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Law or Finance: Evidence from Finland

  • Ari Hyytinen

    ()

  • Iikka Kuosa

    ()

  • Tuomas Takalo

    ()

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. Key words: corporate finance, financial intermediation, corporate governance JEL classification numbers: E50, G2 1, G24, G32

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File URL: http://hdl.handle.net/10.1023/A:1023932325783
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Article provided by Springer in its journal European Journal of Law and Economics.

Volume (Year): 16 (2003)
Issue (Month): 1 (July)
Pages: 59-89

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Handle: RePEc:kap:ejlwec:v:16:y:2003:i:1:p:59-89
DOI: 10.1023/A:1023932325783
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