Shareholders

Vince Cable has accused shareholders of banks for being negligent. He has suggested they need to get a stronger grip as the UK banking system is rife with incompetence and corruption. Cable is referring to the liars in Barclay's orchestrating rates (libor) – specifically LIBOR. Shareholders, while collectively owning a business, are not individually liable for financial misconduct of the board. Cable is either very naive or thinks every reading his analysis is gullible. He says the fine will be passed onto customers and shareholders. Hardly. The latter will just receive a lower dividend – they won’t have to pay back the dividends they were paid when the bank was profiteering from the ruse.

Do shareholders care about how a business is run when their only interest is the dividend? Profit is generated by a variety of good and bad means. Barclays has been revealed in the last few years to have generated profits by mis-selling insurance and now by manipulating LIBOR. Other companies off load employees to retain profitability while oil companies get up to all kinds to keep the profits flowing. Any headline in the business sections about companies bending the rules belies the fact that shareholders will have benefitted. There are shareholders in high profile multinationals that have bought shares so as to attend the AGMs so that they can deliver an attack on the activities of the company. They are few and between.

Shareholders only care about their investment and return. They will watch companies – such as Cadbury’s -get sold off to make a killing on the buyout. Their only issue with Barclay's right now is the share price.