Does agency cost theory work in the real world? The various hypotheses drawn from agency cost theory are considered in light of the relevant empirical evidence. Agency cost theory appears to be able to explain almost anything, but it predicts nothing.

The ‘second version’ of the UK Stewardship Code came into effect at the start of 2020. This chapter assesses the chances of the second version being more successful than the first. It begins by examining the most plausible reasons for the failure of the first version, referring to the capacity and the incentives of institutional investors to discharge the engagement function which the first version cast upon them. It concludes that the incentives and capacities were weak. Turning to the second version, it concludes that it has not effectively addressed the causes of the first versionʼs weakness in relation to engagement. However, regarding ESG factors, especially climate change, there are reasons to expect a more positive impact from the second version, mainly because government policy has increased the reputational incentives for institutions to exercise stewardship in this area; these may also be supported by changes in investor preferences. Overall, the second version may turn out to operate along the same lines as other changes in society rather than as an isolated reform, as with the first version, provided the governmental policy and social changes that support it continue.

I argue that none of the current explanations of why shareholders should be given voting powers are persuasive. I then explain the exercise of informal power through the exertion of influence.

I argue that institutional shareholders should be required to act in good faith in the best interests of the company and to avoid unauthorised conflicts of interest. And I argue that they should be subject to the duty to disclose their voting policies and records.

This chapter summarises the key arguments, explains the rationales and importance of this book, and sets out the structure and outline.

This chapter summarises the key arguments, explains the rationales and importance of this book, and sets out the structure and outline.

I argue that none of the current explanations of why shareholders should be given voting powers are persuasive. I then explain the exercise of informal power through the exertion of influence.

I argue that none of the current explanations of why shareholders should be given voting powers are persuasive. I then explain the exercise of informal power through the exertion of influence.