Substitutes for Legal Protection: Corporate Governance and Dividends in Victorian Britain

27 Pages Posted: 14 Apr 2011

See all articles by Gareth Campbell

Gareth Campbell

Queen's University Belfast - Queen's Management School; Queen's University Belfast

John D. Turner

Queen's University Belfast; Queen's University Belfast - Queen's Management School

Abstract

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.

Suggested Citation

Campbell, Gareth and Turner, John D., Substitutes for Legal Protection: Corporate Governance and Dividends in Victorian Britain. The Economic History Review, Vol. 64, No. 2, pp. 571-597, 2011, Available at SSRN: https://ssrn.com/abstract=1809385 or http://dx.doi.org/10.1111/j.1468-0289.2010.00545.x

Gareth Campbell

Queen's University Belfast - Queen's Management School

Riddel Hall
185 Stranmillis Road
Belfast, BT9 5EE
United Kingdom

Queen's University Belfast ( email )

Riddel Hall
185 Stranmillis Road
Belfast, BT9 5EE
United Kingdom

John D. Turner

Queen's University Belfast ( email )

David Leir Building
Belfast BT7 1NN, BT9 5AG
Ireland

Queen's University Belfast - Queen's Management School

Riddel Hall
185 Stranmillis Road
Belfast, BT9 5EE
United Kingdom

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