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In Chapter 1, we saw that corporate governance problems are often framed as responses to managerial agency costs (or sometimes minority shareholder agency costs), and the fact that remote shareholders may lack the wherewithal and financial incentives to control them. Investors may face collective action problems or lack the incentives, expertise, and/or resources to act. 1 But, although the academic model of a company as a nexus for a range of contractual arrangements is a helpful framework, remote shareholders lacking in incentives to control agency costs are not a problem in a typical private equity-backed company. The most striking feature of such a company is, of course, the dominant position of one professional shareholder (or a small consortium of shareholders), who is likely to have a significant influence over the company's strategy and operations. Although this is in marked contrast to the position in a widely held company, it might be thought similar to the structure of many other companies: concentrated shareholding structures are hardly unique to private equity. However, we know that the identity of a company's shareholders also matters, 2 and the characteristics and St

Publisher

Cambridge University Press

Published

2021

Language

EN