As part of the trend towards Chip Multiprocessors (CMPs) for the next leap in computing performance, many architectures have explored sharing the last level of cache among different processors for better performance-cost ratio and improved resource allocation. Shared cache management is a crucial CMP design aspect for the performance of the system. This paper first presents a new classification of cache misses - CII: Compulsory, Inter-processor and Intra-processor misses - for CMPs with shared caches to provide a better understanding of the interactions between memory transactions of different processors at the level of shared cache in a CMP. We then propose a novel approach, called set pinning, for eliminating inter-processor misses and reducing intra-processor misses in a shared cache. Furthermore, we show that an adaptive set pinning scheme improves over the benefits obtained by the set pinning scheme by significantly reducing the number of off-chip accesses. Extensive analysis of these approaches with SPEComp 2001 benchmarks is performed using a full system simulator. Our experiments indicate that the set pinning scheme achieves an average improvement of 22.18% in the L2 miss rate while the adaptive set pinning scheme reduces the miss rates by an average of 47.94% as compared to the traditional shared cache scheme. They also improve the performance by 7.24% and 17.88% respectively.