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Voting Rights, Share Concentration, and Leverage at Nineteenth-Century US Banks

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  • Howard Bodenhorn

Abstract

Studies of corporate governance are concerned with two features of modern shareholding: diffuse ownership and the resulting separation of ownership and control, which potentially leads to managerial self-dealing; and, majority shareholding, which potentially mitigates some managerial self-dealing but opens the door for the expropriation of minority shareholders. This paper provides a study of the second issue for nineteenth-century US corporations. It investigates two related questions. First, did voting rules that limited the control rights of large shareholders encourage diffuse ownership? It did. Second, did diffuse ownership systematically alter bank risk taking? It did. Banks with less concentrated ownership followed policies that reduced liquidity and bankruptcy risk.

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  • Howard Bodenhorn, 2012. "Voting Rights, Share Concentration, and Leverage at Nineteenth-Century US Banks," NBER Working Papers 17808, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:17808
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    Cited by:

    1. Mariana Pargendler & Henry Hansmann, 2013. "A new view of shareholder voting in the nineteenth century: evidence from Brazil, England and France," Business History, Taylor & Francis Journals, vol. 55(4), pages 585-600, June.
    2. Howard Bodenhorn, 2013. "Large Block Shareholders, Institutional Investors, Boards of Directors and Bank Value in the Nineteenth Century," NBER Working Papers 18955, National Bureau of Economic Research, Inc.
    3. Howard Bodenhorn & Eugene N. White, 2014. "The Evolution of Bank Boards of Directors in New York, 1840–1950," NBER Chapters, in: Enterprising America: Businesses, Banks, and Credit Markets in Historical Perspective, pages 107-145, National Bureau of Economic Research, Inc.
    4. Les Hannah, 2014. "Corporations in the US and Europe 1790-1860," Business History, Taylor & Francis Journals, vol. 56(6), pages 865-899, September.
    5. Acheson, Graeme G. & Campbell, Gareth & Turner, John D., 2016. "Common law and the origin of shareholder protection," eabh Papers 16-03, The European Association for Banking and Financial History (EABH).
    6. Graeme G Acheson & Gareth Campbell & John D Turner, 2019. "Private Contracting, Law and Finance," The Review of Financial Studies, Society for Financial Studies, vol. 32(11), pages 4156-4195.

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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G3 - Financial Economics - - Corporate Finance and Governance
    • N2 - Economic History - - Financial Markets and Institutions

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