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Limited Liability and Investment: Evidence from Changes in Marital Property Laws in the U.S. South, 1840-1850

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  • Koudijs, Peter A. E.

    (Stanford University and NBER)

  • Salisbury, Laura

    (York University and NBER)

Abstract

We study the impact of marital property legislation passed in the U.S. South in the 1840s on household investment. These laws protected the assets of newly married women from creditors in a world of virtually unlimited liability. We compare couples married after the passage of a law with couples from the same state who were married before. Consistent with a simple model of household borrowing that trades off agency costs against risk sharing, the effect on household asset holdings was heterogeneous: if most household property came from the husband (wife), the law led to an increase (decrease) in total assets.

Suggested Citation

  • Koudijs, Peter A. E. & Salisbury, Laura, 2018. "Limited Liability and Investment: Evidence from Changes in Marital Property Laws in the U.S. South, 1840-1850," Research Papers 3753, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:3753
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    Cited by:

    1. Peter Koudijs & Laura Salisbury & Gurpal Sran, 2021. "For Richer, for Poorer: Bankers' Liability and Bank Risk in New England, 1867 to 1880," Journal of Finance, American Finance Association, vol. 76(3), pages 1541-1599, June.
    2. Davis, Lewis S. & Williamson, Claudia R., 2022. "Individualism and women's economic rights," Journal of Economic Behavior & Organization, Elsevier, vol. 198(C), pages 579-597.

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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913

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