The Origination and Evolution of Ownership and Control

Julian Franks, Colin Mayer () and Stefano Rossi

No 3822, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: In the first half of the twentieth century, the UK capital markets were marked by an absence of investor protection; by the end of the century, there was more extensive protection there than virtually anywhere else in the world. The UK therefore provides an exceptional laboratory for evaluating how regulation affects the development of securities markets and corporations. We investigate this question by tracing the ownership and board composition of firms incorporated in around 1900 over the subsequent 100 years, and comparing the pattern of ownership and control with a sample incorporated around 1960. We find that at the beginning of the century there were active securities markets, firms were able to raise substantial outside equity finance, and there was rapid dispersion of ownership even in the absence of investor protection. The introduction of investor protection in the second half of the century was not associated with greater dispersion of ownership but with more trading in share blocks. We offer an explanation as to how UK capital markets could flourish in the absence of investor protection.

Keywords: Ownership; Control; Stock markets; Investor protection (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2003-03
New Economics Papers: this item is included in nep-cfn
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Citations: View citations in EconPapers (21)

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Working Paper: The Origination and Evolution of Ownership and Control (2002)
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