Deakin, Simon and Sarkar, Prabirjit and Singh, Ajit (2011): An end to consensus? the selective impact of corporate law reform on financial development. Published in: Centre for Business Research Working Paper Series No. WP423 (June 2011)
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Legal origins theory suggests that law reform,strengthening shareholder and creditor rights, should enhance financial development. We use recently created datasets measuring legal change over time in a sample of 25 developing, developed and transition countries to test this claim. We find that increases in shareholder protection contribute to stock market growth in the common law world and in developing countries, but not in the civil law world. We also find evidence of reverse causation, with financial development triggering legal changes in the developing world. We consider a number of reasons for the selective impact of law reform, focusing on the endogeneity of the legal system to its economic context, and on resulting complementarities between legal and financial institutions.
JEL Codes: G33, G34, K22, O16.
|Item Type:||MPRA Paper|
|Original Title:||An end to consensus? the selective impact of corporate law reform on financial development|
|Keywords:||legal origins, company law, shareholder rights, creditor rights, financial development|
|Subjects:||K - Law and Economics > K2 - Regulation and Business Law > K22 - Business and Securities Law
G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance
O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance
G - Financial Economics > G3 - Corporate Finance and Governance > G33 - Bankruptcy ; Liquidation
|Depositing User:||Ajit Singh|
|Date Deposited:||26. May 2012 16:26|
|Last Modified:||20. Feb 2013 12:06|
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