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Management Studies
MGST 391
Ahmad Ali Sohrabi

Chapter 12 : Corporate Governance Corporate Governance is the system by which companies are directed and controlled. Patterns of share ownership: (Who are shareholders of company) Types of institutional investors:  Pension funds  Insurance companies  Investment trusts  Unit trust  Venture capital organizations Range of shareholders: Advantages:  Greater activity in firm’s shares  No individual controlling whole firm  Less effect on share price if anyone sells  No threat of takeover Disadvantages:  Administrative cost is high.  Various objectives in holding shares. Why knowing shareholders:  To get support by exchanging views.  Knowledge of shareholders’ preference about Dividend Policy.  To explain recent share price movement.  Shareholders’ attitude to risk and gearing.  Key shareholders to consult in the event of takeover bid. Agency Theory: “Although individual members of the business te
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