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The Rise and Fall of Bank Control in the United States: 1890-1939

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  • Simon, Miguel Cantillo
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    Abstract

    This article studies how equity ownership and corporate control were separated in the United States. Initially, railroads and industrial firms were tightly controlled by a few shareholders; this situation was altered in the 1890s by massive mergers and reorganizations, which allowed private banks to control railroads and industrial firms. Between 1912 and 1939, bank control faded away as a result of a political reaction against financial institutions. Using stock-market data from 1914, the author shows that the eviction of banks from corporate boards depressed firm values by about 7 percent and that part of this value came from cartelization. Copyright 1998 by American Economic Association.

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    Bibliographic Info

    Article provided by American Economic Association in its journal American Economic Review.

    Volume (Year): 88 (1998)
    Issue (Month): 5 (December)
    Pages: 1077-93

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    Handle: RePEc:aea:aecrev:v:88:y:1998:i:5:p:1077-93

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    Cited by:
    1. Eric Hilt, 2014. "Corporate Governance and the Development of Manufacturing Enterprises in Nineteenth-Century Massachusetts," NBER Chapters, in: Enterprising America: Businesses, Banks, and Credit Markets in Historical Perspective National Bureau of Economic Research, Inc.
    2. Higgins, Huong N., 2013. "Conflicts of interest between banks and firms: Evidence from Japanese mergers," Pacific-Basin Finance Journal, Elsevier, vol. 24(C), pages 156-178.
    3. Kenichi Ueda, 2006. "Banks As Coordinators of Economic Growth," IMF Working Papers 06/264, International Monetary Fund.
    4. Stefan ARPING, 2002. "Banking, Commerce, and Antitrust¤," FAME Research Paper Series rp19, International Center for Financial Asset Management and Engineering.

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