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Law and Finance

Listed author(s):
  • Rafael La Porta
  • Florencio Lopez-de-Silanes
  • Andrei Shleifer
  • Robert W. Vishny

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.

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File URL: http://dx.doi.org/10.1086/250042
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Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 106 (1998)
Issue (Month): 6 (December)
Pages: 1113-1155

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Handle: RePEc:ucp:jpolec:v:106:y:1998:i:6:p:1113-1155
Contact details of provider: Web page: http://www.journals.uchicago.edu/JPE/

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  1. Deininger, K & Squire, L, 1996. "Measuring Income Inequality : A New Data-Base," Papers 537, Harvard - Institute for International Development.
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  13. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
  14. Ross Levine & Sara Zervos, "undated". "Stock markets, banks and economic growth ," CERF Discussion Paper Series 95-11, Economics and Finance Section, School of Social Sciences, Brunel University.
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  18. Knack, Stephen & Keefer, Philip, 1995. "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Indicators," MPRA Paper 23118, University Library of Munich, Germany.
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