Final answer:
Direct shareholder intervention is more likely to influence management if pension and mutual funds take large positions in a company's stock, due to their greater resources and influence as institutional investors.
Step-by-step explanation:
If several pension and mutual funds were to take large positions in Great Fortunes Baking Company's stock, direct shareholder intervention would be more likely to motivate the firm's management.
Pension and mutual funds, as institutional investors, tend to have greater resources and more clout compared to individual investors. They are also more likely to engage in shareholder activism, influencing company policy and the management team's decisions.
When a public company sells stock, it invites financial investors to own a piece of the company, and the shareholders elect a board of directors to oversee management.
Larger shareholders with more stock have proportionately more votes. Should institutions hold significant shares, their voting power can strongly impact governance and even lead to changes in the company's operations if they believe it could improve shareholder value.