Working Paper: NBER ID: w7403
Authors: Rafael La Porta; Florencio Lopez-de-Silanes; Andrei Shleifer; Robert Vishny
Abstract: We present a model of the effects of legal protection of minority shareholders and of cash flow ownership by a controlling shareholder on the valuation of firms. We then test this model using a sample of 371 large firms from 27 wealthy economies. Consistent with the model, we find evidence of higher valuation of firms in countries with better protection of minority shareholders, and weaker evidence of the benefits of higher cash flow ownership by controlling shareholders for corporate valuation.
Keywords: No keywords provided
JEL Codes: G32; G31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| better legal protection of minority shareholders (G34) | higher firm valuation (G32) |
| cash flow ownership by controlling shareholders (G32) | firm valuation (G32) |