Questions about ownership and control occupy a lot of my cognitive energy. They are also important questions within finance, law, management, and economics. Is separating ownership and control a good idea? Most of modern finance is premised on the idea that it is a bad idea and that the resultant agency problem needs addressed using all sorts of incentives. However, Colin Mayer in Firm Commitment suggests that separating ownership from control may have been a helpful innovation in the evolution of the corporation in that third parties are more likely to enter commitments and contracts with firms which don't have a dominant owner. Along with two co-authors I argue in this article that the ability to separate ownership from control is one of the rationales for the corporation.
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.