The asking price of incorporation: State leverage and the evolution of corporate purpose

Fatjon Kaja

No 476, SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: This article advances a new perspective on corporate purpose, grounded in the institutional conditions under which corporate privileges are granted. Using a novel dataset of historical UK royal charters and a mixed-methods empirical strategy, the study shows that early corporations articulated specific, enforceable, and public-facing purpose clauses because incorporation was a scarce privilege that allowed the Crown to impose obligations as a "asking price" for the benefits of the corporate form. Machine-learning evidence demonstrates that clauses reflecting Crown leverage cluster systematically and decline over time as incorporation becomes more accessible. The findings reframe corporate purpose not merely as a normative contest among stakeholders but as the product of institutional bargaining at the point of corporate formation, offering a historical lens for contemporary purpose debates.

Keywords: corporate purpose; UK royal charters; text as data; shareholder primacy; historical perspective (search for similar items in EconPapers)
JEL-codes: K00 K2 K22 N80 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewp:340163

DOI: 10.2139/ssrn.6580099

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