35 Pages Posted: 29 Oct 2000
Date Written: October 2000
We present a simple model of an entrepreneur going public in an environment 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.
Suggested Citation: Suggested Citation
Shleifer, Andrei and Wolfenzon, Daniel, Investor Protection and Equity Markets (October 2000). Harvard Institute of Economic Research Paper No. 1906. Available at SSRN: https://ssrn.com/abstract=245448 or http://dx.doi.org/10.2139/ssrn.245448