> If everyone owns fractions of every company, what are the incentives for good governance at any one company? If it goes bankrupt, it's only a tiny fraction of everyone's portfolio.

And all the other companies in the same market segment will then gain a share of the customers and income of the now bankrupt company, so there is little to no effect overall.

Of course this is exactly why some people choose to invest in markets instead of individual companies, because that has less risk.

Of course this is also why other people choose to invest in companies they assessed are way ahead of their market, because that is more profitable.