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Davies, Paul --- "Shareholders in the United Kingdom" [2015] ELECD 836; in Hill, G. Jennifer; Thomas, S. Randall (eds), "Research Handbook on Shareholder Power" (Edward Elgar Publishing, 2015) 355

Book Title: Research Handbook on Shareholder Power

Editor(s): Hill, G. Jennifer; Thomas, S. Randall

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781782546849

Section: Chapter 17

Section Title: Shareholders in the United Kingdom

Author(s): Davies, Paul

Number of pages: 28

Abstract/Description:

The influence exercised by shareholders over the running of the companies in which they are invested varies from jurisdiction to jurisdiction. An extended analysis of that influence in a single jurisdiction – the United Kingdom in this case – therefore requires some justification. From a comparative perspective, it is suggested that there are a number of reasons why such an analysis may be of interest to scholars whose primary concern is not with the UK. Like the United States, the UK displays a pattern of dispersed share ownership in publicly traded companies, in contrast to the dominance of controlling shareholders in many other advanced economies. In a dispersed shareholding environment, the agency costs of the shareholders as a class are potentially high. They have been extensively analyzed in the literature (Armour, Hansmann and Kraakman 2009). However, it would be wrong to equate the UK pattern of shareholding with a fully atomized dispersal in which, for example, the largest shareholder typically holds no more than 1 percent of the voting rights. A distinct feature of the UK system, at least since the 1960s, has been the ability of (semi-) dispersed shareholders (primarily pension funds and insurance companies) to achieve a sufficient level of coordinated action to be able to influence the environment in which their investee companies operate.