Law or finance: evidence from Finland

Ari Hyytinen, Iikka Kuosa and Tuomas Takalo

No 8/2002, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: Although it is widely acknowledged that the benefits of corporate governance reform could be substantial, systematic evidence on such reforms is scant.We both document and evaluate a contemporary corporate governance reform by constructing 18 measures of shareholder and creditor protection for Finland for the period 1980-2000.The measures reveal that shareholder protection has been strengthened whereas creditor protection has been weakened.We also demonstrate how the reform is consistent with a reorganisation of the Finnish financial market in which a bank-centred financial system shifted from relationship-based debt finance towards increasing dominance by the stock market.We find evidence that the development of shareholder protection has been a driver of the reorganisation, whereas the changes in creditor protection have mirrored market developments.

Keywords: corporate finance; financial intermediation; corporate governance (search for similar items in EconPapers)
JEL-codes: E50 G24 G32 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (1)

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Journal Article: Law or Finance: Evidence from Finland (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp2002_008

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