Strong Managers and Passive Institutional Investors in the UK

To the opposite of most Continental European countries, the UK has had stringent rules on ownership disclosure for more than 50 years. However, despite this, we show that the corporate governance system in the UK still needs be improved. The way ownership of listed companies is concentrated in the hands of corporate directors and of passive institutional investors creates its own type of agency problems, i.e. high managerial discretion. Furthermore, there is mounting evidence that hostile takeovers do not necessarily discipline badly performing managers