow, the investment consultancy.

Three quarters of UK fund managers surveyed said longer duration mandates would allow institutional shareholders more time to engage in dialogue with the companies they invest in. Removing short-term performance pressures would enable investors to engage with companies on management and strategy issues, rather than forcing them simply to sell company stock if they are unhappy with performance.