ABSTRACT
This chapter focuses on the changing role of investors in firms - the providers of external capital. They may involve straightforward profit maximisation, or extend to much broader ethical or environmental factors, upon which the enterprise may have an impact. In addition, there has been a growing anxiety over fraud or illegal activity by corporations that has added to the debate over corporate governance. In 1945, the Finance Corporation for Industry was founded to provide capital in larger amounts to facilitate the rationalisation of key sectors of British industry. The chapter examines the role of investment institutions in corporate governance, principally banks, and more latterly venture capital investors in Britain. A report on corporate governance was unequivocal on the part played by the major banks in Britain. The venture capital model of investment seemed to promise a radical change in the relationship between investors and enterprises, bringing a range of direct and indirect controls into effect.
