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For Every Law, a Loophole: Flexibility in the Menu of Spanish Business Forms, 1886-1936

Timothy Guinnane and Susana Martinez Rodriguez
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Susana Martinez Rodriguez: ?

Authors registered in the RePEc Author Service: Susana Martinez-Rodriguez

Working Papers from Yale University, Department of Economics

Abstract: The Spanish business code allowed firms great flexibility in their organizational form in the late nineteenth and early twentieth century. Until 1920, firms had the same basic choices as in France and some other European countries, namely, the corporation, the ordinary partnership, or the limited partnership. But Spanish law was unusually flexible, allowing firms to adapt the corporation especially to the needs of its owners. Starting in 1920 Spanish firms could also organize as a Sociedad de Responsabilidad Limitada (SRL), a form similar to the German GmbH or the British Private Limited Company (PLC). But some firms had already adopted the form prior to 1920. The Spanish coded lacked the principle of "numerus clauses" that is central to many areas of law. Most business codes allow firms to choose only from a proscribed menu of options. The Spanish code offered these options but also stated that firms could organize in other ways if they wished. This paper uses three empirical sources to study the way firms actually used those possibilities. We find that this flexibility did not make entrepreneurs indifferent across the different organizational forms.

JEL-codes: K20 N43 N44 (search for similar items in EconPapers)
Date: 2012-05
New Economics Papers: this item is included in nep-his, nep-hme and nep-law
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Working Paper: For Every Law, a Loophole: Flexibility in the Menu of Spanish Business Forms, 1886-1936 (2012) Downloads
Working Paper: For Every Law, a Loophole: Flexibility in the Menu of Spanish Business Forms, 1886-1936 (2012) Downloads
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