The Divorce of Ownership from Control from 1900: Re-calibrating Imagined Global Historical Trends By Leslie Hannah, University of Tokyo. Submitted to Business History for publication circa October 2007. Leslie Hannah Department of Economics, University of Tokyo, 7-3-1 Hongo, Bunkyo-ku, Tokyo 113-0033. Email:
[email protected] 1 ABSTRACT In 1900 US business corporations were dominated by plutocratic family owners, while British and French quoted companies more commonly divorced ownership from control. ‘Democratic’ corporate governance rules explain some of Europe’s precocity and London’s exceptional listing requirement of large free floats was an important initial factor in manufacturing. Later in the twentieth century, the United States overtook France by further divorcing ownership from control. Business historians should direct their efforts to understanding why Britain was an early pioneer, with persistently wide shareholding, why America took decades to catch up, and why other countries did not build on their earlier lead. The pursuit of alternative (largely imagined) histories of national ownership differences could usefully be curtailed. Keywords: ownership and control; share ownership; family ownership; managerial capitalism; corporate governance. I am grateful to Youssef Cassis, Colleen Dunlavy, Edwin Green, Colin Mayer, Ranald Michie, Yoshiro Miwa, Mary O’Sullivan, Richard Sylla and Horst Wessel for advice, without implicating them in the conclusions drawn. 2 Introduction One of the stylized facts of twentieth-century business history is the increasing divorce of management control from shareholding ownership. Scholars have debated its extent and whether it has really fundamentally changed capitalism, though few have questioned that ownership did become increasingly divorced from control.