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Incentives in Corporations: Evidence from the American Whaling Industry

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  • Eric Hilt

Abstract

In the 1830s, when whaling was a prosperous American industry, a number of whaling corporations were chartered. All of them were short-lived. This paper analyzes the failure of corporations in American whaling, and argues that the corporate form was unable to create the incentives requisite for success in the industry. Most nineteenth-century whaling ventures were owned by a small number of local investors, and were configured to provide powerful incentives for their managers. The effect of the corporate form on productivity is analyzed using a newly-collected panel dataset of 874 whaling voyages. Many whaling corporations were managed by individuals who had previously (or would subsequently) manage ventures with the usual ownership structure. Using an individual-fixed-effects framework, a strong negative effect of the corporate form on productivity is identified.

Suggested Citation

  • Eric Hilt, 2004. "Incentives in Corporations: Evidence from the American Whaling Industry," NBER Working Papers 10403, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:10403
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    1. Boyce, Gordon, 1992. "64thers, Syndicates, and Stock Promotions: Information Flows and Fund-raising Techniques of British Shipowners Before 1914," The Journal of Economic History, Cambridge University Press, vol. 52(01), pages 181-205, March.
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    5. Ellickson, Robert C, 1989. "A Hypothesis of Wealth-Maximizing Norms: Evidence from the Whaling Industry," Journal of Law, Economics, and Organization, Oxford University Press, vol. 5(1), pages 83-97, Spring.
    6. Hilt, Eric, 2007. "Investment and Diversification in the American Whaling Industry," The Journal of Economic History, Cambridge University Press, vol. 67(02), pages 292-314, June.
    7. Elmo P. Hohman, 1926. "Wages, Risk, and Profits in the Whaling Industry," The Quarterly Journal of Economics, Oxford University Press, vol. 40(4), pages 644-671.
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    Cited by:

    1. Gershkov, Alex & Li, Jianpei & Schweinzer, Paul, 2016. "How to share it out: The value of information in teams," Journal of Economic Theory, Elsevier, vol. 162(C), pages 261-304.
    2. Hilt, Eric, 2008. "The negative trade-off between risk and incentives: Evidence from the american whaling industry," Explorations in Economic History, Elsevier, vol. 45(4), pages 424-444, September.
    3. 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, pages 73-102 National Bureau of Economic Research, Inc.
    4. Hilt, Eric, 2008. "When did Ownership Separate from Control? Corporate Governance in the Early Nineteenth Century," The Journal of Economic History, Cambridge University Press, vol. 68(03), pages 645-685, September.
    5. Glaser, Darrell J. & Rahman, Ahmed S., 2016. "Ex Tridenti Mercatus? Sea-power and maritime trade in the age of globalization," Journal of International Economics, Elsevier, vol. 100(C), pages 95-111.

    More about this item

    JEL classification:

    • N5 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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