This is the first comprehensive study of its kind of corporate governance in the United Kingdom before the introduction of general incorporation. It is based on an analysis of the constitutional provisions (in the form of a charter or a deed of settlement) of 514 companies sampled, out of an estimated 1,400 companies formed between 1720 and 1844; 290 of these were companies that were incorporated by acts of parliament or royal charters. Even a systematic study of these would have been a significant addition to the literature; 214 were unincorporated companies. Adding these to the analysis was a real challenge and a major contribution. Unincorporated companies were privately and contractually formed. They were not registered with the state and did not have to deposit their constitutive documents. Previous historians of the company have never surveyed the stock of unincorporated companies.

Finding their deeds of settlement required a painstaking search through hundreds of repositories in archives throughout the United Kingdom. The authors then identified and coded 90 different variables related to these companies and their constitutional documents. Analysis of these documents is the end stage of a formidable historical research project.

Chapters 4–6, the center of the study, present the authors’ findings on corporate governance issues, and particularly the division of powers between the directors (and their board) and the shareholders (and their general meeting). The general trend identified is a shift of powers from shareholders to directors. In the eighteenth century, issues such as appointment, dismissal, and remuneration of directors and employees, audit and accounts, borrowing, and key operational issues were either decided or approved by the shareholders. Significant shareholders served as directors in rotation. Board meetings were not frequent. Between 1800 and 1844 shareholding became more of a financial investment, restrictions on buying and selling shares were reduced, the shareholding prerequisites for serving as directors lessened, the powers of directors increased, resort to professional managers was allowed in constitutional documents, the ability of shareholders to call a general meeting was reduced and the quorum requirements diluted. The trend of power shifting from shareholders to directors was analyzed not only over time. The authors show that it was more evident in incorporated companies than in unincorporated companies because the larger firms that could withstand the costs of incorporation were also the ones in which separation of ownership from control appeared in a more significant way. The smaller unincorporated companies remained in the control of their shareholders. Another explanation is that more unincorporated companies were mutual in character and their shareholders preferred to strengthen and maintain their voice rather than trade it for an exit option as was the case in firms that only offered financial investment. It is not clear from the analysis whether unincorporated companies were more democratic because they were smaller or because they were mutual. Some regressions beyond the descriptive statistics could aid the reader on this point. The authors also point to differences between sectors. Contrary to the common wisdom, they convincingly show that it was not only the railways that led the evolution to corporate governance. But they do not fully discuss what may drive the data or explain the differences between sectors. In the concluding chapter (Chapter 9), the authors aim to capture the overall trend from shareholders to directors using a 9-variable corporate governance index they developed. Like all such indices, this index has its problems. Readers could benefit from an explicit discussion that compares it to other more widely used indices such as La Porta, Lopez de Silanes, Shleifer, and Vishny's and acknowledges its shortfalls, which every indexing method has. It uses an unconventional method, which is neither binary 0/1 nor value based, but rather 0, 1, 2, which requires justification.

General meeting voting systems have received much attention in the literature and are dealt with comprehensively in this book. The authors’ first striking finding is the variation: 233 systems were used by the 514 companies covered in the sample. Of these, 180 occurred only once and only 7 appeared 10 times or more, indicating that there was no convergence or standardization in this central and basic aspect of governance. Such variation poses methodological problems on the way to the analysis performed by means of clustering the systems into basic types. On the whole, the trend identified by the authors is a very gradual shift toward removal of capping on voting of larger shareholders, introduction of prohibition on voting by the smallest shareholders, and disappearance of the one-member-one-vote system. It is clear that by the end of the period, a one-share-one-vote system was still not popular. The discussion of the relationship between changes in the voting system and changes in governance is interesting but could be further developed.

Chapter 7 discusses the development of liability regimes. Though the authors discuss them in the context of internal governance, in fact they are more about creditors and debt finance. The main finding is that limited liability was not explicitly mentioned in the constitutions of most of the incorporated companies except between 1840 and 1844. This might suggest that limitation of liability was not a major motive for incorporation.

The quantitative sections of the book are meticulous and thought-provoking. Their analysis is careful and sensitive to the limitations of the sample and the data, and to conflicting trends. The chapters that offer legal and economic history background (Chapters 2 and 3) and the case studies in the quantitative chapters are illuminating. But the meta-narrative sketched in the introduction and the conclusion is not well-supported by the evidence. It suggests a shift from a democratic to a plutocratic governance structure, from shareholders who felt attachment to their company to alienated shareholders who are there solely as financial investors. This narrative suggests that corporate governance was transformed in parallel to the transformation of the political culture and was influenced by it. But the quantitative evidence suggests a more complex, nuanced, and enigmatic development. Causation, and even correlation, between political changes and the pattern of corporate governance changes are not convincingly supported. The period 1840–1844 does not fit the meta-narrative well. The size of companies decreased. Governance of corporations became more participatory. Unincorporated companies shifted toward directors’ domination just before they disappeared with general incorporation. Limited liability suddenly became desirable. The meta-narrative is not inconceivable. It simply does not emerge out of the remarkable quantitative study.

The book is a major contribution to the literature on the history of corporate governance. It is based on a vast sample, carefully presented data, and fine analysis. As with many good empirical studies, it raises more questions that it can answer. Future scholarship will view this book as an essential point of reference.