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TY - JOUR
T1 - Does Limited Liability Matter? Evidence from Nineteenth-Century British Banking1
AU - Acheson, Graeme
N1 - Reference text: Acheson, Graeme G., and John D. Turner. 2006. The Impact of Limited Liability on Ownership and Control: Irish Banking, 1877-1914. Economic History Review 59: 320-46. Acheson, Graeme G., and John D. Turner. 2008. The Death Blow to Unlimited Liability in Victorian Britain: The City of Glasgow Failure. Explorations in Economic History 45: 235-53. Alchian, Armen. A., and Susan Woodward. 1987. Reflections on the Theory of the Firm. Journal of Institutional and Theoretical Economics 143: 110-136. Anderson, B. L., and Philip L. Cottrell. 1975. Another Victorian Capital Market: A Study of Banking and Bank Investors on Merseyside. Economic History Review 28: 600-615. Anderson, Gary M., and Robert D.Tollison. 1983. The Myth of the Corporation as a Creation of the State. International Review of Law and Economics 3: 107-120. Barrow, G. L. 1975. The Emergence of the Irish Banking System, 1820-1845. Dublin: Gill and Macmillan Ltd.. Bell, George J. 1858. 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A Treatise on the Law of Partnership and Joint-Stock Companies According to the Law of Scotland. Edinburgh: T. & T. Clark. 29 Collins, Michael. 1989. The Banking Crisis of 1878. Economic History Review 42: 504-527. Copeland, Thomas E. 1979. Liquidity Changes Following Stock Splits. Journal of Finance 34: 115-141. Crick, W. F. and J. E. Wadsworth. 1936. A Hundred Years of Joint Stock Banking. London: Hodder and Stoughton. Dick, James. 1884. Banking Statistics: A Record of Nine Years’ Progress. Journal of the Institute of Bankers 5: 317-69. Dowd, Kevin. 2009. Moral Hazard and the Financial Crisis. Cato Journal 29: 141-166. Dun, John. 1876. The Banking Institutions, Bullion Reserves, and Non-Legal-Tender Note Circulation of the United Kingdom Statistically Investigated. Journal of the Statistical Society 39: 1-189. England, Catherine. 1988. Agency Costs and Unregulated Banks: Could Depositors Protect Themselves? Cato Journal 7: 771-797. Evans, Lewis T., and Neil C. Quigley. 1995. 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PY - 2010/4/1
Y1 - 2010/4/1
N2 - The superiority of the corporation over other organizational forms is typicallyattributed to the fact that every owner has limited liability. The widely-held, butempirically unsubstantiated, view is that the main advantage of limited liability overextended shareholder liability is that the enforcement costs of the latter generallyimpedes the tradability and liquidity of stock. We use the rich shareholder-liabilityexperience of nineteenth-century British banking to test this standard view. As wellas exploring the means by which unlimited liability was enforced, we examine theimpact of liability regimes on the tradability and liquidity of stock. Our evidencesuggests that liability rules appear to be irrelevant from the perspective of stocktradability and liquidity.
AB - The superiority of the corporation over other organizational forms is typicallyattributed to the fact that every owner has limited liability. The widely-held, butempirically unsubstantiated, view is that the main advantage of limited liability overextended shareholder liability is that the enforcement costs of the latter generallyimpedes the tradability and liquidity of stock. We use the rich shareholder-liabilityexperience of nineteenth-century British banking to test this standard view. As wellas exploring the means by which unlimited liability was enforced, we examine theimpact of liability regimes on the tradability and liquidity of stock. Our evidencesuggests that liability rules appear to be irrelevant from the perspective of stocktradability and liquidity.
U2 - 10.2202/1555-5879.1444
DO - 10.2202/1555-5879.1444
M3 - Article
VL - 6
JO - Review of Law and Economics
JF - Review of Law and Economics
SN - 1555-5879
IS - 2