Agency problems should be less prevalent in countries such as Germany and Japan that have a 

much higher level institutional ownership and therefore much fewer shareholders. However, with large group shareholders such as mutual funds and pension plans becoming more prominent in the U.S. markets, agency problems should be reduced. Large groups such as these are able to exert more pressure and control over corporation’s management as they tend to be very large shareholders. They can do this through proxy if necessary . They are better able to exert their ownership then the average investor.

relatively small percentage of individual ownership. Fewer individual owners should reduce the  number  of  diverse  opinions  concerning  corporate  goals.  The  high  percentage  of institutional  ownership  might  lead  to  a  higher  degree  of  agreement  between  owners  and managers  on  decisions  concerning  risky  projects.  In  addition,  institutions  may  be  able  to implement  more  effective  monitoring  mechanisms  than  can  individual  owners,  given  an institution’ deeper resources and experiences with their own management. The increase in institutional ownership of stock in the United States and the growing activism of these large shareholder groups may lead to a reduction in agency problems for U.S. corporations and a more efficient market for corporate control.