ABSTRACT
One of the key questions in the history of the modern public company is when exactly did corporate ownership become separate from corporate control? The literature on the evolution
of corporate ownership is voluminous,1 and is highly inuenced by the seminal work of Berle and Means (1932) whose view was that US companies were the early movers, with ownership being separated from control at some stage in the early twentieth century followed by the same transition in other Anglo-Saxon economies in the latter part of the twentieth century (Acheson et al., 2015). Subsequently, one of the well-established facts about corporate ownership is that ownership of large listed companies is dispersed in the UK and US and concentrated in most other countries (Franks, Mayer and Rossi, 2005). In the UK, even in the absence of strong investor protection rights dispersed ownership has emerged rapidly in the rst half of the twentieth century. In a comprehensive analysis of the evolution of law, nance and ownership of corporations, Franks, Mayer and Rossi associate dispersion of ownership with growth in issued equity, particularly in acquisitions rather than changes to regulations. The authors associate regulation with greater market liquidity in controlling shareholding blocks. The strengthening of regulation in the second half of the twentieth century promoted markets in and for corporate control that undermined relations between owners and managers, which initially were based on trust, but which in turn made it easier for a market for corporate control to emerge. This view is consistent with Chens’ (2004) study of British evolution of corporate ownership, which considered merger activity to be an important agent of change where regulation of anti-competitive conduct is a potentially key determinant of corporate ownership structures. Hannah and Kay (1977) also link this to levels of concentration in British industry. Indeed, giant rms in the early twentieth century simply could not have existed in the society of ‘Personal Capitalism’, which had been the norm a century earlier. Crucially, economies of scale and scope, widening markets, technological and managerial innovations and network eects have driven corporate growth and with it the emergence of professional managers and administrators (Foreman-Peck and Hannah, 2012).
