Amanda Gregg (Middlebury College), Steven Nafziger (Williams College), Amy Dayton (Harvard University)

This paper investigates how the rules that corporations wrote for themselves related to corporate finance and performance in an environment characterized by poor investor protections, Imperial Russia. We compose a new database of detailed governance provisions from Imperial Russian corporate charters, which we connect to a comprehensive panel database of corporate balance sheets from 1900 to 1915. We document how differences in votes per share and other shareholder rights provisions related to how corporations chose to finance operations using debt vs. equity and whether these governance provisions related systematically to corporate performance on the balance sheet and in terms of the market-to-book ratio. This investigation reveals the tradeoffs weighed by Imperial Russian corporations and demonstrates the surprising flexibility that Russian corporations enjoyed, conditional on obtaining a corporate charter.

Cihan Artunç (Middlebury College)

The literature views that corporate governance structures should promote their shareholders’ interests, and that Anglo-American legal rules achieve this more effectively than regimes derived from French civil law. However, the legal regime under which a business incorporates cannot be disentangled from other sources that can influence firm outcomes. Furthermore, few studies explore the details of rules corporations put in their articles of association. This paper takes a first step in disentangling these effects by assembling a new dataset of corporations in Egypt between 1887 and 1913. Egypt had an unusual system of incorporation. The main legal system was transplanted from France but entrepreneurs could incorporate under any European law. This legal flexibility led to considerable variation in governance structures and board makeup. The results suggest that companies incorporated under British law were less shareholder-friendly than those under French law – regardless of the nationality of founders, industry, or size – and were less successful in surviving the financial crisis of 1907.

Madeleine Zelin (Columbia University)

This paper examines one aspect of the introduction of Western business law to China in the first quarter of the twentieth century---the thirty-year debate over the liability of partners for external debt of the firm. The context for this debate was the continuous process of civil law codification during the last decade of the Qing dynasty [1644-1911] during which time the largely unregulated realm of private transactions in China was reimagined as governed by commercial and civil statute guided by Western examples. That the first and most eagerly anticipated legislation, company law, did not result in the widespread adoption of the corporate model has been attributed to many factors, including the weakness of Chinese capital markets, Chinese legal insufficiency, and the capricious traditionalism of Chinese businessmen.  By flipping our focus from the corporation to the partnership and the long-standing practice of what I have called apportioned liability, this paper argues for the seriousness with which the creation of a new legal regime was taken as the vehicle for Chinese economic development.   The debate reconstructed here pitted continental and common law principles of unlimited liability against protestations of long-standing Chinese practices.  It was performed within new state and popular institutions as well as mass and specialist print media.  The latter, in particular, gave expression to contending views by publishing verbatim new modes of public communication with state agencies, the interpretations and decisions of the new Supreme Court, and a wide range of scholarly, journalistic and lay opinions regarding the changing legal landscape. The intensity of the debate over the issue of partnership liability relied on deeply embedded understandings of how business should be done, the place of custom in the ordering of private transactions, the sources of trust, and the appropriate role of the state in regulating business activity and intervening in dispute resolution.  An examination of Chinese partnership liability during a period of intense engagement with Western legal norms thus provides a useful point of entry for understanding the embeddedness and historical contingency of legal practices.  It underscores the inadequacy of legal transplantation as a means to understand the complex processes by which law enters new terrain. And it allows us to trace the processes by which Western law, itself by no means uniform, participated in the realignment of legal authority in the highly sophisticated, albeit non-Western context that was early twentieth century China.

Eric Hilt (Wellesley College)

This paper analyses the ownership of public companies in the late nineteenth and early twentieth centuries.  Beginning in the 1880s, the number of publicly traded corporations in the United States began to expand significantly, first with the addition of new railroads, and later with industrial corporations. As securities markets expanded, the ownership of the largest public companies became much more dispersed. At the same time, the composition of corporate boards changed significantly.  Between 1880 and 1910, there was a substantial increase in the number of individuals holding five or more directorships, who were typically either financiers, prominent lawyers, or capitalists.  As corporate ownership became more dispersed, the control of corporate boards became more concentrated.  

Michael Aldous (Queen’s University, Belfast), Philip Fliers (Queen’s University, Belfast), John Turner (Queen’s University, Belfast)

The business and economic history literature has traditionally made the following claims: (1) British management in the Edwardian era was amateur largely because the ownership of corporations was concentrated in the hands of families, and (2) this managerial failure contributed to the long-term decline of British business as well as the British economy. In this paper, we revisit these claims by looking at the ownership and control of the largest 1,800 British companies in 1911. We examine director ownership to see whether concentrated family ownership was common. We find that it was uncommon and that most large companies had a separation of ownership and control. This raises the question as to who ultimately controlled Edwardian companies. To address this question, we analyse the backgrounds and characteristics of this cadre of individuals to understand how they got to the top. Were they in these powerful positions because of their social, family and corporate connections or were they professional managers? We then explore whether ownership and control were associated with corporate performance and longevity.