Incentives in Corporations: Evidence from the American Whaling Industry

Eric Hilt

NBER Working Paper No. 10403
Issued in April 2004
NBER Program(s):   DAE

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.

(314 K)

Published: Hilt, Eric. "Incentives In Corporations: Evidence From The American Whaling Industry," Journal of Law and Economics, 2006, v49(1,Apr), 197-227.

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