Working Paper: NBER ID: w11883
Authors: Simeon Djankov; Rafael La Porta; Florencio Lopez-de-Silanes; Andrei Shleifer
Abstract: 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, governing a specific self-dealing transaction. This theoretically-grounded index predicts a variety of stock market outcomes, and generally works better than the commonly used index of anti-director rights.
Keywords: No keywords provided
JEL Codes: G3; G38; K22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| anti-self-dealing index (L44) | stock market outcomes (G10) |
| stronger regulations against self-dealing (G38) | more developed financial markets (G19) |
| differences in legal origins (K15) | structure of self-dealing regulation (G38) |
| structure of self-dealing regulation (G38) | financial market development (O16) |
| common law countries (K15) | stronger protections (D18) |
| stronger protections (D18) | better financial outcomes (G29) |
| anti-self-dealing index (L44) | stock market capitalization (G10) |
| anti-self-dealing index (L44) | number of domestic firms (F23) |
| anti-self-dealing index (L44) | private benefits of control (D61) |