History of American Corporate Governance: Law, Institutions, and Politics

Posted: 25 Nov 2014

See all articles by Eric Hilt

Eric Hilt

National Bureau of Economic Research (NBER); Wellesley College

Multiple version iconThere are 2 versions of this paper

Date Written: December 2014

Abstract

This article presents an overview of the history of corporate governance in the United States, emphasizing the period before the advent of federal securities laws and the Securities and Exchange Commission (SEC). Recent research has overturned many widely accepted beliefs about corporate governance during this period. In particular, the evolution of American corporate governance has not followed a simple, linear trajectory, beginning with small, well-governed firms and ending with large, poorly governed ones. Over time, economic and institutional changes have given rise to successive generations of corporations with their own governance problems and their own mechanisms to address those problems. When existing governance mechanisms failed, the United States experienced corporate governance crises — episodes that shattered investors’ faith in corporate management and the legal institutions intended to protect their rights. The resolutions of these crises have sometimes been found in legal innovations and, in other cases, in institutional or market-based solutions.

Suggested Citation

Hilt, Eric, History of American Corporate Governance: Law, Institutions, and Politics (December 2014). Annual Review of Financial Economics, Vol. 6, pp. 1-21, 2014, Available at SSRN: https://ssrn.com/abstract=2530474 or http://dx.doi.org/10.1146/annurev-financial-110613-034509

Eric Hilt (Contact Author)

National Bureau of Economic Research (NBER)

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