Christopher Kobrak

Diverging Paths: Accounting for Corporate Governance in America and Germany

American and German accountancy took different paths in the early part of the twentieth century. In Germany, a persistent disconnect arose between relatively sophisticated managerial accounting practices for insiders and the methods used in public financial accounting. The “equity revolution” America experienced—an enormous shift in the number and expectations of shareholders—prompted new demands for financial statements designed to help evaluate the future earning power of companies. In contrast, the effects of World War I retarded equity–market development in Germany. Political frictions reinforced the Germanss; discomfort with equity markets and increased their resistance to revising accounting principles. Banks, tax law, courts, and lawyers, instead of professional accountants, became the primary source of accounting principles. Only in past decades, under pressure from the European Union and global capital markets, have the accounting systems begun to reconverge.

The ‘2008 Crisis’ in an economic history perspective: Looking at the twentieth century

This introduction sets the articles in this special issue into their historical context and explores some of the definitional problems associated with discussions of financial and economic crises. It highlights some of the unifying themes and wider lessons of the papers found in the issue and makes the case for greater historical understanding of crises while outlining the limits of historical analogy.

The Concept of Reputation in Business History

Historical narratives have enriched, and can even do more to enhance, the concept of corporate reputation by deepening our understanding of how reputation changes over time and among different stakeholders. This literature review highlights this theme of reputation for two audiences—business historians and corporate reputation theorists. By showing how different social and political contexts shape expectations for business behavior, historical study can add new dimensions to the study of corporate reputation.

Banks on Board: German and American Corporate Governance, 1870–1914

This examination of the foundations of German and American corporate governance highlights the role of money-centered banks, both as board members in large corporations and as intermediaries on the stock exchange. German banks, by acting as surrogate regulators, became institutional stabilizers, and German regulators encouraged banks to participate in corporate boards in order to overcome agency problems in firms and to control speculation. American investment banks, prior to 1914, often managed to overcome regulatory obstacles, which enabled them to wield more power over corporations than their legendary German counterparts. American banks had more opportunities to intervene in the event of panics, bankruptcies, foreign investment, and corporate consolidation. In contrast to Germany, the United States increasingly imposed regulations that circumscribed the supervisory role of banks as board members.

Family Finance: Value Creation and the Democratization of Cross-Border Governance

As Mira Wilkins has argued, there is a curious disconnect between business and financial history (Wilkins 2004). Whereas business history literature has rediscovered the importance of family business in many countries and in many sectors of contemporary commercial life, for example, little has been written about family banking as an alternative to joint-stock, management-run financial institutions. This lacuna is odd for many reasons. First, family banking is one of the best-known examples of family business in history. Second, family banks once played a much greater role in international investment banking than it does today. Third, some family financial institutions are still active (dominant) in certain market segments and countries. This paper will focus on how, when and why family banking lost its position in international (multinational) banking during the first few decades of the twentieth century. Although political upheaval and a widespread movement to reduce the power of private financial institutions undermined their businesses, family banks suffered, too, from America’s maturing as a financial center. I will argue that this shift is connected with the increased importance of American markets and financial regulations, which, in the 1930s, deliberately steered financial transactions away from private dealings and toward transparent impersonal exchanges and capital markets with new forms of aggregated capital and individual investors, in which private banks were ill-suited to manage or at the least for which they had no special competitive edge. Using concepts drawn from an earlier paper on family businesses and relying mostly on secondary sources, this paper will further argue that in markets or market segments, such as Leveraged Buyouts, where uncertainty forms a greater part of the transactional environment, family banking still plays a significant role.

The Use and Abuse of History as a Management Tool: Comments on Eric Godelier's View of the French Connection

This short essay elaborates on two points raised by Eric Godelier’s article about resolving divisions between management science and business history in France. It outlines the segmentation of French higher education, especially in the area of business studies, and discusses some long-standing debates over legitimizing historical studies.