Investor Protection: Origins, Consequences, and Reform

Rafael La Porta (), Florencio Lopez-deSilanes, Andrei Shleifer and Robert W. Vishny
Authors registered in the RePEc Author Service: Florencio Lopez-de-Silanes ()

No 7428, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Recent research has documented large differences between countries in ownership concentration in publicly traded firms, in the breadth and depth of capital markets, in dividend policies, and in the access of firms to external finance. We suggest that there is a common element to the explanations of these differences, namely how well investors, both shareholders and creditors, are protected by law from expropriation by the managers and controlling shareholders of firms. We describe the differences in laws and the effectiveness of their enforcement across countries, discuss the possible origins of these differences, summarize their consequences, and assess potential strategies of corporate governance reform. We argue that the legal approach is a more fruitful way to understand corporate governance and its reform than the conventional distinction between bank-centered and market-centered financial systems.

JEL-codes: G21 G28 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-cfn and nep-pub
Date: 1999-12
Note: CF
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