Law and Finance

1998/12/01 by Rafael La Porta, Florencio Lopez‐de‐Silanes, Florencio López‐de‐Silanes +3 · 18,213 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Accounting #Banking stability, regulation, efficiency #Business #Common law #Corporate Finance and Governance #Corporate Insolvency and Governance #Corporate governance #Creditor #Debt #Economics #Enforcement #Finance #German #Investor protection #Law #Political science #Quality (philosophy) #Shareholder

paper · doi:10.1086/250042

published in Journal of Political Economy 106(6), 1113-1155 (University of Chicago Press)

openalex publication_date 1998/12/01 · openalex created_date 2021/02/01 · openalex updated_date 2026/08/06

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.

Citations

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