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Making a splash in the stock market: Does listing status affect stakeholder orientation?

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Maybe that is why the media are very keen to talk about water, specifically about water companies and their dividends. A quick Google News search [ii] revealed 50,700 results for “water companies dividends UK”, and just to show that I take the business of blogging seriously, when I exchanged “retailers” for “water companies” the tally dropped to 28,600 results. News stories on dividends are presented alongside examples of unhappy water consumers (or would-be consumers depending on how you look at it). So we hear about dividend payments to shareholders in Severn Trent alongside the news that farmers in Derbyshire are digging their own wells, and about payments to United Utility shareholders being made days before the company brings in a hosepipe ban. Meanwhile those of us whose water is supplied by Thames Water worry about leaks, but not about dividends because last year the company announced that would not make any dividend payments until 2020.

Why the difference? Well, last year Thames Water received a record fine for sewage leaks back in 2013 and 14, so that is part of the story, but I wonder if the company’s private status is relevant here? Both Unitied Utilities and Severn Trent are listed on the London Stock Exchange, Thames Water is owned by Kemble Private Water Holdings, a private holding company. Maybe it is easier to adopt a stakeholder focus, in this case fixing your leaks, as a private business than it is when the stock market is keeping an eye on you. You may still lose shareholders, for example the USS held nearly 11% of the company’s equity on 12th January this year but do not feature in the list of owners now, but you don’t have to worry about a market reaction.

I could say more, but I just heard a rumble of thunder, so I must go and tell someone …

[i] Samuel Johnson (1758) Discourses on the weather

[ii] Friday 27th July Find out more about Dr Carol Padgett’s research.

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Published 1 August 2018

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