Research Handbook on Shareholder Power
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Research Handbook on Shareholder Power

Edited by Jennifer G. Hill and Randall S. Thomas

Much of the history of corporate law has concerned itself not with shareholder power, but rather with its absence. Yet, as this Handbook shows, there have been major shifts in capital market structure that require a reassessment of the role and power of shareholders. This book provides a contemporary analysis of shareholder power and considers the regulatory consequences of changing ownership patterns around the world. Leading international scholars in corporate law, governance and financial economics address these central issues from a range of different perspectives including historical, contemporary, legal, economic, political and comparative.
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Chapter 17: Shareholders in the United Kingdom

Paul Davies


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.

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