A new view of shareholder voting in the nineteenth century: evidence from Brazil, England and France

Abstract

Business corporations in the nineteenth century often imposed limits on the voting rights of large shareholders. Economic historians have generally interpreted these voting restrictions as a contractual mechanism designed to protect small shareholders in a legal environment that afforded insufficient investor protection. This dominant account, however, fails to explain the variation in the incidence of voting restrictions across different industries and firm ownership structures, as well as their eventual disappearance from corporate charters over time. In this Article, we advance an alternative interpretation for these early voting schemes as efforts at consumer protection employed primarily by firms that were local service monopolies and collectively owned by their principal customers, none of whom wished the firm to come under the exclusive control of their competitors or of profit-maximising investors. We explore and test this proposition by analysing data on shareholder voting rights in the nineteenth century in Brazil, England, and France.