Twenty Years of 'Law & Finance': Time to Take Law Seriously

Gerhard Schnyder, Mathias Siems, Ruth Aguilera and Centre for Business Research

Working Papers from Centre for Business Research, University of Cambridge

Abstract: The Law and Finance School (LFS) has become an important stream of re-search in management and socio-economic studies. This paper provides the first comprehensive discussion of the first 20 years of LFS literature. Draw-ing on legal theory, we show that, despite the centrality of law to the LFS, the LFS is based on a surprisingly 'thin' theory of law. It does not provide a coherent definition of what primary function law plays in the economy, what criterion makes law 'valid' law, and what mechanism links law to ac-tors' behaviours. Therefore, contrary to existing criticisms of the LFS, we argue that the main issue is not that the LFS overstates the importance of law, but rather that it does not take law seriously enough. We propose ways in which future research could develop a more solid conceptual framework to empirically investigate the impact of law on economic and social outcomes.

Keywords: law; regulation; corporate governance; theory (search for similar items in EconPapers)
JEL-codes: K0 L5 O1 (search for similar items in EconPapers)
Date: 2018-03
New Economics Papers: this item is included in nep-hpe and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:cbr:cbrwps:wp501

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