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Corporate Governance and the Plight of Minority Shareholders in the United States before the Great Depression

Lamoreaux, Naomi and Rosenthal, Jean-Laurent (2006) Corporate Governance and the Plight of Minority Shareholders in the United States before the Great Depression. In: Corruption and Reform: Lessons from America's History. National Bureau of Economic Research conference report. University of Chicago Press , Chicago, IL, pp. 125-152. ISBN 0226299570.

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This chapter discusses the rise of corporations in the U.S. during the late nineteenth century and how their emergence was accompanied by decreased protection of minority shareholder rights. It compares the interest of investors in partnerships and corporations and suggests that the willingness of investors to participate in corporations, as opposed to partnerships, was affected by the extent to which their returns could be expropriated by controlling shareholders. The implication of this model is that organizational problems would only dissuade investors from putting their funds in firms whose expected returns were low.

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Additional Information:© 2006 National Bureau of Economic Research. The authors have benefited from the advice of Robert Allen, Steven A. Bank, Ruth Bloch, Hongbin Cai, Judith Chevalier, Paul David, Lance Davis, Harold Demsetz, Stanley Engerman, Edward Glaeser, Claudia Goldin, Peter Gourevitch, Timothy Guinnane, Henry Hansmann, Ron Harris, Susan Helper, Philip Hoffman, Hugo Hopenhayn, Gonzalo Islas-Rojas, Gregory Mark, Christopher McKenna, Joel Mokyr, William Novak, Gilles Postel-Vinay, James Rebitzer, Larry E. Ribstein, Arthur Rolston, Roberta Romano, Kenneth Sokoloff, John Wallis, and Matt Wiswall, as well as from the comments of participants in seminars at the Yale Law School, Oxford University, Case Western Reserve University, UCLA, at a meeting of the Greater Chicago Economic History Group, at the conference on the Political Economy of Financial Markets held at Princeton University, and the NBER conference on Corruption and Reform. We are also grateful for the assistance of Eric Torres in searching newspapers and other periodical sources.
Series Name:National Bureau of Economic Research conference report
Record Number:CaltechAUTHORS:20160317-095907575
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:65418
Deposited By: Susan Vite
Deposited On:18 Mar 2016 21:43
Last Modified:03 Oct 2019 09:47

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