Ownership: Evolution and Regulation
Julian R. Franks
London Business School; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)
University of Oxford - Said Business School; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)
Krannert School of Management; Centre for Economic Policy Research (CEPR)
November 14, 2006
ECGI - Finance Working Paper No. 09/2003
EFA 2004 Maastricht Meetings Paper No. 3205
AFA 2003 Washington, DC Meetings
Review of Financial Studies, Forthcoming
This paper is the first study of long-run evolution of investor protection, equity financing and corporate ownership in the U.K. over the 20th century. Formal investor protection only emerged in the second half of the century. We assess its influence on ownership by comparing cross-sections of firms at different times in the century and the evolution of firms incorporating at different stages of the century. Investor protection had little impact on dispersion of ownership: even in the absence of investor protection, there was a high rate of dispersion of ownership, primarily associated with mergers. Ownership dispersion in the UK relied more on informal relations of trust than on formal systems of regulation. Preliminary evidence for this comes from the geographical proximity of shareholders to their boards of directors, the absence of price discrimination in takeovers and retention of directors of target boards in merged firms.
Note: Previously titled "The Origination and Evolution of Ownership and Control"
Number of Pages in PDF File: 68
Keywords: Evolution, ownership, investor protection, equity issues, trust
JEL Classification: G32, G34working papers series
Date posted: January 26, 2004 ; Last revised: June 30, 2008
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