Financial Institutions and The Stock Market

Abstract

Institutional investors—insurance companies, pension funds, investment trust companies and unit trusts—have increased significantly and persistently their ownership of British industry. At the end of 1977 they owned approximately 46 per cent of the ordinary shares in UK quoted companies and in recent years have accounted for over 50 per cent of stock market turnover in UK equities. Their presence in the stock market has been associated with their ability to influence share prices, decide the outcome of takeover battles, and trade outside the London Stock Exchange. As major shareholders in public companies they have been encouraged to participate in managerial decision‐making. For corporate management, the growth of institutional shareholdings provides opportunities to utilise their voting power in takeover situations, encourage their support for the market value of the company, and use financial institutions as sources of new capital.

Citation

Briston, R.J. and Dobbins, R. (1979), "Financial Institutions and The Stock Market", Managerial Finance, Vol. 5 No. 1, pp. 87-107. https://doi.org/10.1108/eb013440