Why Did Shareholder Liability Disappear?
Journal of Financial Economics, 2024

Bogle, David A.; Campbell, Gareth; Coyle, Christopher; Turner, John D. Why did shareholder liability disappear? We address this question by looking at its use by British insurance companies until its complete disappearance. We explore three possible explanations for its demise: (1) regulation and government-provided policyholder protection meant that it was no longer required; (2) it had become de facto limited; and (3) shareholders saw an opportunity to expunge something they disliked when insurance companies grew in size. Using hand-collected archival data, our findings suggest investors attached a risk premium to companies with shareholder liability, and it was phased out as insurance companies expanded, which meant that they were better able to pool risks.

Business Creation and Political Turmoil: Ireland versus Scotland before 1900
Business History Review, 2022

Adams, Robin J. C.; Campbell, Gareth; Coyle, Christopher; Turner, John D. What effect does political instability in the form of a potential secession from a political union have on business formation? Using newly collected data on business creation, we show that entrepreneurial activity in Ireland in the late nineteenth century was much lower than Scotland, and this divergence fluctuated over time. Several factors may have contributed to this, but we argue that political uncertainty about the prospect of a devolved government in Ireland played a role. The effects were most acute in the North of Ireland, the region that was most concerned by potential changes.

Private Contracting, Law and Finance
Review of Financial Studies, 2019

Acheson, Graeme G.; Campbell, Gareth; Turner, John D. In the late nineteenth century Britain had almost no mandatory shareholder protections, but had very developed financial markets. We argue that private contracting between shareholders and corporations meant that the absence of statutory protections was immaterial. Using approximately 500 articles of association from before 1900, we code the protections offered to shareholders in these private contracts. We find that firms voluntarily offered shareholders many of the protections that were subsequently included in statutory corporate law. We also find that companies offering better protection to shareholders had less concentrated ownership.

Capital Structure Volatility in Europe
International Review of Financial Analysis, 2018

Campbell, Gareth; Rogers, Meeghan Contrary to the predictions of the trade-off theory, we find that many companies in Europe had substantial variation in their capital structures between 2006 and 2016. We show that this pattern occurred across countries. Companies with the most volatile debt ratios tended to be smaller, and were less profitable. Their high debt volatility was partly due to high volatility in operating and investing activities, and partly due to a reduced propensity to let cash balances and equity payouts absorb the fluctuations.

Who Financed the Expansion of the Equity Market? Shareholder Clienteles in Victorian Britain
Business History, 2017

Acheson, Graeme G.; Campbell, Gareth; Turner, John D. Who financed the great expansion of the Victorian equity market, and what attracted them to invest? Using data on 453 firm-years and over 172,000 shareholders, we find that the largest providers of capital were rentiers, men with no formal occupation who relied on investment income. We also see a substantial growth in women investors as time progressed. In terms of clientele effects, we find that rentiers invested in large firms, whilst businessmen were the venture capitalists of young, regional enterprises. Women and the middle classes preferred safe investments, whilst financiers and institutional investors were speculators in foreign companies. Our results may help to explain the growth of new types of assets catering for particular clienteles, and the development of managerial policies on dividends and share issues.

Corporate Ownership, Control, and Firm Performance in Victorian Britain
Journal of Economic History, 2016

Acheson, Graeme G.; Campbell, Gareth; Turner, John D.; Vanteeva, Nadia Scholars have long debated whether ownership matters for firm performance. The standard view regarding Victorian Britain is that family-controlled companies had a detrimental effect on performance. In this article, we examine this view using a hand-collected corporate ownership dataset. Our main finding is that it was not necessarily the broad structure of corporate ownership that mattered for performance, but whether family blockholders had a governance role. Large active blockholders tended to increase operating performance, implying that they reduced managerial expropriation. Contrastingly, we find that directors who were independent of large owners were more likely to increase shareholder value.

Active Controllers or Wealthy Rentiers? Large Shareholders in Victorian Public Companies
Business History Review, 2015

Acheson, Graeme G.; Campbell, Gareth; Turner, John D. This article addresses the issue of whether large shareholders in Victorian public companies were active in the control of companies or were simply wealthy rentiers. Using ownership records for 890 firm-years, we examine the control rights, socio-occupational background, and wealth of large shareholders. We find that many large shareholders had limited voting rights and neither they nor family members were directors. This implies that the majority of public companies in the second half of the nineteenth century cannot be characterized as family companies and that large shareholders are better viewed as wealthy gentlemen capitalists rather than entrepreneurs.

Managerial Failure in Mid-Victorian Britain? Corporate Expansion during a Promotion Boom
Business History, 2015

Campbell, Gareth; Turner, John D. This article examines the mid-1840s expansion of the British railway network, which was associated with a large deterioration in shareholder value. Using a counterfactual approach and new data on railway competition, we argue that the expansion of the railway companies, and their subsequent decline in financial performance, was not due to managerial failure. Rather, the promotion of new routes by established railways and mergers with other companies was part of a managerial strategy to maintain incumbent positions, and may have been preferable to not expanding whilst their competitors did.

Corporate Ownership and Control in Victorian Britain
Economic History Review, 2015

Acheson, Graeme G.; Campbell, Gareth; Turner, John D.; Vanteeva, Nadia Using ownership and control data for 890 firm-years, this article examines the concentration of capital and voting rights in British companies in the second half of the nineteenth century. We find that both capital and voting rights were diffuse by modern-day standards. However, this does not necessarily mean that there was a modern-style separation of ownership from control in Victorian Britain. One major implication of our findings is that diffuse ownership was present in the UK much earlier than previously thought, and given that it occurred in an era with weak shareholder protection law, it somewhat undermines the influential law and finance hypothesis. We also find that diffuse ownership is correlated with large boards, a London head office, non-linear voting rights, and shares traded on multiple markets.

Government Policy during the British Railway Mania and the 1847 Commercial Crisis
British Financial Crises Since 1825, 2014

Campbell, Gareth During the 1840s, Britain experienced a period of financial turbulence. Railway share prices rose and fell dramatically during the Railway Mania, there was a surge and then crash in the price of corn, and a Commercial Crisis followed. The development of an asset price reversal, a commodity price reversal, and problems in the commercial and banking sectors within such a short period of time makes this a particularly interesting episode, and the variety and intensity of events makes it a useful study in how to deal with financial instability.

Dispelling the Myth of the Naive Investor during the British Railway Mania, 1845-1846
Business History Review, 2012

Campbell, Gareth; Turner, John D. Anecdotal evidence from the British Railway Mania and other historical financial bubbles suggests that many investors during such episodes are naive, thus contributing to the asset price boom. Using extensive investor records, we find that very few investors during the Railway Mania can be categorized as such. Although some interpretations of the Mania suggest that naive investors were expropriated by railway insiders, our evidence is inconsistent with this view as railway insiders contributed substantial amounts of capital, and their investments performed no better than those made by other experienced investors.

Substitutes for Legal Protection: Corporate Finance and Dividends in Victorian Britain
Economic History Review, 2011

Campbell, Gareth; Turner, John D. Companies in Victorian Britain operated in a laissez-faire legal environment from the perspective of outside investors, implying that such investors were not protected by the legal system. This article seeks to identify the alternative mechanisms that outside shareholders used to protect themselves by examining the dividend policy and governance of over 800 publicly traded companies at the beginning of the 1880s. We assess the importance of these mechanisms by estimating their impact on Tobin's Q. Our evidence suggests that dividends and well-structured and incentivized boards of directors may have played a role in protecting the interests of outside investors.