Lyndon Moore

Dividend Policies in an Unregulated Market: The London Stock Exchange 1895-1905

In perfect and complete financial markets Miller and Modigliani (1961) show that a firms value is unaffected by its dividend policy. Taxation, asymmetric information, incomplete contracts, institutional constraints, and transaction costs make dividend policy important. We examine the effects of dividend policies on 469 British firms between 1895 and 1905. These firms operated in an environment of very low taxation and an absence of institutional constraints. We find strong support for asymmetric information theories of dividend policy, and little support for agency models.

The Economic Benefits of Political Connections in Late Victorian Britain

The late-Victorian era was characteristed by especially close links between politicians and firms in the UK. Roughly half of all members of Parliament served as company directors, many as directors of multiple firms. We analyze 467 British companies over the period 1895 to 1904 to investigate the interaction of firms and politicians. We find that new-technology firms with politicians serving on their boards were more likely to issue equity finance and had higher Tobins Q. Our evidence suggests that causality runs from director-politicians to a firms performance, rather than in the opposite direction.

From Competition to Cartel: Bank Mergers in the U.K. 1885 to 1925

We study the effects of bank mergers and acquisitions in the U.K. from 1885 to 1925. The lack of a regulatory authority and the confidential nature of merger negotiations allows us to precisely measure the wealth effects of M&As in a laissez-faire environment. We find positive wealth effects for bidders (0.7%-1%) and targets (6.7%-8%) over the announcement month. When takeovers took place in a competitive environment wealth creation appears to be related to efficiency gains. As competition decreased, gains to shareholders appear to be related to increased oligopoly power. In a less competitive environment, banks tended to reduce the amount of loans and increase their holdings of safe marketable securities. Banks with higher charter value displayed higher capital ratios.

Nothing Special About Banks: Competition and Bank Lending in Britain, 1885-1925

We investigate the impact of increasing bank concentration on bank loan contracts in a lightly regulated environment. This environment allows us to abstract from possible confounding effects of regulation to focus on the “pure�? effects of competition on bank lending. We study over 30,000 British bank loans over the period 1885 to 1925. Borrowers in counties with high bank concentration received smaller loans and posted more collateral than borrowers in low concentration counties. In high concentration counties, the quality of loan applicants had improved, which suggests that banks restricted credit, rather than that the quality of loan applicants had worsened.

An efficient market? Going public in London, 1891-1911: GOING PUBLIC IN LONDON, 1891-1911

There have been claims that British capital was not well deployed in Victorian Britain. There was, allegedly, a lack of support for new and dynamic companies in comparison to the situation in Germany and the US. We find no evidence to support these claims. The London Stock Exchange welcomed young, old, domestic, and foreign firms. It provided funds to firms in old, existing industries as well as patenting firms in ‘new‐tech’ industries at similar costs of capital. If investors did show a preference for older and foreign firms, it was because those firms offered investors better long‐run performance. In addition, we show some evidence that investors who worked in the same industry and lived close to the firm going public were allotted more shares in high‐quality initial public offerings.

WHAT WAS THE MARKET VALUE OF DAIMLER DURING THE GERMAN HYPERINFLATION

The claim of Bresciani-Turroni that Daimlers equity capital reached the equivalent of only 327 of their cars during the German hyperinflation has spread widely through the hyperinflation literature. There are two critical errors in Bresciani-Turronis calculation, and the minimum market value of Daimler in November 1922 was far lower, at around 94 cars.