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The Anachronism of the Voice-Exit Paradigm: institutional investors and corporate governance in the UK


  • Photis Lysandrou
  • Denitsa Stoyanova

    (London Metropolitan University)


The voice-exit paradigm continues to serve as the framework for debating key issues in UK corporate governance. That paradigm, however, has become an anachronism with the recent changes in the scale and organisational structure of the UK asset management industry. As a result of these changes the "holding" and the "selling" of shares tend to be mutually inclusive rather than exclusive acts, and the capital market's corporate governance role is now exercised more through the gravitational pull of equity trading than through the medium of hostile takeovers. If the new realities are to be correctly appraised and factored into the corporate governance codes of conduct, the voice-exit paradigm has to be abandoned in favour of an alternative framework that is attuned to these realities. The aim of this paper is to help develop such a framework. Copyright (c) 2007 The Authors; Journal compilation (c) 2007 Blackwell Publishing Ltd.

Suggested Citation

  • Photis Lysandrou & Denitsa Stoyanova, 2007. "The Anachronism of the Voice-Exit Paradigm: institutional investors and corporate governance in the UK," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(6), pages 1070-1078, November.
  • Handle: RePEc:bla:corgov:v:15:y:2007:i:6:p:1070-1078

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    References listed on IDEAS

    1. Andrew M. Clearfield, 2005. ""With Friends Like These, Who Needs Enemies?" The Structure of the Investment Industry and Its Reluctance to Exercise Governance Oversight," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(2), pages 114-121, March.
    2. Bhide, Amar, 1993. "The hidden costs of stock market liquidity," Journal of Financial Economics, Elsevier, vol. 34(1), pages 31-51, August.
    3. C. B. Ingley & N. T. van der Walt, 2004. "Corporate Governance, Institutional Investors and Conflicts of Interest," Corporate Governance: An International Review, Wiley Blackwell, vol. 12(4), pages 534-551, October.
    4. John Grahl & Photis Lysandrou, 2006. "Capital market trading volume: an overview and some preliminary conclusions," Cambridge Journal of Economics, Oxford University Press, vol. 30(6), pages 955-979, November.
    5. Chris Mallin & Andy Mullineux & Clas Wihlborg, 2005. "The Financial Sector and Corporate Governance: the UK case," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(4), pages 532-541, July.
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    Cited by:

    1. Photis Lysandrou, 2014. "Post-Keynesian stock-flow models after the subprime crisis: the need for micro-foundations," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 11(1), pages 113-126, April.
    2. Compston Hugh, 2013. "The network of global corporate control: implications for public policy," Business and Politics, De Gruyter, vol. 15(3), pages 357-379, October.

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