Apathetic and outmanoeuvred by insiders. How true was this of stock and shareholders in mid-nineteenth century British and American public companies?

This thesis investigates the nature of and factors affecting shareholder activism in 19th century railway companies. It supports the proposition in the literature that the course to management ascendancy was not linear. It finds good contemporary understanding of agency risk and preparedness to incur agency costs to control it. However, there is also evidence in support of stewardship and stakeholder theories. Data has been collected from extensive archival sources - state, parliamentary and company records, press material and personal correspondence - related to nine companies in Britain and New England. Mid 19th century railway shareholders have been seen as a distributed, passive group struggling to hold management to account. However, the case studies evidence shareholder activism and challenge to insiders. Informed by an active railway discourse and assisted by statutory requirements, shareholders, usually prompted by declining financial performance, organised and appointed Committees of investigation (CofI’s). The nature of the shareholder body, alignment of shareholder incentives, activist board members, strategic pressures and campaigners all affected the level of shareholder activism. Outcomes of activism included preventing the sale of the company and the removal of senior directors. Strategy and business policy remained with management, but shareholder activism set expectations about how companies should be run; bore down on conflicts of interest; promoted transparency in reporting and constraining managers by the threat of removal. It also educated shareholders through greatly enriching the railway discourse. Indications are that the use of CofI’s in railway companies fell away after the period under review. Bringing extensive archival data to bear, the thesis’s chief contribution is to reveal and explain a distinct phase in the history of shareholder activism and corporate governance more generally.