ABSTRACT
As the above figure suggests, most UK market capitalization is concentrated in the hands of institutions (including both UK institutions and overseas institutions). Despite significant institutional shareholding, due to investment restrictions and risk-diverse reasons, as we will see in Chapter 4, shareholdings in individual companies are relatively small: the average of the largest shareholding owned by institutions amounts to a mere 5 per cent. 2 Hence, even though share ownership is not as dispersed as the USA, Britain still has an ‘outsider/arm’s-length’ system by international standards, especially compared with China. The most pressing concern for shareholders in UK listed companies is how to hold self-serving directors accountable to them as a whole. The director–shareholder agency problem, is therefore becoming one of most important issues that the UK corporate regulatory framework aims to address.
