Disclosure regulation and public policy a sociohistorical reappraisal

Law and politics affect the financial structure of the public corporation, perhaps as much as economics. Law restricts financial institutions from holding large equity blocks and from networking the small blocks they do own. Impetus for these restrictions came from several sources: a public-spirited belief that financial stability would be fostered by financial fragmentation, American federalism (each state created its own insular set of financial institutions), rivalries between groups of financial institutions, and popular mistrust of powerful private financial institutions. The stability of many of these rules also derives from the political resistance that one would expect corporate managers and benefited financial institutions to offer to any change.

Political and Legal Restraints on Ownership and Control of Public Companies

An ecological conceptualization of the uwrld system of cities is proposed based both on an extension of the ecological rationale for a national system of cities and on insights from uorld-system theory and research. The core concepts are divided into five categories: (1) the key function, (2) hierarchy and dominance-the vertical dimension, (3) specialization-the horizontal dimension, (4) interaction, and (5) dynamics. As a test of selected ideas, the dominance of core international financial metropolises over peripheral South American cities is examined; the measure is the international bank headquarters-branch office link. The hypotheses of ecological dominance were confirmed. The core metropolises dominate the peripheral metropolises of South America, and within the core the upper level metropolises exert greater dominance than the lower level metropolises. The national metropolises of South America are the key intermediaries with international metropolises, but the former have few links among themselves. The world system of cities based on finance seems to be organized independently of national or world regional boundaries. The global expansion of multinational corporations since 1950 has created a network of international economic transactions within and between businesses such as industrial firms, banks, commodity firms, and trading companies. Ecologists argue that these intercommunity transactions are controlled and coordinated by organizations which are concentrated in metropolises; therefore, urban ecological inquiry about the system of cities should include the world scale. The system of cities in the United States, however, has been the focus of ecologists; they have neglected the world system of cities (Wilson). The purpose of this paper is to extend the ecological framework for examining the system of cities to the world scale.

The World System of Cities: Relations Between International Financial Metropolises and South American Cities

We study the effect of financial relationships on firms' investment decisions and access to external finance. In the early twentieth century, securities underwriters commonly held directorships with American corporations. Section 10 of the Clayton Antitrust Act prohibited bankers from serving on the boards of railroads for which they underwrote securities. We find that following the implementation of Section 10, railroads with strong preexisting relationships with underwriters saw declines in their investment rates, valuations, and leverage, and increases in their costs of external funds. Reassuringly, we do not observe similar effects among industrials and utilities, which were not subject to Section 10. Our results are consistent with underwriters on corporate boards acting as delegated monitors, and highlight the potential for regulations intended to address conflicts of interest to disrupt valuable information flows.

/pdf/investment-banks-as-corporate-monitors-in-the-early-1q8cn8hu69.pdf

Investment banks as corporate monitors in the early twentieth century United States

Before World War 11, the U.S. state played a negligible role in the investment process. But the state dominated the investment process during World War 11, and at war's end it owned 40 percent of the nation's capital assets. This structural transformation offers an ideal opportunityfor refining theories of the state. The state's investment policies were influenced by its warmaking agenda and by interagency infighting over the ends and means of state policy. I attempt to reconcile the state's ascendance to international prominence with the confusion and disunity among the agencies that supplied industrialfinancing. I adapt leading theories of the state business dominance theory, structuralist Marxism, and state-centered theory to the middle range by identifying the institutional contexts in which the outcomes asserted by each theory are likely. Business dominance theory offers insights into state subsidy ofprivatefinancing -an institutional arena in which economic elites were dominant. Structuralist Marxism sheds light on the lending practices of the emergency civilian agency that financed and owned a number offactories. Because the state depended on monopoly sector firms during the war, many of the state's investments represented a capital infusion rather than a threat to private control of the postwar investment process. State-centered theory offers insights when considering the military's direct investments. The militaryfinanced and retained ownership of important factories in the nascent military-industrial complex.

The weakness of strong theories: the U.S. State's dominance of the World War II investment process

/pdf/the-evolution-of-finance-capitalism-3kwpmzebk0.pdf

The Evolution of Finance Capitalism.

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The Evolution of Finance Capitalism.