Law, Economics and the UK's System of Corporate Governance: Lessons from History

Abstract

Share ownership in the United States is widely dispersed instead of being concentrated in the hands of families, banks or other firms. Most of the country's major companies have publicly traded shares and few of these have a shareholder that owns enough equity to have any sort of “inside” influence. The result, as Berle and Means argued in their famous 1932 book, is a separation of ownership and control. American academics have offered various theories to explain why US corporate governance evolved in the manner it did. Examining historical developments in the United Kingdom provides a good way to evaluate these theories since, with respect to corporate governance, the United States has more in common with Britain than it does with other major industrial nations. This article provides an overview of the lessons that can be derived from the British experience. In so doing, it draws attention to the implications for countries that may be experiencing some form of convergence towards the Anglo-American pattern.

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