36 Pages Posted: 7 Jun 2012 Last revised: 15 Aug 2012
Date Written: June 7, 2012
An important tenet of a burgeoning 'law and finance' literature is that stock market development is contingent upon corporate law offering ample protection to shareholders. This paper addresses this claim, using as its departure point developments occurring in the United States between 1930 and 1970. We show that, contrary to what the law and finance literature would predict, the US lacked during this period and throughout the 20th century generally corporate law that provided extensive protection to shareholders. We also point out that while federal securities legislation introduced in the mid-1930s bolstered investor protection, this reform effort did not energize the stock market in the manner implied by law and finance analysis.
Keywords: law and finance, corporate law, Delaware, stock market, securities regulation
JEL Classification: G38, K22, N12
Suggested Citation: Suggested Citation
Cheffins, Brian R. and Bank, Steven A. and Wells, Harwell, Questioning 'Law and Finance': US Stock Market Development, 1930-70 (June 7, 2012). University of Cambridge Faculty of Law Research Paper No. 14/2012; UCLA School of Law, Law-Econ Research Paper No. 12-14. Available at SSRN: https://ssrn.com/abstract=2079505 or http://dx.doi.org/10.2139/ssrn.2079505