Theory and Practice of Corporate Governance by Stephen Bloomfield

Author:Stephen Bloomfield [Bloomfield, Stephen]
Language: eng
Format: azw3
Publisher: Cambridge University Press
Published: 2013-02-28T05:00:00+00:00

The second issue – treating shareholders equally

The record of the stock market mobilising cash to feed growing businesses is apparently not good then. Could this be linked to the issues of corporate governance shortcomings? Once a company’s shares have been listed how are shareholders then treated in terms of the corporate governance issues raised by traditionalist theories of governance?

In the market and economic environment of the 1950s, 1960s and 1970s, somnolent institutional shareholders deferred to industrial managers and then when changes were introduced of necessity, to prevent gross abuse, the sudden (supposed) increase in regulatory cost was criticised by industrial managers as being burdensome. Industry wanted the City’s (public’s) money but didn’t want the (protective) costs associated with it.15

At the outset, as noted above, the large investment institutions were largely inert – more concerned with investing than enforcing standards of governance or goading industrial managers to produce better returns for the companies’ nominal owners. (There were of course occasional exceptions, e.g. the removal of Lord (and Lady) Docker from BSA by the other directors of the company with the assistance of the Prudential Assurance as noted in Chapter 1, and the intervention of investment companies during the ‘Aluminium Wars’.)

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