IDEAS home Printed from https://ideas.repec.org/p/auu/hpaper/110.html
   My bibliography  Save this paper

Share ownership and the introduction of no liability legislation in nineteenth-century Australia

Author

Listed:
  • Grant Fleming
  • Frank Liu
  • David Merrett
  • Simon Ville

Abstract

The no liability company - where investors are not liable for uncalled parts of their shares - has been unique to Australasia. Deploying a large dataset, we provide the first empirical examination of the effects of this new corporate form on company formation and shareholding. Our focus is on Victorian goldmining, the earliest and most pervasive users of the no liability form. No liability companies largely replaced limited liability within a decade of the legislation in 1871, which was more rapid than the transition from unlimited to limited liability companies in several other nations. No liability companies attracted a broader occupational and locational range of investors beyond the mining industry and its districts, especially gentlemen and financiers. We conclude that investors believed no liability firms to be less risky because of the removal of call liabilities and the mitigation of previous regulatory failures.

Suggested Citation

  • Grant Fleming & Frank Liu & David Merrett & Simon Ville, 2022. "Share ownership and the introduction of no liability legislation in nineteenth-century Australia," CEH Discussion Papers 11, Centre for Economic History, Research School of Economics, Australian National University.
    • Handle: RePEc:auu:hpaper:110
    as

    Download full text from publisher

    File URL: https://cbe.anu.edu.au/researchpapers/CEH/WP202211.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Stephen Broadberry & Douglas A. Irwin, 2007. "Lost Exceptionalism? Comparative Income and Productivity in Australia and the UK, 1861–1948," The Economic Record, The Economic Society of Australia, vol. 83(262), pages 262-274, September.
    2. Acheson Graeme G. & Hickson Charles R & Turner John D, 2010. "Does Limited Liability Matter? Evidence From Nineteenth-Century British Banking," Review of Law & Economics, De Gruyter, vol. 6(2), pages 247-273, December.
    3. Janette Rutterford & Dimitris P. Sotiropoulos & Carry van Lieshout, 2017. "Individual investors and local bias in the UK, 1870–1935," Economic History Review, Economic History Society, vol. 70(4), pages 1291-1320, November.
    4. Mark I. Weinstein, 2003. "Share Price Changes and the Arrival of Limited Liability in California," The Journal of Legal Studies, University of Chicago Press, vol. 32(1), pages 1-25, January.
    5. Diane van den Broek, 2011. "Strapping, as well as numerate: Occupational identity, masculinity and the aesthetics of nineteenth-century banking," Business History, Taylor & Francis Journals, vol. 53(3), pages 289-301.
    6. D. T. Merrett & Andrew Seltzer, 2000. "Work in the Financial Services Industry and Worker Monitoring: A Study of the Union Bank of Australia in the 1920s," Business History, Taylor & Francis Journals, vol. 42(3), pages 133-152.
    7. Grossman, Peter Z, 1995. "The Market for Shares of Companies with Unlimited Liability: The Case of American Express," The Journal of Legal Studies, University of Chicago Press, vol. 24(1), pages 63-85, January.
    8. Campbell, Gareth & Turner, John D., 2012. "Dispelling the Myth of the Naive Investor during the British Railway Mania, 1845–1846," Business History Review, Cambridge University Press, vol. 86(1), pages 3-41, April.
    9. Simon Ville & Olav Wicken, 2013. "The dynamics of resource-based economic development: evidence from Australia and Norway," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(5), pages 1341-1371, October.
    10. Ville, Simon & Merrett, David Tolmie, 2020. "Investing in a Wealthy Resource-Based Colonial Economy: International Business in Australia before World War I," Business History Review, Cambridge University Press, vol. 94(2), pages 321-346, July.
    11. John D. Turner, 2009. "Wider share ownership?: investors in English and Welsh Bank shares in the nineteenth century1," Economic History Review, Economic History Society, vol. 62(s1), pages 167-192, August.
    12. Quinn,William & Turner,John D., 2020. "Boom and Bust," Cambridge Books, Cambridge University Press, number 9781108421256.
    13. Graeme G. Acheson & John D. Turner & Qing Ye, 2012. "The character and denomination of shares in the Victorian equity market," Economic History Review, Economic History Society, vol. 65(3), pages 862-886, August.
    14. Acheson, Graeme G. & Turner, John D., 2008. "The death blow to unlimited liability in Victorian Britain: The City of Glasgow failure," Explorations in Economic History, Elsevier, vol. 45(3), pages 235-253, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Acheson, Graeme G. & Coyle, Christopher & Jordan, David P. & Turner, John D., 2018. "Share trading activity and the rise of the rentier in the UK before 1920," QUCEH Working Paper Series 2018-04, Queen's University Belfast, Queen's University Centre for Economic History.
    2. Acheson, Graeme G. & Campbell, Gareth & Turner, John D., 2015. "Who financed the expansion of the equity market? Shareholder clienteles in Victorian Britain," QUCEH Working Paper Series 15-07, Queen's University Belfast, Queen's University Centre for Economic History.
    3. Turner, John D., 2014. "Financial history and financial economics," QUCEH Working Paper Series 14-03, Queen's University Belfast, Queen's University Centre for Economic History.
    4. Paolo Maggioni, 2011. "Limited liability and shares’ pricing: sufficient but not necessary," Openloc Working Papers 1115, Public policies and local development.
    5. Ilgmann, Cordelius, 2011. "The advent of corporate limited liability in Prussia 1843," CAWM Discussion Papers 46, University of Münster, Münster Center for Economic Policy (MEP).
    6. Paolo Maggioni, 2011. "The introduction of limited liability in nineteenth century England," Openloc Working Papers 1116, Public policies and local development.
    7. Grossman, Richard, 2017. "Stocks for the Long Run: New Monthly Indices of British Equities, 1869-1929," CEPR Discussion Papers 12121, C.E.P.R. Discussion Papers.
    8. Turner, John D., 2017. "The development of English company law before 1900," QUCEH Working Paper Series 2017-01, Queen's University Belfast, Queen's University Centre for Economic History.
    9. Grossman, Richard & Campbell, Gareth & Turner, John, 2019. "Before the Cult of Equity: New Monthly Indices of the British Share Market, 1829-1929," CEPR Discussion Papers 13717, C.E.P.R. Discussion Papers.
    10. Monica Keneley, 2020. "Reflections on the Business History Tradition: Where has it Come from and Where is it Going to?," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 60(3), pages 282-300, November.
    11. Quinn, William & Turner, John D., 2020. "Bubbles in history," QUCEH Working Paper Series 2020-07, Queen's University Belfast, Queen's University Centre for Economic History.
    12. Jiaqi Qin & Yan Sun, 2023. "Unveil the veil of limited liability: Evidence from firm investment," The Financial Review, Eastern Finance Association, vol. 58(3), pages 485-511, August.
    13. Willison, Matthew, 2018. "Were banks special? Contrasting viewpoints in mid-nineteenth century Britain," Bank of England working papers 755, Bank of England.
    14. Richard S. Grossman & Masami Imai, 2011. "Contingent Capital and Bank Risk-Taking among British Banks before World War I," Wesleyan Economics Working Papers 2011-003, Wesleyan University, Department of Economics.
    15. Bogle, David A. & Campbell, Gareth & Coyle, Christopher & Turner, John D., 2022. "Why did shareholder liability disappear?," QUCEH Working Paper Series 22-12, Queen's University Belfast, Queen's University Centre for Economic History.
    16. Gareth Campbell & John D. Turner & Qing Ye, 2018. "The liquidity of the London capital markets, 1825–70†," Economic History Review, Economic History Society, vol. 71(3), pages 823-852, August.
    17. Graeme G. Acheson & Gareth Campbell & John D. Turner & Nadia Vanteeva, 2015. "Corporate ownership and control in Victorian Britain," Economic History Review, Economic History Society, vol. 68(3), pages 911-936, August.
    18. Button, Richard & Knott, Samual & Macmanus, Conor & Willison, Matthew, 2015. "Desperate adventurers and men of straw: the failure of City of Glasgow Bank and its enduring impact on the UK banking system," Bank of England Quarterly Bulletin, Bank of England, vol. 55(1), pages 23-35.
    19. Bargeron, Leonce & Lehn, Kenneth, 2017. "Limited liability and share transferability: An analysis of California firms, 1920–1940," Journal of Corporate Finance, Elsevier, vol. 44(C), pages 451-468.
    20. Acheson, Graeme G. & Campbell, Gareth & Gallagher, Áine & Turner, John D., 2018. "Independent women: Shareholders in the age of the suffragettes," QUCEH Working Paper Series 2018-09, Queen's University Belfast, Queen's University Centre for Economic History.

    More about this item

    Keywords

    Mining; goldmining; share ownership; Australia; company law; limited liability; no liability; investors; stock exchanges; occupations; Melbourne; investment booms.;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:auu:hpaper:110. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/chanuau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.