Spending Less Time
with the Family: The Decline of Family Ownership in the UK
of London Corporation Professor of Finance, London Business School
Moores Professor of Management Studies, Saïd Business School, University
ownership was rapidly diluted in the twentieth century in Britain.
Issuance of equity in the process of acquisitions was the main cause.
In the first half of the century, it occurred in the absence of minority
investor protection and relied on directors of target firms protecting the
interests of shareholders. Families were able to retain control by
occupying a disproportionate number of seats on the boards of firms.
However, in the absence of large stakes, the rise of hostile takeovers and
institutional shareholders made it increasingly difficult for families to
maintain control without challenge. Potential targets attempted to
protect themselves through dual class shares and strategic share blocks
but these were dismantled in response to opposition by institutional
shareholders and the London Stock Exchange. The result was a
regulated market in corporate control and a capital market that looked
very different from its European counterparts. Thus, while
acquisitions facilitated the growth of family controlled firms in the
first half of the century, they also diluted their ownership and
ultimately their control in the second half.
Key words: Family ownership, control,
JEL classification: G32
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