Why did shareholder liability disappear?
Journal of Financial Economics, 2024

David A. Bogle, Gareth Campbell, Christopher Coyle, John D. Turner Why did shareholder liability disappear? We address this question by looking at its use by British insurance companies until its complete disappearance. We explore three possible explanations for its demise: (1) regulation and government-provided policyholder protection meant that it was no longer required; (2) it had become de facto limited; and (3) shareholders saw an opportunity to expunge something they disliked when insurance companies grew in size. Using hand-collected archival data, our findings suggest investors attached a risk premium to companies with shareholder liability, and it was phased out as insurance companies expanded, which meant that they were better able to pool risks.

British CEOs in the twentieth century: aristocratic amateurs to fat cats?
Business History Review, 2024

Robin J. C. Adams, Michael Aldous, Philip T. Fliers, John Turner This article uses a prosopographical methodology and new dataset of 1,558 CEOs from Britain’s largest public companies between 1900 and 2009 to analyse how the role, social background, and career pathways of corporate leaders changed. We have four main findings: First, the designation of CEO only prevailed in the 1990s. Second, the proportion of socially elite CEOs was highest before 1940, but they were not dominant. Third, most CEOs did not have a degree before the 1980s, or professional qualification until the 1990s. Fourth, liberal market reforms in the 1980s were associated with an increase in the likelihood of CEO dismissal by a factor of three.

Corporate taxes, leverage, and investment: evidence from Nazi-occupied Netherlands
Economic History Review, 2024

Philip T. Fliers, Abe de Jong, Bert Kramer We examine the Netherlands around the Second World War, where the occupying Nazi regime overhauled the country's corporate tax regime and introduced a profit tax of 55 per cent. We estimate that the new tax regime cost investors at least 300 million guilders, an amount equivalent to 5 per cent of Dutch GDP in 1940. We demonstrate that the tax introduction changed the financing of Dutch businesses. In particular, we find strong evidence that debt financing increased because it provides a tax shelter. The changes in taxation also led to an after-tax reduction in the cost of debt, which had large real effects on firm investment. After the end of the war, firms with more leverage had higher capital expenditures.

Three centuries of corporate governance in the United Kingdom
Economic History Review, 2024

John D. Turner As articulated by Adam Smith, one of the central issues facing companies is that managers will not run the business in the interests of its owners and will misuse resources. This ultimately has a detrimental consequence for the wealth of the nation. This survey reviews the nature and evolution of the corporate governance of UK public companies over the past 300 years. It makes two principal arguments. First, because the separation of ownership and control was one of the rationales for the introduction of the corporate form, we should not be surprised that corporate ownership has generally been diffuse. Second, over time, the way in which owners ensure that managers act in their interests has gradually changed from a system in which shareholders monitored and exercised voice to one where there was more reliance on external forces and exiting ownership.

The anatomy of a bubble company: the London Assurance in 1720
Economic History Review, 2023

Graeme Acheson, Michael Aldous, William Quinn The London Assurance Company (LA), which incorporated during the bubble of 1720, experienced more dramatic price movements in its shares than the South Sea Company. This paper examines how incorporating during the bubble affected its long run performance. We show that the bubble in the Company's share price was partly attributable to changes in market structure during the share issuance process. As a result of the bubble, the Company's original subscribers, who had been curated for expertise and political connections, overwhelmingly exited during 1720 and were replaced by unsuccessful speculators. Analysis of LA shareholder behaviour up to 1737 suggests that this loss of shareholder expertise had detrimental consequences for the Company's performance. These results demonstrate how a bubble in the shares of a newly created company can lead to an exodus of value-adding investors, damaging the company's long-term prospects.

Was Marshall right? Managerial failure and corporate ownership in Edwardian Britain
The Journal of Economic History, 2023

Michael Aldous, Philip T. Fliers, John D. Turner Alfred Marshall argued that the malaise of public companies in Edwardian Britain was due to the separation of ownership from control and a lack of professional management. In this paper, we examine the ownership and control of the c. 1,700 largest British companies in 1911. We find that most public companies had a separation of ownership and control, but that this had little effect on their performance. We also find that manager characteristics that proxy for amateurism are uncorrelated with performance. Ultimately, our evidence suggests that, if Marshall was correct in identifying a corporate malaise in Britain, its source lay elsewhere.

Bubbles in History
Business History, 2023

William Quinn, John Turner Bubbles have become ubiquitous. This ubiquity has stimulated research over the past three decades into bubbles in history. In this article, we provide a systematic overview of research into historical bubbles. Our analysis reveals that there is no coherent approach to the study of bubbles and much of the debate has unhelpfully focussed on the rationality/irrationality dichotomy. We then suggest a new framework for the study of historical bubbles, which helps us understand the causes of bubbles and their economic consequences. We conclude by suggesting ways in which business history can contribute to the study of historical bubbles.

Business creation and political turmoil: Ireland versus Scotland before 1900
Business History Review, 2022

Robin J. C. Adams, Gareth Campbell, Christopher Coyle, John D. Turner What effect does political instability in the form of a potential secession from a political union have on business formation? Using newly collected data on business creation, we show that entrepreneurial activity in Ireland in the late nineteenth century was much lower than Scotland, and this divergence fluctuated over time. Several factors may have contributed to this, but we argue that political uncertainty about the prospect of a devolved government in Ireland played a role. The effects were most acute in the North of Ireland, the region that was most concerned by potential changes.

Independent Women: Investing in British Railways, 1870-1922
Economic History Review, 2021

Graeme G. Acheson, Gareth Campbell, Aine Gallagher, John D. Turner The early twentieth century saw the British capital market reach a state of maturity before any of its global counterparts. This coincided with more women participating directly in the stock market. This study analyses whether these female shareholders chose to invest independently of men. Using a novel dataset of almost 500,000 shareholders in some of the largest British railways, it shows that women were much more likely to be solo shareholders than men. There is also evidence that they prioritized their independence above other considerations such as where they invested or how diversified they could be.

Before the cult of equity: the British stock market, 1829–1929
European Review of Economic History, 2021

Gareth Campbell, Richard S Grossman, John D Turner We analyze the development and performance of the British equity market during the era when it reigned supreme as the largest in the world. Using an extensive monthly dataset of thousands of companies, we identify the major peaks and troughs in the market and find a relationship with the timing of economic cycles. We also show that the equity risk premium was modest and, contrary to previous research, domestic and foreign stocks earned similar returns for much of the period. We also document the early dominance of the transport and finance sectors and the subsequent emergence of many new industries.

Capital Market Development over the Long Run: The Portfolios of UK Life Assurers over Two Centuries
European Review of Economic History, 2021

David Bogle, Christopher Coyle, John Turner What shapes and drives capital market development over the long run? In this paper, using the asset portfolios of UK life assurers, we examine the role of regulation, historical contingency, and political reactions to events on the long-run development of the UK capital market. Government response to events such as war, hegemony-secured peace, and the wider macroeconomic environment was the ultimate determinant of major changes in asset allocation since 1800. Furthermore, when we compare the UK with the United States, we find that regulation played a limited role in shaping the asset portfolios of the UK life assurance industry.

Examining the Role of a Private-Order Institution in Global Trade: The Liverpool Cotton Brokers’ Association and the Crowning of King Cotton, 1811–1900
Business History Review, 2021

Michael Aldous, Christopher Coyle In the nineteenth century, the Liverpool Cotton Brokers' Association (CBA) coordinated the dramatic growth of Liverpool's raw cotton market. This article shows how the CBA achieved this through the development of a private-order institutional framework that improved information flows, introduced standardization and contracting regimes, and regulated market exchange platforms. These developments corresponded with significantly improved market coordination, which facilitated the growth of the largest raw cotton market in the world. The article's findings demonstrate and quantify the importance of nonstate actors in creating institutions of global exchange central to the first wave of globalization.

Exceptional big linkers: Dutch evidence from the 20th century
Business History, 2021

Abe de Jong, Philip T. Fliers, Gerarda Westerhuis This article investigates the effects of individual directors for corporate strategies and firm performance over the course of the 20th century for Dutch exchange-listed firms. We apply a multi-method approach on directors with many executive and supervisory roles in multiple firms--so-called big linkers. We first identify exceptional big linkers, board members whose presence is systematically related with firm characteristics. Our approach allows us to identify a number of exceptional individuals who were previously overlooked by business historians. Then we investigate the backgrounds of these exceptional big linkers. We find that their biographies and other archival materials provide explanations for their systematic relation with corporate outcome variables such as performance, debt and investments. Using additional information about these directors, including network centrality, bank relations and family histories, we are able to shed light on the multitude of explanations for the roles of exceptional big linkers.

The macroeconomic effects of banking crises: evidence from the United Kingdom, 1750–1938
Explorations in Economic History, 2021

Seán Kenny, Jason Lennard, John D. Turner This paper analyses the macroeconomic effects of banking crises in the United Kingdom between 1750 and 1938. We construct a new annual chronology of banking crises, which we define as episodes of runs and panics combined with significant, geographically-dispersed failures and suspensions. Using a vector autoregression, we find that banking crises are associated with short, sharp and significant drops in economic growth. Using the narrative record to identify plausibly exogenous variation, we show that this finding is robust to potential endogeneity.