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

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  • Miguel Cantillo Simon

    (University of California, Berkeley)

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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, I show that the eviction of banks from corporate boards depressed firm values by about 7 percent, and that part of this value came from cartelization.

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    File URL: http://128.118.178.162/eps/fin/papers/9803/9803005.pdf
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    Bibliographic Info

    Paper provided by EconWPA in its series Finance with number 9803005.

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    Date of creation: 23 Mar 1998
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    Handle: RePEc:wpa:wuwpfi:9803005

    Note: Sent pdf file in binary Revised January 1997.
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    Web page: http://128.118.178.162

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    Cited by:
    1. Stefan ARPING, 2002. "Banking, Commerce, and Antitrust¤," FAME Research Paper Series rp19, International Center for Financial Asset Management and Engineering.
    2. Josef Schroth, 2012. "Financial Crisis Resolution," 2012 Meeting Papers 617, Society for Economic Dynamics.
    3. Eric Hilt, 2014. "Corporate Governance and the Development of Manufacturing Enterprises in Nineteenth-Century Massachusetts," NBER Working Papers 20096, National Bureau of Economic Research, Inc.
    4. Kenichi Ueda, 2006. "Banks As Coordinators of Economic Growth," IMF Working Papers 06/264, International Monetary Fund.
    5. 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.

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