Ownership: Evolution and Regulation

Why Do Firms Become Widely Held? An Analysis of the Dynamics of Corporate Ownership

“…Table IV shows, that mergers are a less important contributor to the reduction of the insider ownership share than sales of shares by insiders. This result contrasts sharply with the conclusion of Franks, Mayer, and Rossi (2004) for the United Kingdom.…”

“…In a study of the U.K. stock market, Franks, Mayer, and Rossi (2004) find that increases in the number of shares due to mergers play a central role in ownership dilution in the United Kingdom. We find that the evolution of ownership in our sample is different: On average, sales of shares by insiders are as important in explaining the decrease in insider ownership as the issuance of new shares.…”

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

“…In particular, the financial community in the City of London has long been characteriszed by a 'clubby' and inward-looking culture, with a tight and complex web of social ties between and among individuals and financial firms (see Augar 2000;Kynaston 2001). As for firm-investor relations, a recent historical exploration by Franks et al (2004) has demonstrated the critical importance of 'trust' from the turn of the twentieth century onwards. Contrary to the implications of the La Porta et al thesis, trust functioned in lieu of formal investor protection and enabled dispersed ownership to develop in the first half of the twentieth century.…”

“…The answer in the conventional wisdom is the market for corporate control. Yet take-over activity is cyclical and episodic, and the evidence suggests that it is a poor instrument for correcting managerial failure (Franks et al 2004). The answer provided here is the co-ordination of institutional investors via various institutions and networks.…”

Information Systems Outsourcing

“…Regulatory processes may be conceptualised as including rule setting, the inspection of organizations' conformity to these rules, monitoring and sanctioning. Franks et al (2009) note that prior to the 1920s equity markets developed on the basis of informal trust relations rather than formalised systems of regulation. Consequently, regulative processes aim to influence future behaviour through coercive mechanisms which may be formal, such as financial penalties, and informal, such as shaming activities often through the press.…”