Incentives in Corporations: Evidence from the American Whaling Industry

37 Pages Posted: 16 Apr 2004 Last revised: 6 Jun 2021

See all articles by Eric Hilt

Eric Hilt

National Bureau of Economic Research (NBER); Wellesley College

Date Written: April 2004

Abstract

In the 1830s, when whaling was a prosperous American industry, a number of whaling corporations were chartered. All of them were short-lived. This paper analyzes the failure of corporations in American whaling, and argues that the corporate form was unable to create the incentives requisite for success in the industry. Most nineteenth-century whaling ventures were owned by a small number of local investors, and were configured to provide powerful incentives for their managers. The effect of the corporate form on productivity is analyzed using a newly-collected panel dataset of 874 whaling voyages. Many whaling corporations were managed by individuals who had previously (or would subsequently) manage ventures with the usual ownership structure. Using an individual-fixed-effects framework, a strong negative effect of the corporate form on productivity is identified.

Suggested Citation

Hilt, Eric, Incentives in Corporations: Evidence from the American Whaling Industry (April 2004). NBER Working Paper No. w10403, Available at SSRN: https://ssrn.com/abstract=528984

Eric Hilt (Contact Author)

National Bureau of Economic Research (NBER)

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