Economics at your fingertips  

The failings of legal centralism for helping stock markets in transition

Edward Stringham () and Peter Boettke ()

Politická ekonomie, 2006, vol. 2006, issue 1, 22-34

Abstract: After Czech voucher privatization many companies simply ignored the interests of their shareholders. The government has since increased the amount of regulation, but they have failed to establish significant investor confidence. This article offers some explanations of why their legal centric approach remains unlikely to create good corporate governance. Mandating that companies maximize shareholder value is easier said than done because it requires government to assess whether companies are making optimal business decisions. In former communist countries especially, government officials are ill suited to make such judgments because they lack the knowledge of how businesses should be properly run. Increased bureaucratic oversight in the Czech Republic has simply burdened markets without any noticeable positive results. This article discusses how good corporate governance can only be a byproduct of markets where managers compete for investors rather than something that can be created by law.

Keywords: regulation; corporate governance; Czech stock market transition; legal centralism (search for similar items in EconPapers)
JEL-codes: G1 K2 P2 (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link) (text/html)
free of charge

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
Redakce Politické ekonomie, Vysoká škola ekonomická, nám. W. Churchilla 4, 130 67 Praha 3

Access Statistics for this article

Politická ekonomie is currently edited by Martin Mandel

More articles in Politická ekonomie from University of Economics, Prague Contact information at EDIRC.
Bibliographic data for series maintained by Frantisek Sokolovsky ().

Page updated 2019-10-01
Handle: RePEc:prg:jnlpol:v:2006:y:2006:i:1:id:543:p:22-34