The East India Company—A Case Study in Corporate Governance^*

Abstract

The East India Company was the first joint-stock company of the world. Being a joint-stock company, it experienced the consequences of separation between ownership (stockholders) and control (management). The separation between ownership and control leads to the principal-agent problem, which provides possibilities for opportunistic behaviour on the part of agents (management). The study of the relationship between owners and managers is now the subject matter of a specialized field of knowledge, called corporate governance. In the present paper an attempt has been made to study the East India Company purely as a corporation, to understand the nature of problems of corporate governance that it experienced.

Commercial Determinants of Global Health

“…The Fiduciary Duty to Maximize Profit Earlier, we saw how the East India Company separated ownership (shareholders) and management (corporate directors), leading to a perverse incentive to maximize profits with unusually callous disregard for the means employed to generate growth. All forms of commercial or legal relationship where a "principal" entrusts one or more "agent" to act on their behalf come with a characteristic set of issues that have been studied and closely regulated since the dawn of civilization (Seth 2012). Laws and moral codes governing the conduct of individuals entrusted with the resources of another feature in Hammurabi's code (King 2016), the work of Aristotle (Aikin and Fausti 2010), and Confucius's Analects (Confucius 1938).…”

Tale of Two Cities of South Asia: Consequences of Changes in the nature of Manufacturing on Dhaka and Kolkata

“…India during the Mughal Empire had emerged as a nodal centre of dynamic world trading system with its interaction and interdependence between commercial locations spread along the Indian Ocean (China, Southeast Asia and Central Asia) and Europe (Britain, France, Portugal, Holland and Spain). Apart from sea routes, trade also occurred through land routes to Persia and Ottoman Empire (Seth, 2008, 2012, 2015).…”

“…Due to lack of data regarding the purchases of the products produced by Dacca manufacturing by the centres of consumption of the domestic economy of the Indian subcontinent, it is difficult to make an assessment regarding the size of the domestic markets of the products produced by the traditional flexible manufacturing of Dacca. Even a very large magnitude of trade conducted by the European trading companies is not known because it was conducted by the employee of the company as private trade (own account trade) (Seth, 2012). However, there exists data in the records of the European companies, regarding their official trading in the products of traditional flexible manufacturing of Dacca.…”

Debate on De-industrialization Revisited: The Process of Decline of Traditional Flexible Manufacturing

“…The dependence on local merchants was far greater among the British employees of the East India Company, who were involved in private trade. The East India Company had given permission to its British employees for conducting trade on their own account to complement their earnings which they received as wages (Seth, 2012). The dependence on local merchants for their needs for credit had increased the incidence of indebtedness among the officials of the company to the local merchants (Om Prakash, 2007).…”