Investor Protection and Corporate Valuation

44 Pages Posted: 26 Jul 2000 Last revised: 25 Sep 2022

See all articles by Rafael La Porta

Rafael La Porta

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

Florencio Lopez-de-Silanes

SKEMA Business School; National Bureau of Economic Research (NBER)

Andrei Shleifer

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Robert W. Vishny

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Multiple version iconThere are 4 versions of this paper

Date Written: October 1999

Abstract

We present a model of the effects of legal protection of minority shareholders and of cash flow ownership by a controlling shareholder on the valuation of firms. We then test this model using a sample of 371 large firms from 27 wealthy economies. Consistent with the model, we find evidence of higher valuation of firms in countries with better protection of minority shareholders, and weaker evidence of the benefits of higher cash flow ownership by controlling shareholders for corporate valuation.

Suggested Citation

La Porta, Rafael and Lopez-de-Silanes, Florencio and Shleifer, Andrei and Vishny, Robert W., Investor Protection and Corporate Valuation (October 1999). NBER Working Paper No. w7403, Available at SSRN: https://ssrn.com/abstract=227583

Rafael La Porta (Contact Author)

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

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Florencio Lopez-de-Silanes

SKEMA Business School ( email )

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France

National Bureau of Economic Research (NBER)

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Andrei Shleifer

Harvard University - Department of Economics ( email )

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HOME PAGE: http://www.economics.harvard.edu/~ashleife/

National Bureau of Economic Research (NBER)

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European Corporate Governance Institute (ECGI)

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Robert W. Vishny

University of Chicago - Booth School of Business ( email )

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United States
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312-702-0118 (Fax)

National Bureau of Economic Research (NBER)

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