Much ado about nothing: the limitation of liability and the market for 19th century Irish bank stock |
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Authors: | Charles R Hickson Claire McCann |
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Institution: | a School of Management and Economics, Queen’s University of Belfast, Belfast BT7 1NN, Ireland b School of Retail and Financial Services, University of Ulster, Ireland |
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Abstract: | Limited liability is widely believed to be a prerequisite for the emergence of an active and liquid securities market because the transactions costs associated with trading ownership of unlimited liability firms are viewed as prohibitive. In this article, we examine the trading of shares in an Irish bank, which limited its liability in 1883. Using this bank’s archives, we assemble a time series of trading data, which we test for structural breaks. Our results suggest that the move to limited liability had a negligible impact upon the trading of this bank’s shares. |
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Keywords: | Limited liability Unlimited liability Securities market Bank Ireland |
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