“How Far Does the United Kingdom have a Market-based System of Corporate Governance? A Review and Evaluation of Recent Developments in the United Kingdom”

This chapter questions the extent to which UK corporate governance fi ts the stereotypical market model. It is argued that the UK system displays features that sit uneasily with an emphasis on markets as the primary form of governance. A web of social relationships between investors and managers complements and to some extent substitutes for marketbased discipline. Thus the United Kingdom possesses characteristics of relationship or network systems as well as those of market systems. Furthermore, it is argued that, contrary to the usual inferences from an apparently dispersed structure of ownership in the United Kingdom, investors are able to exert strong control of managers. This arises from a similarity of interests between investors, and involves some explicit forms of investor co-ordination. The chapter concludes with some observations on the utility of the two-systems model.