In Imperial Russia, incorporation required an expensive special concession, yet over 4,000 Russian firms incorporated before 1914. I identify the characteristics of incorporating firms and measure the productivity gains and growth in machine power enjoyed by corporations using newly-constructed factory-level panel data compiled from Russian factory censuses. Factories owned by corporations were larger, more productive, and more mechanized than unincorporated factories. Higher productivity factories were more likely to incorporate and, after incorporating, added machine power and became even more labor productive. Russian firms sought the corporate form’s full set of advantages, not just stock markets access, to obtain scarce long-term financing. (JEL D24, G31, G32, L60, N43, N63)

This article investigates the financing of corporations in industrialization’s early stages by examining new balance sheet data describing all Imperial Russian corporations in 1914. We emphasize differences between two Russian corporation types: share partnerships and A-corporations. Share partnerships issued greater dividends, were less likely to issue bonds, and had larger accounts payable. We find that capital structures varied with age, size, and sector according to modern corporate finance theories and that scaled profits did not demonstrate differential market power across corporation types. Thus, Russian corporations exhibited considerable financial flexibility, and reducing incorporation costs could have benefited the Imperial Russian economy.

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During the nineteenth and early twentieth centuries, western European countries introduced general incorporation and additional flexible enterprise forms, but the Russian Empire left its concession system of incorporation in place. The Empire's only major corporation reform, the 1901 law, strengthened minority shareholder rights and removed bankers from boards of directors for certain corporations. The reform offers a rare opportunity to examine the financial effects of improving corporations' principal-agent relationships through regulation, because the reform did not affect all corporations equally. Corporations affected by the reform had smaller total share capital, fewer shares, and higher par values for shares as observed in 1905. The new regulations may have increased the cost of having shareholders and hence disciplined corporations' founders to be more conservative in raising capital by issuing stock. Removing bankers from boards of directors may have removed an important source of firms' founding capital, though corporations could easily evade this provision. The results also show that, although the commercial code treated all corporations equally, there were two major groups of Russian corporations that behaved differently, and, despite the fact that corporate charters could grant individual exceptions to the commercial code, a revision in the commercial code changed corporations' behaviour.

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