ABSTRACT
The rudiments of modern exchange trading in equity capital shares emerged during the 17th century. Yet, there are subtle and not-so-subtle differences between modern common shares and the joint-stock shares of the 16th to 18th centuries. A number of differences arise from the form of business organization. Modern corporations operate within a different legal structure than applied to the early joint-stock companies. The early methods of joint-stock company formation, such as by chartering and subscription, and the applicable law of limited liability were substantively different than in modern times (Shannon 1931; Baskin and Miranti 1997; Gelderblom 2013). Another important difference arises because many of the most important English joint-stock companies and some of those in Europe were chartered with monopoly privileges over some activity in exchange for using the paid-in share capital to later purchase government debt. This made the cash flows and risk characteristics of these joint stocks different from those of modern common shares.
