Abstract

This paper examines legal rules covering protection of corporate shareholders and creditors, the origin of these rules, and the quality of their enforcement in 49 countries. The results show that common‐law countries generally have the strongest, and frenchcivillaw countries the weakest, legal protections of investors, with German‐and scandinavin‐civil‐law countries located in the middle. We also find that concentration of ownership of shares in the largest public companies is negativelyrelated to investor protections, consistent with the hypothesis that small, diversified share‐holders are unlikely to be important in countries that fail to protect their rights.

Keywords

ShareholderCreditorEnforcementBusinessInvestor protectionQuality (philosophy)GermanCommon lawCorporate governanceFinanceAccountingEconomicsLawDebtPolitical science

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Publication Info

Year
1998
Type
article
Volume
106
Issue
6
Pages
1113-1155
Citations
17629
Access
Closed

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Cite This

Rafael La Porta, Florencio López‐de‐Silanes, Andrei Shleifer et al. (1998). Law and Finance. Journal of Political Economy , 106 (6) , 1113-1155. https://doi.org/10.1086/250042

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DOI
10.1086/250042