Essentials of Corporate Governance

Chapter 2. History

After reading this chapter, you will be able to

• Understand how the corporate structure came to be

• Understand the various forms of corporate structure

• Understand significant events in U.S. corporate history

Vital to understanding where we are going is understanding where we have been. This is important not only to ensure that we do not make the same mistakes as our predecessors, but also to create a deeper understanding of things as they are.

Corporations and the corporate structure are integrally linked to the cultural environment in which they are built. It is because of each country’s unique political, social, and economical landscape that corporate structure and practice vary so widely around the globe.

In terms of Corporate Governance and the U.S. corporate structure, the history is long and very eventful. The pages of this chapter disclose some of the most important events in the history of U.S. corporations. These events include the takeover eras, the 1929 stock market crash, corporate scandals at the turn of the millennium, and important corporate legislation.

The Early Years

One of the earliest of the modern corporations was the East India Trading Company, created at the turn of the sixteenth century. This corporation, like most others at the time, was created by the British Crown.^[1]

In fact, in the early years, the United States was partially run by corporations, when some individual states were ruled by companies, such as the Massachusetts Bay Company.^[2] After ...