Evolution of Ownership and Control Around the World: The Changing Face of Capitalism

51 Pages Posted: 2 May 2017 Last revised: 3 May 2017

See all articles by Julian R. Franks

Julian R. Franks

London Business School - Institute of Finance and Accounting; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Colin Mayer

University of Oxford - Said Business School; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: April 1, 2017

Abstract

This chapter documents the evolution of ownership and control of firms around the world over a hundred year period from the beginning of the 20th century to today. It records the substantial changes that have taken place in the nature of stock markets and contrasts these with the persistent patterns of ownership that are observed in many countries around the world. In particular, it documents the growth in dispersion in ownership that took place in many countries from the early part of the 20th century. It reports that this took place in the absence of formal systems of investor protection but in the presence of institutional developments that facilitated the building of trust between investors and firms. Contrary to the view that concentrations of ownership necessarily undermine the operation of equity markets by exploiting minority interests, the chapter argues that in many countries they played a central role not just in exercising control but also in promoting relations between investors and firms that were central to the development of their stock markets. In particular, concentrations of ownership in the hands of families may have been a source of public as well as private benefits. The chapter concludes by looking at recent changes and argues that these reinforce the long-run patterns of the relative decline of the UK and US stock markets, the continued decline of family firms in the UK, the growth of private equity and the emergence of new forms of concentrated shareholdings.

Keywords: Ownership, control, trust, stock markets

JEL Classification: G32, G34, N20

Suggested Citation

Franks, Julian R. and Mayer, Colin, Evolution of Ownership and Control Around the World: The Changing Face of Capitalism (April 1, 2017). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 503/2017, Available at SSRN: https://ssrn.com/abstract=2954589 or http://dx.doi.org/10.2139/ssrn.2954589

Julian R. Franks (Contact Author)

London Business School - Institute of Finance and Accounting ( email )

Institute of Finance and Accounting
Sussex Place - Regent's Park
London NW1 4SA
United Kingdom
+44 20 7262 5050 x3449 (Phone)
+44 20 7724 3317 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: https://ecgi.global/

Colin Mayer

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain
+44 1865 288112 (Phone)
+44 1865 288805 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
612
Abstract Views
2,295
rank
36,080
PlumX Metrics