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Does Regulation Matter? an Analysis of Corporate Charters in a Laissez-Faire Environment*

Published online by Cambridge University Press:  19 March 2013

Gonzalo Islas Rojas
Gonzalo Islas Rojas*
Affiliation:
Escuela de Negocios, Universidad Adolfo Ibáñez.Diagonal Las Torres 2640, Peñalolén, Santiago, Chile. [email protected]
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Abstract

Are laws that protect minority investors a necessary condition for the development of stock markets? This paper attempts to answer this question using data on the origins of the corporate sector in Chile to construct an empirical analysis of the contractual provisions included in charters of corporations in the 19th century. Our findings indicate that, even though corporate law at the time was silent with respect to governance rules and investor protection, a significant number of corporations were created and their shares traded. The empirical analysis of the corporate charters reveals that these contracts frequently included provisions favourable to outside investors and the use of these provisions is consistent with the predictions of a simple agency model.

Resumen

¿Son las leyes que protegen a los accionistas minoritarios una condición necesaria para el desarrollo de los mercados de capitales? Este ensayo intenta responder esta pregunta usando datos sobre los orígenes de las sociedades anónimas en Chile para desarrollar un análisis empírico de las condiciones contractuales incluidas en los estatutos de estas empresas durante el siglo XIX. Se muestra que, pese a que la legislación chilena no incluía normas referidas a gobierno corporativo y protección a accionistas minoritarios, durante este periodo se desarrolló un mercado activo. El análisis empírico revela que los estatutos de las sociedades anónimas frecuentemente incluían cláusulas que establecían derechos para los inversionistas minoritarios y que el uso de estas cláusulas contractuales es consistente con las predicciones de un modelo de agencia simple.

Keywords

Chilecorporate governancecorporate lawChilegobierno corporativoderecho de sociedades

JEL classification

N26: Latin America • Caribbean G34: Mergers • Acquisitions • Restructuring • Corporate Governance K22: Business and Securities Law
Type
Articles/Artículos
Information
Revista de Historia Economica - Journal of Iberian and Latin American Economic History , Volume 31 , Issue 1 , March 2013 , pp. 11 - 39
Copyright
Copyright © Instituto Figuerola de Historia y Ciencias Sociales, Universidad Carlos III de Madrid 2013 

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Footnotes

*

This paper corresponds to chapter 2 of his doctoral dissertation. The author thanks his thesis advisor Jean-Laurent Rosenthal. He is grateful for the comments and suggestions of Naomi Lamoreaux and the late Ken Sokoloff. He also thanks Roberto Alvarez, Leah Brooks, Mark Dincecco, Judith Frias, Eric Hilt, Aldo Musacchio, two anonymous referees and participants at the Economic History Proseminar at UCLA, Workshop on Comparative Corporate Governance in the Pacific Region, Economic History Association Annual Meeting, the Economics Department Seminar at Universidad de Chile and the Finance and Economics Seminar at IESE. The author accepts all the errors as his own. He gratefully acknowledges the Bradley Foundation and Universidad Adolfo Ibáñez for their financial support.

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