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Shareholder Protection and Stock Market Development: An Empirical Test of the Legal Origins Hypothesis
Author(s) -
Armour John,
Deakin Simon,
Sarkar Prabirjit,
Siems Mathias,
Singh Ajit
Publication year - 2009
Publication title -
journal of empirical legal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.529
H-Index - 24
eISSN - 1740-1461
pISSN - 1740-1453
DOI - 10.1111/j.1740-1461.2009.01146.x
Subject(s) - shareholder , stock market , business , obstacle , panel data , convergence (economics) , empirical research , empirical evidence , financial economics , economics , accounting , corporate governance , law and economics , law , finance , econometrics , political science , macroeconomics , philosophy , epistemology , paleontology , horse , biology
Using a panel data set covering a range of developed and developing countries, we show that common‐law systems were more protective of shareholder interests than civil‐law ones in the period 1995–2005. However, civilian systems were catching up, suggesting that legal origin was not much of an obstacle to formal convergence in shareholder protection law. We find no evidence of a positive impact of these legal changes on stock market development. Possible explanations are that laws have been overly protective of shareholders and that transplanted laws have not worked well in contexts for which they were not suited.