Reforming Corporate Governance: What History Can Teach Us
Blair, Margaret M., 1950-
In this Article, I turn to the history of corporate law for insight into the role that the corporate form plays in the organization of business enterprises. I then draw implications from this history for thinking about circumstances and situations in which corporate directors should have unimpeded control over business decisions, versus situations in which shareholders should have more input and control over business decisions. In Part I, I review historical evidence of the rapid growth in demand for the corporate form to organize businesses in the United States during the early nineteenth century. I compare the law that governed corporations at that time to the law that governed partnerships and socalled "joint-stock" companies. This comparison, together with anecdotal evidence from the period, suggests that businesspeople found the corporate form to be a superior mechanism for organizing certain businesses largely because it allowed the entrepreneurs and managers to "lock in" the capital invested in the enterprise, thereby making it possible to invest in long-lived, highly specific assets.