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An investigation of the ownership and control of American corporations.

University of British Columbia

The modern corporation did not reach its present position of importance in economic and social fact without a long struggle marked by an increasing liberalization of incorporation process and appreciation of its merits by businessmen. This led to the rise of the corporate system and resulted in the concentration of industry in this form. The concentration of economic power in the corporate form was followed by the separation of ownership and management. This process of change lasted several decades and was aided by the increasingly wide dispersion of ownership among thousands upon thousands of scattered shareholders. Historically control was exercised by ownership of a majority of the voting stock. This was a proprietary right. As corporations grew in size and economic importance, ownership began to disperse and control through less than majority ownership evolved. This was aided by legal devices and various techniques that made control possible with a minimum of investment. The bulk of the shareholders were slowly losing their rights and voice in management. The coup was complete with the advent of management control, which stemmed from the wide dispersal of ownership among small scattered stockholders. The rise of the institutional investors completes the circuit with the concentration of holdings in institutional portfolios. Thus, control may once more be dependent on ownership for its existence. The changes that this evolution has brought about have had their effect on the system. Management control, the dominant form of control in industry, at present, has many inherent dangers. Profit is no longer the only motivating force driving the controlling group. The corporation has become a prominent citizen in the community in which it resides, ruled by men accountable to themselves alone. Gone: are the inherent checks on management and the ability to oust them when they become slack or dishonest. Control has become a power position in the economy with no proprietary right to the situation. Ownership has been reduced to the passive position of receiving dividends.

Text

2011-12-01

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http://hdl.handle.net/2429/39429

Business Administration

University of British Columbia

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