Why don't individual investors in the firm have the same incentive to keep an eye on the management?

Answer 1

Individual investors often lack the resources and information to closely monitor management compared to institutional investors. Their relatively small ownership stakes may lead to a sense of powerlessness, as they might feel their influence is minimal in driving corporate governance. Additionally, individual investors may rely on the expertise of financial analysts and media, which can result in less direct engagement with management oversight. This can create a disconnect in accountability and oversight compared to larger, more organized institutional investors who have a vested interest in monitoring management closely.