Banks on board: German and American corporate governance, 1870–1914

Fear, J. and Kobrak, C. (2010) Banks on board: German and American corporate governance, 1870–1914. Business History Review, 84(4), pp. 703-736. (doi:10.1017/S0007680500001999)

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Abstract

This examination of the foundations of German and American corporate governance highlights the role of money-centered banks, both as board members in large corporations and as intermediaries on the stock exchange. German banks, by acting as surrogate regulators, became institutional stabilizers, and German regulators encouraged banks to participate in corporate boards in order to overcome agency problems in firms and to control speculation. American investment banks, prior to 1914, often managed to overcome regulatory obstacles, which enabled them to wield more power over corporations than their legendary German counterparts. American banks had more opportunities to intervene in the event of panics, bankruptcies, foreign investment, and corporate consolidation. In contrast to Germany, the United States increasingly imposed regulations that circumscribed the supervisory role of banks as board members.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Fear, Professor Jeffrey
Authors: Fear, J., and Kobrak, C.
College/School:College of Social Sciences > School of Social and Political Sciences > Economic and Social History
Journal Name:Business History Review
ISSN:0007-6805
ISSN (Online):2044-768X
Published Online:14 April 2011

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