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Corporate Governance and the Development of Manufacturing Enterprises in Nineteenth-Century Massachusetts

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  • Eric Hilt

Abstract

This paper analyzes the use of the corporate form among nineteenth-century manufacturing firms in Massachusetts, from newly collected data from 1875. An analysis of incorporation rates across industries reveals that corporations were formed at higher rates among industries in which firm size was larger. But conditional on firm size, the industries in which production was conducted in factories, rather than artisanal shops, saw more frequent use of the corporate form. On average, the ownership of the corporations was quite concentrated, with the directors holding 45 percent of the shares. However, the corporations whose shares were quoted on the Boston Stock Exchange were 'widely held' at rates comparable to modern American public companies. The production methods utilized in in different industries also influenced firms' ownership structures. In many early factories, steam power was combined with unskilled labor, and managers likely performed a complex supervisory role that was critical to the success of the firm. Consistent with the notion that monitoring management was especially important among such firms, corporations in industries that made greater use of steam power and unskilled labor had more concentrated ownership, higher levels of managerial ownership, and smaller boards of directors.

Suggested Citation

  • 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.
  • Handle: RePEc:nbr:nberwo:20096
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    References listed on IDEAS

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    1. Guinnane, Timothy & Harris, Ron & Lamoreaux, Naomi R. & Rosenthal, Jean-Laurent, 2007. "Putting the Corporation in its Place," Enterprise & Society, Cambridge University Press, vol. 8(3), pages 687-729, September.
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    Cited by:

    1. 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.
    2. Amanda Gregg & Steven Nafziger, 2019. "Capital structure and corporate performance in late Imperial Russia," European Review of Economic History, Oxford University Press, vol. 23(4), pages 446-481.
    3. Howard Bodenhorn & Eugene N. White, 2014. "The Evolution of Bank Boards of Directors in New York, 1840–1950," NBER Chapters, in: Enterprising America: Businesses, Banks, and Credit Markets in Historical Perspective, pages 107-145, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • K2 - Law and Economics - - Regulation and Business Law
    • N11 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: Pre-1913

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