Corporate Governance Before There Was Corporate Law
Working paper
Permanent lenke
http://hdl.handle.net/11250/95404Utgivelsesdato
2011Metadata
Vis full innførselSamlinger
Sammendrag
We study 79 sets of bylaw provisions adopted by Norwegian corporations in a free
contracting environment before Norway got its first corporate law. The firms in our
sample are publicly traded companies in the period 1900-1910. We document substantial
protections to minority shareholders against expropriation by insiders and observe
considerable heterogeneity in the investor protections stipulated in the contracts with
regards to board structure, director responsibilities and remuneration, disclosure of
company information, and shareholder voting rights, among others. We find that firms
seem to self-select bylaw protections and show that firms with dispersed control
structures tend to operate with protections reflecting collective action and free-rider
problems, whereas tightly controlled firms have bylaws in place that reflect the relatively
sophistication of investors. We also find evidence that dividends and investor protections
are substitutes, and that firms in high growth industries and firms that issue equity
disclose more information to investors. We conclude that effective governance systems
may develop independently of statutory corporate law.