Abstract
It is frequently asserted that the 1856 Companies Act, in removing the mandatory accounting and auditing requirements of the 1844 Companies Act, reflects laissez-faire principles. This paper examines the effects of unlimited and limited liability on investors, and the extent to which accounting publicity benefited different types of investors. It concludes that the “permissiveness” of the 1856 legislation was not neutral, but favoured large investors. It was only when mandatory accounting disclosure was perceived as serving the interests of this group that it began to be viewed more favourably by legislators.
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