Contractual Freedom and Corporate Governance in Britain in the Late Nineteenth and Early Twentieth Centuries

Timothy W. Guinnane, Ron Harris, Naomi R. Lamoreaux

Research output: Contribution to journalReview articlepeer-review

22 Scopus citations


British general incorporation law granted companies an extraordinary degree of contractual freedom. It provided companies with a default set of articles of association, but incorporators were free to reject any or all of the provisions and write their own rules instead. We study the uses to which incorporators put this flexibility by examining the articles of association filed by three random samples of companies from the late nineteenth and early twentieth centuries, as well as by a sample of companies whose securities traded publicly. Contrary to the literature, we find that most companies, regardless of size or whether their securities traded on the market, wrote articles that shifted power from shareholders to directors. We find, moreover, that there was little pressure from the government, shareholders, or the market to adopt more shareholder-friendly governance rules.

Original languageEnglish
Pages (from-to)227-277
Number of pages51
JournalBusiness History Review
Issue number2
StatePublished - 2017


FundersFunder number
American Economy Group
Harvard College
Harvard College BritishS0007680517000733a.pdf
History of Business Organization
Law and Business Organization
Ratio Institute
Tel-Aviv University
University of Auckland Law School
Yale Economic Growth Center
Yale University
Stanford University
Harvard Business School
Medical School, University of Michigan
UC Davis College of Biological Sciences
Wharton School, University of Pennsylvania
Graduate School, University of Minnesota
London School of Economics and Political Science
National Bureau of Economic Research
Queen's UniversityBelfast
Israel Science Foundation
Western University
Assumption University of Thailand
Dokuz Eylül Üniversitesi
National Science Foundation


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