Quotation Higgins, D., Toms, S., Filatotchev, Igor. 2015. Ownership, Financial Strategy and Performance: the Lancashire Cotton Textile Industry, 1918-1938. Business History 57 (1): S. 97-121.




This article assesses the validity of John Maynard Keynes' claim that the Lancashire cotton industry failed to restructure because the banks as debt holders prevented firms exiting the industry, creating persistent over-capacity. Using case studies from a substantial sample of Lancashire firms, the article explores archival evidence to establish their financial characteristics, to examine their equity and debt finance and the governance roles of directors and outside ownerhip groups. On the basis of this review the article develops hypotheses to suggest alternatives to the view that bank debt was the dominant explantion of firm level behaviour and industry failure. Applying these to a statistical dataset, results show that syndicates of local shareholders, not banks, were an important impediment to the exit of firms. Moreover, syndicates milked firms of any profits through dividends, thereby limiting reinvestment and re-equipment possibilities. Our results show that where laissez-faire fails in response to a crisis, incumbent investors, particularly block-holders, can be an important impediment to corporate restructuring.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Business History
Citation Index SSCI
WU-Journal-Rating new VW-D, WH-B
Language English
Title Ownership, Financial Strategy and Performance: the Lancashire Cotton Textile Industry, 1918-1938
Volume 57
Number 1
Year 2015
Page from 97
Page to 121
Reviewed? Y
DOI http://dx.doi.org/10.1080/00076791.2014.977873


Filatotchev, Igor (Details)
Higgins, D.
Toms, S.
Competence Center for Emerging Markets and CEE WE (Details)
Institute for International Business (Dikova) (Details)
Institute for International Business IN (Details)
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