We frequently will speak that stockholders, as residual claimants, are in the best position to monitor the firm. However, even given that, any individual stockholder generally does not have much incentive to bear the costs of monitoring. Suppose you knew that by monitoring you could improve operations at a company you owned stock in. Of course not. You are incuring all of the costs but only getting a fraction of the benefits.
Shareholders elect a board of directors to look out for shareholder interests.
There is much evidecne however that the board does not always do a sufficient job of monitoring. This list is available online. Additionally Calpers frequently urges shareholder to vote with them in proxy contests against the firm. Here is a list of those votes and their outcomes. When this happens a poorly performing firm will be taken over and the managers will generally be replaced.