Alfred Marshall Lecture - Shareholder protection, stock market development, and politics

• 成果类型: Article; Proceedings Paper
• 署名作者: Pagano, Marco; Volpin, Paolo
• 署名单位: University of Naples Federico II; University of London; London Business School
• 刊物名称: JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION
• ISSN/ISSBN: 1542-4766
• DOI: 10.1162/jeea.2006.4.2-3.315
• 发表日期: 2006
• 页码: 315-341
• 关键词: CORPORATE GOVERNANCE; cross-listings; UNITED-STATES; finance; LAW; determinants; CONVERGENCE; ECONOMY; HISTORY

摘要

This paper presents a political economy model in which there is mutual feedback between investor protection and stockmarket development. Better investor protection induces companies to issue more equity and thereby leads to a broader stockmarket. In turn, equity issuance expands the shareholder base and increases support for shareholder protection. This feedback loop can generate multiple equilibria, with investor protection and stock market size being positively correlated across equilibria. The model's predictions are tested on panel data for 47 countries over 1993-2002, controlling for country and year effects and endogeneity issues. We also document international convergence in shareholder protection to best-practice standards, and show that it is correlated with cross-border mergers and acquisitions activity, consistent with the model.