The End of the “Modern Corporation”: Deregulation and Ownership of Electric Utilities1

Berle and Means (1932) claimed that “modern” corporations in the United States had diffuse ownership. Their claim characterizes regulated electric utilities until the mid1990s. But following the 1992 EPACT deregulation, block ownership in utilities increased sharply, relative to a matched sample of non-utilities, which already had large blocks by the 90s. The post-EPACT blocks in utilities were not long-term investments by monitors but short duration speculative investments. With the financial crisis of 2008, large active investors are replaced by asset managers. In sum, dispersed ownership arose through the regulatory protections introduced in the 1930s and disappeared following their repeal. 1 We owe special thanks to Nicholas Beauchamp, Katrina Evtimova, Daniel Kangmin Ko, Umberto Mignozzetti, Jin Nie, Peter Ryan, Becci Weiss, and Wei Xiong for superb research assistance. We are also grateful to Jas Sekhon and John Henderson for advice on matching. We thank Colin Mayer and Wei Jiang for their suggestions at early stages of our project. We are grateful to the following research centers at Columbia University for their financial support: the Center for Global Economic Governance, the Chazen Institute, the Institute for Social and Economic Research and Policy, and the Richman Center. 2