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Extreme Divorce: the Managerial Revolution in UK Companies before 1914

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Abstract

We present the first broadly representative study for any early twentieth century economy of the extent to which quoted company ownership was already divorced from managerial control. In the 337 largest, independent, UK companies in the Investor's Year Book (those with \pounds 1m or more share capital in 1911) the two million outside shareholders were fewer than today's shareholding population, but they held 97.5% of the shares in the median company and their directors only 2.5%. This indicates a lower level of personal ownership by boards, and of director voting control, in the largest securities market of the early twentieth century than in any of the world.s major securities markets toward the end of that century. Berle, Means, Gordon and others later quantified the USA's delayed (and on this dimension less advanced) managerial "revolution." Their evidence has been widely misinterpreted: some erroneously concluded that America pioneered this aspect of "modernity" and that the "divorce" of ownership from control, globally, was a new and continuing trend.

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  • Foreman-Peck, James & Hannah, Leslie, 2011. "Extreme Divorce: the Managerial Revolution in UK Companies before 1914," Cardiff Economics Working Papers E2011/21, Cardiff University, Cardiff Business School, Economics Section.
  • Handle: RePEc:cdf:wpaper:2011/21
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    Cited by:

    1. James Foreman-Peck & Leslie Hannah, 2012. "Some Consequences of the Early Twentieth Century Divorce of Ownership from Control," CIRJE F-Series CIRJE-F-864, CIRJE, Faculty of Economics, University of Tokyo.
    2. 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.
    3. Braggion, Fabio & Giannetti, Mariassunta, 2013. "Public Debate and Stock Prices: Evidence from the Voting Premium," CEPR Discussion Papers 9619, C.E.P.R. Discussion Papers.
    4. 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.

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