The anatomy of a bubble company: The London Assurance in 1720

The London Assurance Company (LA), which incorporated during the bubble of 1720, experienced more dramatic price movements in its shares than South Sea Company. This paper examines how incorporating affected long run performance. We show that Company's share was partly attributable to changes market structure issuance process. As a result bubble, original subscribers, who had been curated for expertise and political connections, overwhelmingly exited 1720 were replaced by unsuccessful speculators. Analysis LA shareholder behaviour up 1737 suggests this loss detrimental consequences These results demonstrate newly created company can lead an exodus value-adding investors, damaging company's long-term prospects.