Do property rights matter? Evidence from a property law enactment

Daniel Berkowitz, Chen Lin and Yue Ma

Journal of Financial Economics, 2015, vol. 116, issue 3, 583-593

Abstract: This paper considers a property law enactment that gave creditors more rights over the assets underlying their secured loans to private firms and gave private firms more protections against the potential expropriation of their assets. We find that this property law enactment led to a significant increase in firm value. We also find that the law׳s impact on value was more profound for firms with more tangible assets, lower internal cash flows, and stronger growth opportunities, and less profound for politically connected firms. Taken together, our findings confirm the importance of property rights protection in enhancing firm value.

Keywords: Property rights; Creditor rights; Expropriation risk; Asset tangibility; Political connections (search for similar items in EconPapers)
JEL-codes: G31 G38 K11 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (62)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:116:y:2015:i:3:p:583-593

DOI: 10.1016/j.jfineco.2015.04.003

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