Transparency and Accountability

Mark Freeman, Robin Pearson and James Taylor

in Shareholder Democracies?

Published by University of Chicago Press

Published in print December 2011 | ISBN: 9780226261874
Published online February 2013 | e-ISBN: 9780226261881 | DOI:
Transparency and Accountability

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This chapter examines the mechanisms for shareholder oversight of accounts. Constitutional provisions ranged from a general right to inspect all documents relating to the company to a complete bar on any access and from vague provisions for general meetings (GMs) to “audit” annual accounts to formal independent auditing procedures. Like the ad hoc committee of inspection, the standing audit can be seen as an alternative to direct shareholder participation in company affairs. In this context, specialized auditing diminished shareholder participation by introducing intermediaries into the relationship between proprietors and managers. Consequently, the notion that the GM represented “parliament” with sovereignty over a company's internal affairs faded to the extent that, late in the century, one solicitor could argue that if shareholders wanted reliable accounting information, they should not raise the issues at the GM at all but instead approach the directors and obtain it privately. Whether there had ever been a “golden age” of transparency in the affairs of joint-stock companies is doubtful only because directors were always tempted to encroach on the rights of shareholders. Yet what is clear is that, by the 1840s, growing numbers of shareholders were being stripped of their political rights, and, though not yet moribund, their participation in joint-stock politics was clearly in decline.

Keywords: transparency; accountability; shareholders; general meetings; shareholder participation; joint-stock companies

Chapter.  10606 words.  Illustrated.

Subjects: Economic History

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