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The Growth of Institutional Shareholdings 1966–1980. Institutional investors, particularly insurance companies and pension funds, are consistent purchasers of company and overseas securities. Of particular interest is the ownership of U.K. quoted equities, rather than ownership of debentures, preference shares and overseas securities. Ownership of the ordinary share capital is of particular interest because the votes attached to equities give the holders legal powers to influence management through general meetings. The impact of the growth of institutional shareholdings on corporate management and the London Stock Exchange will be discussed in later articles. This article demonstrates the growth of institutional ownership of British industry, comments on the concentration of institutional holdings in large companies, illustrates the avoidance of new issues by financial institutions, and comments on the future pattern of U.K. share ownership.

A comprehensive review of UK share ownership during the 1966–1980 period, with particular reference to the work of Revell and Moyle at the Department of Applied Economics, Cambridge.

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.

Implications of Modern Portfolio Theory for Investment Management. The general principles of portfolio management are explained by Dobbins and Witt, Sprecher, Francis, Van Home and Fama and Miller. Portfolio theory is concerned with the choice of efficient combinations of assets and its foundation lies in the work of Markowitz. It is assumed that investors base their decisions simply on the expected return and variance of return of assets, where the variance is taken to measure risk. For any given level of risk, the optimal portfolio is that which offers the maximum expected return; and for any given expected return, the investor prefers minimum risk. The set of efficient portfolios therefore comprises those combinations of assets which promise the highest expected return corresponding to each level of risk.

Most research on share repurchases is based on the USA. Recently, the rate of share repurchases by UK companies has increased significantly; such a marked increase in activity would suggest a change in strategic factors generating this activity. This paper aims to focus on UK practice, the motivations of UK companies to repurchase shares and compares similar research in the USA.

Strategic motives for share repurchase activity are examined by a questionnaire survey of the finance directors of the top UK 200 companies. The outcome is compared to equivalent US research. The theoretical underpinning of the survey is based on six prominent hypotheses from the academic literature.

The results indicate that a primary motive of share repurchases in the UK is to achieve an optimal capital structure, and that the requirement to cancel shares is fundamental to buy‐back decisions in the UK.

USA/UK comparison has limitations, nevertheless it highlights differences and possible reasons. A follow‐up study in the current market conditions may give further clarity. Also, a survey of smaller quoted companies may further enhance our understanding of the motives.

The likelihood is of this trend being maintained, especially in view of legal development.

Individual respondents indicated that finance directors have a genuine interest in this topic and that further research would be beneficial in both practical and academic use. Share buy‐backs can be an effective part of the overall strategy of a company, however the effects of a repurchase are ultimately short term.

Analyses the extent of Cadbury compliance and its impact on corporate performance in the UK. Comparing 1992 and 1995, we find that UK public companies have, in general, complied with the Cadbury Committee’s Code of Best Practice and have adopted the recommended governance structures. However, compliance is more common among larger firms. Thus we find that duality is less common, firms tend to have more than three non‐executive directors and that there has been an almost universal adoption of board subcommittees such as the remuneration and audit committees. However, little evidence is found to suggest either that the board characteristics recommended by Cadbury lead to improved performance or that moving towards them improves performance. The only governance mechanism which does positively affect performance is the presence of remuneration and audit committees.

This paper aims to contrast the financial costs and benefits of leasing, rather than owning real estate assets.

The main argument is that leasing is beneficial. The hypothesis is tested using a total of 2,343 UK‐quoted companies over the period 1989‐2002, resulting in 14,101 pooled time‐series and cross‐sectional observations.

The results indicate that large and high‐growth companies are likely to lease than to own these assets. Companies that lease are more efficient in using their real estate and that these benefits are compounded in share price valuation as leasing propensity is strongly leasing propensity is not linear, but an inverse U‐shaped, suggesting that the market is also considering the costs of not owning real estate.

The study relied on historical accounting values of real estate rather than market values which are not available in machine readable format, and there was no data on the type of real estate and its location.

The results of the paper provide strong and consistent evidence that the market values the costs and benefits of leasing.

The theory of financial management suggests that the objective of the firm is to maximise shareholder wealth. The valuation of the firm is its net operational cash flows discounted at the stock market's average required rate of return. A firm's risk class determines the rate of return required by investors. The operating objective for management is to maximise the difference between operational receipts and operational expenditures plus investment, whilst minimising risk. However, the separation of ownership by shareholders and control by professional managers enables directors to pursue objectives other than maximisation of shareholder wealth. Directors might attempt to maximise sales revenue, maximise growth in assets or employees, maximise value added or even their own well‐being. They may choose to pursue multiple objectives as described in corporate planning systems. Multiple objectives may include social goals as well as goals relating to marketing, production, personnel and finance. It has been suggested that levels of directors' remuneration might be associated with the extent to which directors achieve corporate objectives. Several research projects have tried to identify the major determinants of directors' remuneration. Some of these are summarised below.