University of Hertfordshire

From the same journal

By the same authors

Ernst Freund as Precursor of the Rational Study of Corporate Law

Research output: Contribution to journalArticlepeer-review



View graph of relations
Original languageEnglish
Pages (from-to)597-621
JournalJournal of Institutional Economics
Early online date7 Dec 2017
Publication statusPublished - 2 Sep 2020


The rise of large business corporations in the late 19th century compelled many American observers to admit that the nature of the corporation had yet to be understood. Published in this context, Ernst Freund's little-known The Legal Nature of Corporations (1897) was an original attempt to come to terms with a new legal and economic reality. But it can also be described, to paraphrase Oliver Wendell Holmes, as the earliest example of the rational study of corporate law. The paper shows that Freund had the intuitions of an institutional economist, and engaged in what today would be called comparative institutional analysis. Remarkably, his argument that the corporate form secures property against insider defection and against outsiders anticipated recent work on entity shielding and capital lock-in, and can be read as an early contribution to what today would be called the theory of the firm.


Gindis, David, Ernst Freund as Precursor of the Rational Study of Corporate Law (October 27, 2017). Journal of Institutional Economics, Forthcoming. Available at SSRN:, doi:

ID: 12474097