The Evolution of Shareholder and Creditor Protection in Australia: An International Comparison

37 Pages Posted: 10 Mar 2011 Last revised: 17 Oct 2012

See all articles by Helen L. Anderson

Helen L. Anderson

Melbourne Law School

Michelle Anne Welsh

Monash Business School

Ian Ramsay

Melbourne Law School - University of Melbourne

Peter G. Gahan

University of Melbourne - Department of Management and Marketing

Date Written: March 10, 2011

Abstract

This study is part of a larger international investigation of the effects of a country's legal origins on the style of business regulation. We employ an innovative 'leximetric' methodology to numerically code the protective strength of Australian corporate law for both shareholder and creditor protection for the period 1970 to 2010. This leximetric methodology has been used in a prominent international debate concerning the development of legal rules and the effects of different styles of regulation on a range of economic outcomes - the legal origins debate. Drawing on similar data compiled by Armour, Deakin, Lele and Siems in five other countries (France, Germany, India, the UK and the US), we compare changes in the level of protection afforded to Australian shareholders and creditors with developments in other countries. Our analysis finds that in Australia there was a sustained upward trend in shareholder protection, but not in the case of creditor protection. Compared to the five other countries, the level of protection afforded to shareholders under Australian law was relatively high and this was also the case for the level of protection afforded to creditors.We also examine the extent of convergence and divergence in shareholder and creditor protection among the countries in the study. We find persistent divergence in shareholder protection, with the extent of divergence in 2005 similar to that in 1970. For creditor protection, we find increasing divergence among the countries over the period of study. Our findings are not supportive of legal origins theory.

Suggested Citation

Anderson, Helen L. and Welsh, Michelle Anne and Ramsay, Ian and Gahan, Peter G., The Evolution of Shareholder and Creditor Protection in Australia: An International Comparison (March 10, 2011). U of Melbourne Legal Studies Research Paper No. 539; International and Comparative Law Quarterly, Vol. 61, No. 1, pp.171-207, 2012; U of Melbourne Legal Studies Research Paper No. 539; Monash U. Department of Business Law & Taxation Research Paper No. 1782412. Available at SSRN: https://ssrn.com/abstract=1782412 or http://dx.doi.org/10.2139/ssrn.1782412

Helen L. Anderson

Melbourne Law School ( email )

University of Melbourne
Melbourne, 3010
Australia
+61 3 90355467 (Phone)

Michelle Anne Welsh

Monash Business School ( email )

Wellington Road
Clayton, Victoria 3168
Australia

Ian Ramsay (Contact Author)

Melbourne Law School - University of Melbourne ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 5332 (Phone)

HOME PAGE: http://law.unimelb.edu.au/about/staff/ian-ramsay

Peter G. Gahan

University of Melbourne - Department of Management and Marketing ( email )

5th Floor Babel Building
Melbourne, Victoria 3010
Australia
+61390359740 (Phone)
+61393494293 (Fax)

HOME PAGE: http://www.managementmarketing.unimelb.edu.au/who/staff.cfm?StaffId=241

Register to save articles to
your library

Register

Paper statistics

Downloads
528
Abstract Views
2,252
rank
53,080
PlumX Metrics