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

Howard Bodenhorn

No 17808, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: G21 G3 N2 (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-cdm and nep-his
Note: DAE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published as “Voting Rights, Share Concentration, and Leverage in Nineteenth-Century US Banks.” Journal of Law & Economics 57 (May 2014 forthcoming).

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