Investor Protection and Foreign Stakeholders

42 Pages Posted: 3 Jul 2010

See all articles by Maela Giofré

Maela Giofré

University of Turin - Department of Economics and Statistics; CeRP-CCA; Netspar

Date Written: June 30, 2010


Different investor classes are endowed with different rights, and conflicting interests among them can make protections afforded to one party detrimental to another. Indeed, we find that investor protection laws have sizeable "cross" effects on foreign portfolio investment and the direction of these effects supports the conjecture that foreign stakeholders are more sensitive to the perceived riskiness of assets than domestic investors. Specifically, we find that strong protection of creditor rights - limiting excessive risk taking - positively affects foreign shareholders, whereas strong protection of shareholder rights – potentially shifting firms toward riskier projects - negatively impacts foreign bondholders.

Keywords: international portfolio investments, investor protection, bondholders-shareholders conflicts

JEL Classification: G11, G15, G30

Suggested Citation

Giofré, Maela, Investor Protection and Foreign Stakeholders (June 30, 2010). CESifo Working Paper Series No. 3102, Available at SSRN:

Maela Giofré (Contact Author)

University of Turin - Department of Economics and Statistics ( email )

Lungo Dora Siena 100/A
Torino, Turin - Piedmont 10153

CeRP-CCA ( email )

Via Real Collegio 30
Moncalieri (TO), Turin 10024

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE

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