68 Pages Posted: 26 Jan 2004 Last revised: 30 Jun 2008
Date Written: November 14, 2006
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.
Notes: Previously titled "The Origination and Evolution of Ownership and Control"
Keywords: Evolution, ownership, investor protection, equity issues, trust
JEL Classification: G32, G34
Suggested Citation: Suggested Citation
Franks, Julian R. and Mayer, Colin and Rossi, Stefano, Ownership: Evolution and Regulation (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. Available at SSRN: https://ssrn.com/abstract=354381 or http://dx.doi.org/10.2139/ssrn.354381