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

Hilt, Eric

doi:10.3386/w20356

Cited by 8 publications

(3 citation statements)

References 25 publications

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“…In contrast, in state-owned enterprises 1 (SOEs), a so-called "twin-agency" problem (Stulz, 2005) may arise: the first is the agency problem between the manager and the state as a controlling shareholder, the other is the agency problem between the state and the public citizens, because the state as a controlling shareholder may have different goals than other types of shareholders. Such new forms of agency conflicts that arise from the state's power to control the creation of corporations or expropriate existing enterprises, Hilt (2014) argues, have also been a central concern at the dawn of the U.S. Corporation.…”

Section: Introductionmentioning

confidence: 99%

The political determinants of executive compensation: Evidence from an emerging economy

Liang

Renneboog

Sun

2015

Emerging Markets Review

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Section: Introductionmentioning

confidence: 99%

The political determinants of executive compensation: Evidence from an emerging economy

Liang

Renneboog

Sun

2015

Emerging Markets Review

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“…At that time, the weak legal protections available for minority investors failed to constrain the behavior of controlling insiders, and asymmetries of information between those insiders and outside investors were acute (Hilt, 2014). That era of "ruthless and criminal abuse of power" by controlling shareholders was plagued by scandals, which repeatedly shook the confidence of outside investors in railroad securities.…”

Section: Underwriters and Railroad Governancementioning

confidence: 99%

Investment Banks as Corporate Monitors in the Early 20th Century United States

Frydman¹,

Hilt²

2014

Self Cite

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Abstract:We study the effect of relationships with financial intermediaries on firms' investment decisions and access to external finance. In the early twentieth century, securities underwriters commonly held directorships with American corporations; this was especially true for railroads, the largest enterprises of the era. Section 10 of the Clayton Antitrust Act of 1914 prohibited investment bankers from serving on the boards of railroads for which they underwrote securities, in order to eliminate the bankers' conflicts of interest. Using the volume of underwriting done by bankers on their boards to capture the extent to which railroads were affected by the regulation, we find that following the implementation of Section 10 in 1921, railroads that had maintained close affiliations with underwriters saw declines in their valuations, investment rates and leverage ratios, and increases in their costs of external funds. We perform falsification tests using data for industrial corporations, which were not subject to the prohibitions of Section 10, and find no differential effect of relationships with underwriters on these firms following 1921. Our results are consistent with the predictions of a simple model of underwriters on corporate boards acting as delegated monitors. Our findings also highlight the potential for regulations intended to address conflicts of interest to disrupt valuable information flows.

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“…If preferred shares and other classes of common shares were considered, some control blocks might well be much lower and some wedges much higher. 31 This statement contradicts Hilt (2014) who argues that ownership in the United States was dispersed even in the early decades of the nineteenth century. Becht and DeLong (2005) describe a process by which ownership gradually became more dispersed in many firms during the first half of the twentieth century.…”

mentioning

confidence: 99%