Shareholder and Creditor Protection in Australia - A Leximetric Analysis
Company and Securities Law Journal, Vol. 30, No. 6, pp. 366-390, 2012
26 Pages Posted: 18 Oct 2012 Last revised: 10 Jan 2013
Date Written: October 17, 2012
This article utilises leximetric analysis, which involves the numerical coding of the strength of legal protections, to show changes in levels of shareholder and creditor protection in Australia for the period 1970-2010. This form of analysis, originally developed by La Porta et al, and subsequently used by many scholars in different legal fields, allows for the production of graphs which illustrate changes to the law, reducing complexities and allowing for comparisons of shareholder and creditor protection. The data shows levels of shareholder protection have increased, most notably against actions of the board of directors rather than against other shareholders. In contrast, levels of creditor protection have been relatively stable. The article explores how and why these developments in shareholder and creditor protection have occurred. The research also identifies that for most of the 40 year period of study, there was a positive correlation between shareholder and creditor protection. However, this is no longer the case for recent years and possible explanations for this finding are identified.
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