Stockholder review committee of the Chesapeake and Ohio Canal Company, 1828-1857: Evidence of changes in financial reporting and corporate governance

              Accounting Historians Journal
Vol. 33, No. 1
June 2006
pp. 125-143
Robert W. Russ
NORTHERN KENTUCKY UNIVERSITY
Gary J. Previts
CASE WESTERN RESERVE UNIVERSITY
and
Edward N. Coffman
VIRGINIA COMMONWEALTH UNIVERSITY
THE STOCKHOLDER REVIEW
COMMITTEE OF THE CHESAPEAKE
AND OHIO CANAL COMPANY, 1828-1857:
EVIDENCE OF CHANGES IN FINANCIAL
REPORTING AND CORPORATE
GOVERNANCE
Abstract: 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 Compa-ny
(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 po-litical
control exerted by the State of Maryland. The paper provides
an historical perspective on corporate governance in the 19th centu-ry.
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 pro-vide
an early example of accountability required in a corporate char-ter
and the manner in which the stockholders carried out this respon-sibility.
INTRODUCTION
Canal companies were among the earliest enterprises to be
organized in a corporation form, and they were also among the
first to require large amounts of capital. Raising the needed cap-ital
resulted in absentee owners who required financial infor-
Acknowledgments: We express our appreciation to the anonymous review-ers
and the editor emeritus, Steve Walker, for their comments and suggestions
which improved the paper significantly.