History of American Corporate Governance: Law, Institutions, and Politics
This paper presents an overview of the history of corporate governance in the United States, emphasizing the period before the advent of federal securities laws and the Securities and Exchange Commission (SEC). Recent research has overturned many widely accepted beliefs about corporate governance during this period. In particular, the evolution of American corporate governance has not followed a simple, linear trajectory, beginning with small, well-governed firms and ending with large, poorly governed ones. Over time, economic and institutional changes have given rise to successive generations of corporations with their own governance problems and their own mechanisms to address those problems. When existing governance mechanisms failed, the United States experienced corporate governance crises--episodes that shattered investors' faith in corporate management and the legal institutions intended to protect their rights. The resolutions of these crises have sometimes been found in legal innovations, and in other cases, in institutional or market-based solutions.
I would like to thank Carola Frydman, David Robinson, Naomi Lamoreaux, Antoinette Schoar, and Marc Weidenmier for comments. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
Eric Hilt, 2014. "History of American Corporate Governance: Law, Institutions, and Politics," Annual Review of Financial Economics, Annual Reviews, vol. 6(1), pages 1-21, December. citation courtesy of