IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Related Investing: Corporate Ownership and Capital Mobilization during Early Industrialization

Listed author(s):
  • B. Zorina Khan
Registered author(s):

    Scholars engage in extensive debate about the role of families and corporations in economic growth. Some propose that personal ties provide a mechanism for overcoming such transactions costs as asymmetrical information, while others regard familial connections as conduits for inefficiency, with the potential for nepotism, corruption and exploitation of other stakeholders. This empirical study is based on a unique panel dataset comprising all of the shareholders in a sample of early corporations, including information on such characteristics as gender, age, occupation, household composition, real estate holdings and personal wealth. Related investing was widespread among directors and elite shareholders, but was also pervasive among women and small shareholders. Personal ties were especially evident among ordinary investors in the newer, riskier ventures, and helped to ensure persistence in shareholding. “Outsider investors” were able to overcome a lack of experience and information by taking advantage of their own networks. The link between related investing and the concentration of ownership in these corporations suggests that this phenomenon was likely associated with a reduction in perceptions of risk, especially beneficial for capital mobilization in emerging ventures. These patterns are consistent with a more productive interpretation of related investing and its function in newly developing societies.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.nber.org/papers/w23052.pdf
    Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 23052.

    as
    in new window

    Length:
    Date of creation: Jan 2017
    Handle: RePEc:nbr:nberwo:23052
    Note: CF DAE DEV
    Contact details of provider: Postal:
    National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.

    Phone: 617-868-3900
    Web page: http://www.nber.org
    Email:


    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as
    in new window


    1. Fear, Jeffrey & Kobrak, Christopher, 2010. "Banks on Board: German and American Corporate Governance, 1870–1914," Business History Review, Cambridge University Press, vol. 84(04), pages 703-736, December.
    2. Sumon Bhaumik & Andros Gregoriou, 2009. "???Family??? ownership, tunneling and earnings management: A review of the literature," William Davidson Institute Working Papers Series wp954, William Davidson Institute at the University of Michigan.
    3. Anne Laurence, 2008. "The emergence of a private clientele for banks in the early eighteenth century: Hoare's Bank and some women customers -super-1," Economic History Review, Economic History Society, vol. 61(3), pages 565-586, 08.
    4. Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 1998. "Corporate Ownership Around the World," NBER Working Papers 6625, National Bureau of Economic Research, Inc.
    5. Helwege, Jean & Pirinsky, Christo & Stulz, Rene M., 2005. "Why Do Firms Become Widely Held? An Analysis of the Dynamics of Corporate Ownership," Working Paper Series 2005-14, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
    6. W. C. Kessler, 1940. "A Statistical Study of the New York General Incorporation Act of 1811," Journal of Political Economy, University of Chicago Press, vol. 48, pages 877-877.
    7. Dan Bogart & John Majewski, 2008. "Two Roads to the Transportation Revolution: Early Corporations in the United Kingdom and the United States," NBER Chapters, in: Understanding Long-Run Economic Growth: Geography, Institutions, and the Knowledge Economy, pages 177-204 National Bureau of Economic Research, Inc.
    8. Warren E. Weber, 2006. "Early state banks in the United States: how many were there and where did they exist?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Sep, pages 28-40.
    9. Naomi R. Lamoreaux, 2005. "Legal Regime and Contractual Flexibility: A Comparison of Business's Organizational Choices in France and the United States during the Era of Industrialization," American Law and Economics Review, Oxford University Press, vol. 7(1), pages 28-61.
    10. David Sraer & David Thesmar, 2007. "Performance and Behavior of Family Firms: Evidence from the French Stock Market," Journal of the European Economic Association, MIT Press, vol. 5(4), pages 709-751, 06.
    11. Majewski, John, 1996. "Who Financed the Transportation Revolution? Regional Divergence and Internal Improvements in Antebellum Pennsylvania and Virginia," The Journal of Economic History, Cambridge University Press, vol. 56(04), pages 763-788, December.
    12. Carlos, Ann M. & Neal, Larry, 2004. "Women investors in early capital markets, 1720 1725," Financial History Review, Cambridge University Press, vol. 11(02), pages 197-224, October.
    13. Davis, Lance Edwin, 1958. "Stock Ownership in the Early New England Textile Industry," Business History Review, Cambridge University Press, vol. 32(02), pages 204-222, June.
    14. Demsetz, Harold & Lehn, Kenneth, 1985. "The Structure of Corporate Ownership: Causes and Consequences," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1155-1177, December.
    15. Wright, Robert E., 1999. "Bank Ownership and Lending Patterns in New York and Pennsylvania, 1781–1831," Business History Review, Cambridge University Press, vol. 73(01), pages 40-60, March.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:23052. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.