Hail Britannia?: Institutional Investor Behavior Under Limited Regulation

91 Pages Posted: 17 Jul 2001  

John C. Coffee Jr.

Columbia Law School; European Corporate Governance Institute (ECGI); American Academy of Arts & Sciences

Bernard S. Black

Northwestern University - Pritzker School of Law; Northwestern University - Kellogg School of Management; European Corporate Governance Institute (ECGI)

Abstract

We explore the role that legal restrictions and path dependence play in determining a country's corporate governance and finance through a case study of institutional investors in the United Kingdom. The U.K. has the same array of institutional investors as the U.S., much looser regulation of these investors, and a strong securities market (much like the U.S.). On the whole, British institutional investors are moderately more active than their U.S. counterparts. They intervene in companies to change management a few times per year. But they are still often passive, absent a crisis, and often prefer to sell their shares rather than press for a change in management or company strategy. Non-legal considerations, including fear that their activism may benefit their institutional rivals, inhibit their desire to participate in corporate governance. If Japan and Germany show how American corporate governance might have developed differently under different legal rules, Britain shows how American corporate governance might look rather similar under more limited regulation.

Suggested Citation

Coffee, John C. and Black, Bernard S., Hail Britannia?: Institutional Investor Behavior Under Limited Regulation. As published in Michigan Law Review, Vol. 92, Pp. 1997-2087 (1994). Available at SSRN: https://ssrn.com/abstract=276991 or http://dx.doi.org/10.2139/ssrn.276991

John C. Coffee Jr.

Columbia Law School ( email )

435 West 116th Street
New York, NY 10025
United States
212-854-2833 (Phone)
212-854-7946 (Fax)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

American Academy of Arts & Sciences

136 Irving Street
Cambridge, MA 02138
United States

Bernard S. Black (Contact Author)

Northwestern University - Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States
312-503-2784 (Phone)

Northwestern University - Kellogg School of Management

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-5049 (Phone)

European Corporate Governance Institute (ECGI)

Brussels
Belgium

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