Ownership Dispersion
Ownership dispersion refers to the distribution of a company's ownership among a large number of shareholders, with no single shareholder or group having a controlling interest. Companies with dispersed ownership typically have more decentralized decision-making processes, as no single entity has enough shares to influence corporate governance significantly. Dispersed ownership can reduce the risk of conflicts of interest but may lead to challenges in aligning shareholders' interests.
Example
A publicly traded company has ownership dispersed among thousands of shareholders, each holding a small percentage of shares, making it difficult for any single shareholder to exert control.
Key points
• Refers to the distribution of ownership among many shareholders, with no controlling interest.
• Leads to more decentralized decision-making and corporate governance.
• Can reduce conflicts of interest but may pose challenges in aligning shareholder goals.
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