Canal companies were among the first enterprises to be organized in the corporate form and to require large amounts of capital. This paper examines the stockholder review committee of a 19th century corporation, the Chesapeake and Ohio Canal Company (C&O), and discusses how the C&O used this corporate governance structure to monitor and improve financial management and operations. A major strength was the concern and dedication of the stockholders to the company, while a major weakness was the political control exerted by the State of Maryland. The paper provides an historical perspective on corporate governance in the 19th century. This research contributes to the literature by providing detailed workings and practices of a stockholder review committee. The paper documents corporate governance efforts in archival sources that provide an early example of accountability required in a corporate charter and the manner in which the stockholders carried out this responsibility.
Presenting evidence from a 19 th century corporation, the Chesapeake and Ohio Canal Company (C&O), the paper shows that issues of corporate governance have existed since the first corporations were established in the United States. The C&O used a stockholder committee to review the annual report of the president and directors. The paper shows how the C&O stockholders used this committee to supplement the corporate governance structure. The corporate governance structure of the C&O is also viewed from the theoretical structure as espoused by Hart (1995).
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