Who runs companies? Managers or investors?

Relations between investors, Boards of Directors and senior managers are in the news again with the recent resignation of top executives at Shell. A new research project at the University's School of Management is examining these relationships and their effect on companies. Professor Roderick Martin and colleagues aim to discover what are and what should be the links between shareholders and the firms in which their investments are held.

After an extensive survey of existing literature, the project will analyse relationships between different types of investor (pension funds, venture capital firms and private shareholders) and different aspects of company performance such as expenditure on research and development. Research will involve case studies in the UK, Germany and the US to examine their varying patterns of investor management relations. The project will also look at issues such as shareholder activism, the role of the Board and the ways managers seek to control relations with investors.

Professor Martin said: "Some people argue shareholders in the US and the UK exercise too much influence on the companies they invest in, resulting in short termism, and others elsewhere have too little influence, failing to discipline poor management performance."

The Department of Trade and Industry is funding the £137,000 project by Professor Martin, Dr Tahir Nisar and Dr Peter Casson which will end in September 2004.