| Title | Journal | Date | Author | Abstract | Link |
|---|
| Why Did Shareholder Liability Disappear? | Journal of Financial Economics | 20240201 | 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. | View Infographic |
| Business Creation and Political Turmoil: Ireland versus Scotland before 1900 | Business History Review | 20221201 | 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. | View Infographic |
| Before the Cult of Equity: The British Stock Market, 1829-1929 | European Review of Economic History | 20211101 | Campbell, Gareth; Grossman, Richard S.; Turner, John D. | We analyze the development and performance of the British equity market during the era when it reigned supreme as the largest in the world. Using an extensive monthly dataset of thousands of companies, we identify the major peaks and troughs in the market and find a relationship with the timing of economic cycles. We also show that the equity risk premium was modest and, contrary to previous research, domestic and foreign stocks earned similar returns for much of the period. We also document the early dominance of the transport and finance sectors and the subsequent emergence of many new industries. | View Infographic |
| From Complementary to Competitive: The London and U.K. Provincial Stock Markets | Journal of Economic History | 20200601 | Rogers, Meeghan; Campbell, Gareth; Turner, John | For many decades, there were stock exchanges operating in provincial cities across Britain. We analyze why companies listed on these markets and how this changed over time. We find that the provincial exchanges had traditionally been complementary to London, providing a trading venue for smaller regional companies. However, they gradually lost their uniqueness and were increasingly competing with London by listing similar stocks. Much of this change can be explained by shifts in industrial composition, leading to more companies being headquartered and listed in the capital and many of the remaining regional firms cross-listing in London to achieve certification. | View Infographic |
| Private Contracting, Law and Finance | Review of Financial Studies | 20191101 | 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. | View Infographic |
| The Liquidity of the London Capital Markets, 1825-70 | Economic History Review | 20180801 | Campbell, Gareth; Turner, John D.; Ye, Qing | This article examines the liquidity of the London capital markets in the decades following the liberalization of UK incorporation law. Using comprehensive stock and bond data, we calculate a measure of market liquidity for the period 1825-70. We find that stock market liquidity trended upwards but bond market liquidity did not increase over the sample period. Stock market liquidity during our sample period was partially influenced by the bond market, rather than fluctuations in economic output. In our analysis of the cross-sectional determinants of individual stock liquidity, we find that firm size and the number of issued shares were important determinants of liquidity. Finally, we find little evidence of an illiquidity premium, which is consistent with the view that investors did not price liquidity in this nascent market. | View Infographic |
| Who Financed the Expansion of the Equity Market? Shareholder Clienteles in Victorian Britain | Business History | 20170401 | 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. | View Infographic |
| Corporate Ownership, Control, and Firm Performance in Victorian Britain | Journal of Economic History | 20160301 | 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. | View Infographic |
| This Time Is Different: Causes and Consequences of British Banking Instability over the Long Run | Journal of Financial Stability | 20161201 | Campbell, Gareth; Coyle, Christopher; Turner, John D. | This paper addresses three questions: (1) How severe were the episodes of banking instability experienced by the UK over the past two centuries? (2) What have been the macroeconomic indicators of UK banking instability? and (3) What have been the consequences of UK banking instability for the cost of credit? Using a unique dataset of bank share prices from 1830 to 2010 to assess the stability of the UK banking system, we find that banking instability has grown more severe since the 1970s. We also find that interest rates, inflation, lending growth, and equity prices are consistent macroeconomic indicators of UK banking instability over the long run. Furthermore, utilising a unique dataset of corporate-bond yields for the period 1860 to 2010, we find that there is a significant long-run relationship between banking instability and the credit-risk premium faced by businesses. | View Infographic |
| Corporate Ownership and Control in Victorian Britain | Economic History Review | 20150801 | 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. | View Infographic |
| Active Controllers or Wealthy Rentiers? Large Shareholders in Victorian Public Companies | Business History Review | 20151201 | 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. | View Infographic |
| Managerial Failure in Mid-Victorian Britain? Corporate Expansion during a Promotion Boom | Business History | 20151001 | 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. | View Infographic |
| Deriving the Railway Mania | Financial History Review | 20130401 | Campbell, Gareth | This article argues that the promotion boom which occurred in the railway industry during the mid 1840s was amplified by the issue of derivative-like assets, which let investors take highly leveraged positions in the shares of new railway companies. The partially paid shares which the new railway companies issued allowed investors to obtain exposure to an asset by paying only a small initial deposit. The consequence of this arrangement was that investor returns were substantially amplified, and many schemes could be financed simultaneously. However, when investors were required to make further payments it put a negative downward pressure on prices. | View Infographic |
| Myopic Rationality in a Mania | Explorations in Economic History | 20120101 | Campbell, Gareth | The rationality of investors during asset price bubbles has been the subject of considerable debate. An analysis of the British Railway Mania, which occurred in the 1840s, suggests that investors may have been myopic, as their expectations were only accurate in the short-term, but they remained rational, as they acted in a utility maximising manner given their expectations. Investors successfully incorporated forecasts of short-term dividend changes into their valuations, but were unable to predict longer-term changes. When short-term growth is controlled for, it appears that the railways were priced consistently with the non-railways throughout the entire episode. | View Infographic |
| The Role of the Media in a Bubble | Explorations in Economic History | 20121001 | Campbell, Gareth; Turner, John D.; Walker, Clive B. | We examine the role of the news media during the British Railway Mania, arguably one of the largest financial bubbles in history. Our analysis suggests that the press responded to changes in the stock market, and its reporting of recent events may have influenced asset prices. However, we find no evidence that the sentiment of the media, or the attention which it gave to particular stocks, had any influence on exacerbating or ending the Mania. The main contribution of the media was to provide factual information which investors could use to inform their decisions. | View Infographic |
| Dispelling the Myth of the Naive Investor during the British Railway Mania, 1845-1846 | Business History Review | 20120301 | 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. | View Infographic |
| Substitutes for Legal Protection: Corporate Finance and Dividends in Victorian Britain | Economic History Review | 20110501 | 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. | View Infographic |
| Independent Women: Investing in British Railways, 1870-1922 | Economic History Review | 20210501 | Acheson, Graeme G.; Campbell, Gareth; Gallagher, Aine; Turner, John D. | The early twentieth century saw the British capital market reach a state of maturity before any of its global counterparts. This coincided with more women participating directly in the stock market. This study analyses whether these female shareholders chose to invest independently of men. Using a novel dataset of almost 500,000 shareholders in some of the largest British railways, it shows that women were much more likely to be solo shareholders than men. There is also evidence that they prioritized their independence above other considerations such as where they invested or how diversified they could be. | View Infographic |
| What Moved Share Prices in the Nineteenth-Century London Stock Market? | Economic History Review | 20180201 | Campbell, Gareth; Quinn, William; Turner, John D.; Ye, Qing | Using a new weekly blue-chip index, this article investigates the causes of stock price movements on the London market between 1823 and 1870. We find that economic fundamentals explain about 15 per cent of weekly and 34 per cent of monthly variation in share prices. Contemporary press reporting from the London Stock Exchange is used to ascertain what market participants thought was causing the largest movements on the market. The vast majority of large movements were attributed by the press to geopolitical, monetary, railway-sector, and financial-crisis news. Investigating the stock price changes on an independent list of events reaffirms these findings, suggesting that the most important specific events that moved markets were wars involving European powers. | View Infographic |
| Integration between the London and New York Stock Exchanges, 1825-1925 | Economic History Review | 20171101 | Campbell, Gareth; Rogers, Meeghan | In this article the integration between the London and New York Stock Exchanges is analysed during the era when they were still developing as asset markets. The domestic securities on both exchanges showed little sustained integration, even when controlling for the different characteristics of stocks, which implies that the pricing of securities in the US and UK was still being driven by local factors. These results place a limit on the view that the pre-First World War period was the first era of globalization in terms of capital markets. However, there was considerable integration between New York and those listings on London that operated internationally. This suggests that the listing of foreign securities may be one of the primary mechanisms driving asset market integration. | View Infographic |
| Government Policy during the British Railway Mania and the 1847 Commercial Crisis | British Financial Crises Since 1825 | 20140101 | 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. | View Infographic |
| Capital Structure Volatility in Europe | International Review of Financial Analysis | 20180101 | 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. | View Infographic |
