Abstract: The Character and Denomination of Shares in the Victorian Equity Market
This paper examines the extent to which publicly traded company stocks in nineteenth-century Britain had the following features: high share denominations and high levels of unpaid capital. Using monthly data for the London stock market over the period 1825-1870, the effect of these features on stock returns is then assessed. We find that stocks with unpaid capital earn a higher return, which is consistent with investors being rewarded for the risk of a call on their personal assets. We also find that stocks with a high share denomination earn a lower return, which appears to be consistent with the view that this feature was conducive to superior corporate governance.