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History of American Corporate Governance: Law, Institutions, and Politics

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  • Eric Hilt

    () (Department of Economics, Wellesley College, Wellesley, Massachusetts 02481
    National Bureau of Economic Research, Cambridge, Massachusetts 02138)

Abstract

This article presents an overview of the history of corporate governance in the United States, emphasizing the period before the advent of federal securities laws and the Securities and Exchange Commission (SEC). Recent research has overturned many widely accepted beliefs about corporate governance during this period. In particular, the evolution of American corporate governance has not followed a simple, linear trajectory, beginning with small, well-governed firms and ending with large, poorly governed ones. Over time, economic and institutional changes have given rise to successive generations of corporations with their own governance problems and their own mechanisms to address those problems. When existing governance mechanisms failed, the United States experienced corporate governance crises—episodes that shattered investors’ faith in corporate management and the legal institutions intended to protect their rights. The resolutions of these crises have sometimes been found in legal innovations and, in other cases, in institutional or market-based solutions.

Suggested Citation

  • Eric Hilt, 2014. "History of American Corporate Governance: Law, Institutions, and Politics," Annual Review of Financial Economics, Annual Reviews, vol. 6(1), pages 1-21, December.
  • Handle: RePEc:anr:refeco:v:6:y:2014:p:1-21
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    References listed on IDEAS

    as
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    Cited by:

    1. Calomiris, Charles W. & Carlson, Mark, 2016. "Corporate governance and risk management at unprotected banks: National banks in the 1890s," Journal of Financial Economics, Elsevier, vol. 119(3), pages 512-532.
    2. Carola Frydman & Eric Hilt, 2014. "Investment Banks as Corporate Monitors in the Early 20th Century United States," NBER Working Papers 20544, National Bureau of Economic Research, Inc.
    3. Kandel, Eugene & Kosenko, Konstantin & Morck, Randall & Yafeh, Yishay, 2013. "Business Groups in the United States: A Revised History of Corporate Ownership, Pyramids and Regulation, 1930-1950," CEPR Discussion Papers 9759, C.E.P.R. Discussion Papers.
    4. Liang, Hao & Renneboog, Luc & Sun, Sunny Li, 2015. "The political determinants of executive compensation: Evidence from an emerging economy," Emerging Markets Review, Elsevier, vol. 25(C), pages 69-91.

    More about this item

    Keywords

    corporate governance; corporate ownership; legal origins; pyramids; investor protection; financial history;

    JEL classification:

    • N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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