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 French-civil-law countries the weakest, legal protections of investors, with German- and Scandinavian-civil-law countries located in the middle. We also find that concentration of ownership of shares in the largest public companies is negatively related 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.
This article is reprinted with permission from the Journal of Political Economy, 1998, Vol. 106 No. 6
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La Porta, R., Lopez-de-Silanes, F., Shleifer, A., Vishny, R.W. (2001). Law and Finance. In: Schwalbach, J. (eds) Corporate Governance. Publications of the Society for Economics and Management at Humboldt-University Berlin. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-59499-1_3
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