Investor Protection and Equity Markets

32 Pages Posted: 12 Oct 2000

See all articles by Andrei Shleifer

Andrei Shleifer

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

Daniel Wolfenzon

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 6 versions of this paper

Date Written: October 2000

Abstract

We present a simple model of an entrepreneur going public in an environement with poor legal protection of outside shareholders. The model incorporates elements of Becker's (1968) "crime and punishment" framework into a corporate finance environment of Jensen and Meckling (1976). We examine the entrepreneur's decision and the market equilibrium. The model is consistent with a number of empirical regularities concerning the relationship between investor protection and corporate finance.

JEL Classification: G31, G32

Suggested Citation

Shleifer, Andrei and Wolfenzon, Daniel, Investor Protection and Equity Markets (October 2000). Available at SSRN: https://ssrn.com/abstract=244520 or http://dx.doi.org/10.2139/ssrn.244520

Andrei Shleifer (Contact Author)

Harvard University - Department of Economics ( email )

Littauer Center
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617-495-5046 (Phone)
617-496-1708 (Fax)

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

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI)

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B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Daniel Wolfenzon

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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