found an old thread and looked at the oed and both seem to support each other. This is the thread. It says "school dances" but the majority of the first answer (which is good) is about proms.

http://www.reddit.com/r/AskHistorians/comments/233bjn/how_did_school_dances_come_to_be/

Essentially Prom King, Queen and Prom Dress both seem to appear around 1920 (though reading between the lines on the oed Prom may go back as early as the 1890s but that seems murky).

This broadly fits into larger trends into the changing system of calling, courting, dating, etc. with the rise of dating literally around this period. While I don't see anything specifically about Prom and given this isn't really a date (unchaparoned and involving the men paying for stuff…stuff sources say are significant changes during the period) but when where and why are probably closely connected.

more on history of dating and courtship (but only tangentially relevant though the first 10 minutes are funny in a "history is odd" type of way.

http://backstoryradio.org/shows/love-me-did-a-history-of-courtship-rebroadcast/