Investor Protection and Corporate Valuation

Rafael La Porta (), Florencio Lopez-de-Silanes (), Andrei Shleifer and Robert Vishny

Harvard Institute of Economic Research Working Papers from Harvard - Institute of Economic Research

Abstract: We present a model of the effects of legal protection of minority shareholders and of cash flow ownership by a controlling shareholder on the valuation of firms. We then test this model using a sample of 371 large firms from 27 wealthy economies. Consistent with the model, we find evidence of higher valuation of firms in countries with better protection of minority shareholders, and weaker evidence of the benefits of higher flow ownership by controlling shareholders for corporate valuation.

Date: Written
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Related works:
Working Paper: Investor Protection and Corporate Valuation (1999)
Journal Article: Investor Protection and Corporate Valuation (2002)
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