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The Law and Economics of Self-dealing

  • Lopez-de-Silanes, Florencio
  • Djankov, Simeon
  • La Porta, Rafael
  • Shleifer, Andrei

We present a new measure of legal protection of minority shareholders against expropriation by corporate insiders: the anti-self-dealing index. Assembled with the help of Lex Mundi law firms, the index is calculated for 72 countries based on legal rules prevailing in 2003, and focuses on private enforcement mechanisms, such as disclosure, approval, and litigation, that govern a specific self-dealing transaction. This theoretically grounded index predicts a variety of stock market outcomes, and generally works better than the previously introduced index of anti-director rights.

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File URL: http://dash.harvard.edu/bitstream/handle/1/2907526/selfdeal.may17.jfe.pdf
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Paper provided by Harvard University Department of Economics in its series Scholarly Articles with number 2907526.

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Date of creation: 2008
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Publication status: Published in Journal of Financial Economics
Handle: RePEc:hrv:faseco:2907526
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  17. Zingales, Luigi, 1994. "The Value of the Voting Right: A Study of the Milan Stock Exchange Experience," Review of Financial Studies, Society for Financial Studies, vol. 7(1), pages 125-48.
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