Under the US federal act, in order to rule out the Cartel, the federal act
indicates that no one can purchase and held stock no more than 5% of the stock,
therefore, this act has strengthen the diversification of shareholder which result of the
separation of ownership and control. However, it does means that this kind of act will
always be the case that could eliminate the cartel as it happens in Japan.
In the United Kingdom and US, market mechanism plays an important role to
monitor the efficiency of the firm. The fully develop capital market has given a firm
the threat of take-over and the security regulations such as disclosure requirements,
auditing procedures does play an important role to discipline the firm. Capital market
in both the UK and the US are exceptionally large and efficiency enough to attract
capital. The importance and implication of the US and UK financial market is very
important to understand because the public held corporate in UK and US usually raise
their capital through financial market. The public markets also have advantages for
corporation because the cost of selling equity and debt to the public is generally lower
than private sates. The cost is generally lower because the trading markets provide
investors with liquidity.