Last week, my Corporate Finance lectures looked at the relationship between ownership structure and firm performance. Which would you rather invest in: a diffusely-owned company managed by a CEO or a firm with a large shareholder who controls a majority of the firm's voting stock such as Facebook? Click here to read an interesting piece in Slate on why you may not want to invest in Facebook.
My colleague and former PhD student Gareth Campbell has created a website about the British Railway Mania - click here . This episode has been described by the Economist as probably the greatest bubble in human history. Gareth's website provides background on the Mania and posits some explanations for the 'bubble'. In his explanation of why the bubble happened, Gareth places a lot of emphasis on investor myopia regarding future dividends and uncalled capital. His study of investors during the episode does not support the view that this episode was fuelled by naive and irrational investors.
