Direct and Ultimate Ownership Structures in the UK: an intertemporal perspective over the last decade

In this paper we analyse the evolution of the direct and ultimate ownership structure of a large sample of UK non-financial listed firms over the last decade. Our data show that while "outsider" ownership is relatively stable over time, managerial ownership shows a sharp decreasing trend and it is significantly lower in the presence of a large outside controller. Nonetheless, while average shareholding by executives confirms the decreasing trend, the opposite holds for non-executive directors. In addition, while average board size is rather constant in time, the proportion of non-executives is steadily increasing in time. As far as ultimate ownership is concerned, our data show that the existence of complex ownership structures in the UK is far from being negligible. We document that more than 10 per cent of the firms are owned via a complex structure and the degree of divergence between cash flow and control rights for these firms is around 11 per cent at the 10 per cent cut-off. Our data also suggest that the presence of complex structures is decreasing in time at any cut-off level. In addition, we report a decreasing trend over time of "widely held" firms. Finally, we show preliminary evidence of a negative impact of the divergence between cash flow and control rights on firm value. Copyright Blackwell Publishing Ltd 2005.