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What is ownership dispersion?

Ownership dispersion

It's where no single investor owns enough stock to control a company. With dispersed ownership, an entity has at least several owners/shareholders, and the running of the entity is delegated to the management team and a board of directors.

Where have you heard about ownership dispersion?

Dispersed ownership is often described by commentators as the 'Anglo-Saxon model' of corporate governance because it's chiefly prevalent in the United States and the UK. Elsewhere, concentrated ownership tends to predominate, often with a single family owning and managing the company.

What you need to know about ownership dispersion.

Ownership models can have a big impact on companies' performance, and it's been argued for example that higher ownership dispersion improves market liquidity. On the other hand, a higher level of ownership concentration - with institutional investors such as pension funds playing a leading role - can often provide more effective monitoring of a company. Owners with significant amounts of shares can take aggressive actions over controversial corporate decisions, while small investors may have less incentive and ability to intervene over a firm's strategy.

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