Sixteen measures of legal protections for public market investors, including the Anti-Director Rights Index, the Anti-SelfDealing Index, and legal origins, are all unrelated to ownership concentration in a large and representative sample of firms frs- som 32 countries. Furthermore, when laws were strengthened in a variety of countries, ownership either stayed the same or became more concentrated. The two theories behind the proposed negative relation of law and ownership concentration are inconsistent with each other and inconsistent with established empirical regularities. In sum, both the evidence and the theory are at odds with the influential proposition that large shareholdings are a response to weak legal protections for public market investors.
Law and Ownership Reexamined Available to Purchase
I thank Stijn Claessens, Simeon Djankov, Mara Faccio, Larry Lang, and Karl Lins for the use of their data. I have benefited from the comments of Vladimir Atanasov, Michael Barclay, David Chapman, Alex Edmans, Rudiger Fahlenbrach, David Freedman, Robin Greenwood, Christine Jolls, Bruce Kennedy, Darren Kisgen, Nick Longford, David McLean, Oyvind Norli, Jeffrey Pontiff, Jonathan Reuter, Mark Roe, Krista Schwarz, Dennis Sheehan, Holger Spamann, Jacob Thomas, Ivo Welch, three anonymous referees, and seminar participants at Aalto University, Boston College, ESCP-Paris, Hanken University, the Paris Corporate Finance Conference, Stockholm School of Economics, University of Bern, University of Washington, William & Mary, and Yale.
Holderness CG (2016), "Law and Ownership Reexamined". Critical Finance Review, Vol. 5 No. 1 pp. 41–83, doi: https://doi.org/10.1561/104.00000029
Download citation file:
Sign in
ICE Member Sign In
Log inPurchased this content as a guest? Enter your email address to restore access.
