Fair Shares: The Future of Shareholder Power and Responsibility

Fair Shares: The Future of Shareholder Power and Responsibility

Fair Shares: The Future of Shareholder Power and Responsibility

Fair Shares: The Future of Shareholder Power and Responsibility


This is a book about shareholders -- who they are, what they own, how their composition and character has changed, and with it their relationship with the companies they own. It is also a book about shareholder rights and responsibilities. In a clear and readable style the book explores the key current corporate governance issues -- company law and reporting, chief executive pay, regulatory and accountability requirements -- against the background of an ever-changing business environment: an environment in which private investors may have grown in number, but in which shareholders influence has dwindled as institutions have become the dominant shareholding group. Throughout the book the authors provide numerous examples and anecdotes illustrating the evolution of the joint stock company from the South Sea Company of the 18th century to the giants and cause celebres on the corporate stage in the 1980s and 1990s. Both authors are authoritative and informed commentators on issues of corporate governance with extensive management, policy and advocacy experience; their underlying concern is to show the importance of shareholder interest and involvement, which they strongly believe will remain in the best interests of the company and the wider society in the 21st century.


This is a book about the shareholders of companies listed on the stock market -- who they are, what they own, and why their role matters to us all. It argues that for shareholders, as with others in a democratic system, power confers responsibility, and sets out a programme of reform to ensure this. The costs, conflicts of interest, and inefficiencies of the current system make it rational for many shareholders to avoid the responsibilities of ownership. This is neither in their own long-term interest as investors, nor in that of others who depend upon the prosperity of these companies for investment returns, employment, the provision of goods and services, or even their contribution of tax to the public purse. Shareholder passivity may be individually rational, but is collectively to the detriment of UK PLC.

In considering the role of shareholders we trace the origins of the joint stock company and the different parts played by shareholders of various types in the UK system. Along the way we review the legal and regulatory framework and look at practical examples of shareholder efforts to make the system work. The reforms we propose address the antique legal and regulatory framework of the UK, and present practical ideas for updating our corporate governance system. In the debate on reform of the financial system internationally, the position of shareholders in one of the largest and oldest capital markets provides an instructive case study.

Since starting this book two years ago, much has been published on corporate governance. There have also been some dramatic changes in the role shareholders play. More needs to be done to make active ownership the rule, rather than the exception.

Despite the implicit importance of their role shareholders have too often played a bit part in corporate governance debates. They crop up in the academic text amidst the theory and new jargon of corporate governance: in discussions of 'principals' and 'agents', tensions with 'stakeholders', as players in the 'nexus of contracts'. Shareholders may appear in the somewhat bewildering charts that now seem to be a requirement in academic tracts on the subject, with two-way arrows and Venn diagrams describing their relationships with auditors, government, directors, management, and even . . .

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