Private Contracting, Law and Finance
Review of Financial Studies, Forthcoming
60 Pages Posted: 18 Mar 2019
Date Written: February 26, 2019
In the late nineteenth century Britain had almost no mandatory shareholder protections, but had very developed financial markets. We argue that private contracting between shareholders and corporations meant that the absence of statutory protections was immaterial. Using circa 500 articles of association from before 1900, we code the protections offered to shareholders in these private contracts. We find that firms voluntarily offered shareholders many of the protections which were subsequently included in statutory corporate law. We also find that companies offering better protection to shareholders had less concentrated ownership.
Keywords: Law and finance, ADRI, shareholder protection, corporate ownership, common law
JEL Classification: G32, G34, G38, K22, N23, N43, N83
Suggested Citation: Suggested Citation