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The Value of Judicial Independence: Evidence from Eighteenth Century England

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  • Daniel M. Klerman

Abstract

This article assesses the impact of changes in judicial independence on equity markets. North and Weingast (1989) argue that judicial independence and other institutional changes inaugurated by the Glorious Revolution of 1688--89 improved public and private finance in England by putting restraints on the government. We calculate abnormal equity returns at critical points in the passage of statutes giving judges greater security of tenure and higher salaries. Early-eighteenth-century legislation granting tenure during good behavior is associated with large and statistically significant positive abnormal returns. Other statutes had positive but generally insignificant effects. Copyright 2005, Oxford University Press.

Suggested Citation

  • Daniel M. Klerman, 2005. "The Value of Judicial Independence: Evidence from Eighteenth Century England," American Law and Economics Review, Oxford University Press, vol. 7(1), pages 1-27.
  • Handle: RePEc:oup:amlawe:v:7:y:2005:i:1:p:1-27
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    File URL: http://hdl.handle.net/10.1093/aler/ahi005
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    Cited by:

    1. Ross Levine, 2005. "Law, Endowments and Property Rights," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 61-88, Summer.
    2. Eric Langlais & Marie Obidzinski, 2013. "Elected vs appointed public law enforcers," Working Papers 2013-06, CRESE.
    3. Elliott Ash, W. Bentley MacLeod, . "Intrinsic Motivation in Public Service: Theory and Evidence from State Supreme Courts," Journal of Law and Economics, University of Chicago Press, vol. 58(4).
    4. Dan Bogart, 2016. "The East Indian Monopoly and the Transition from Limited Access in England, 1600–1813," NBER Chapters,in: Organizations, Civil Society, and the Roots of Development, pages 23-49 National Bureau of Economic Research, Inc.
    5. Stephen Quinn, 2008. "Securitization of Sovereign Debt: Corporations as a Sovereign Debt Restructuring Mechanism in Britain, 1694-1750," Working Papers 200701, Texas Christian University, Department of Economics.
    6. Hadfield, Gillian K., 2008. "The levers of legal design: Institutional determinants of the quality of law," Journal of Comparative Economics, Elsevier, vol. 36(1), pages 43-73, March.

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