Law and Ownership Reexamined

Critical Finance Review, Vol. 5, No. 1, 2016

Posted: 13 May 2016

Date Written: July 2014


Sixteen measures of legal protections for public market investors, including the Anti-Director Rights Index, the Anti-Self-Dealing Index, and legal origins, are all unrelated to ownership concentration in a large and representative sample of firms from 32 countries. Furthermore, when laws were strengthened in a variety of countries, ownership either stayed the same or became more concentrated. The two theories behind the proposed negative relation of law and ownership concentration are inconsistent with each other and inconsistent with established empirical regularities. In sum, both the evidence and the theory are at odds with the influential proposition that large shareholdings are a response to weak legal protections for public market investors.

Keywords: Law and Finance, Ownership Concentration, Investors' Legal Protections

JEL Classification: G15, G32, G34

Suggested Citation

Holderness, Clifford G., Law and Ownership Reexamined (July 2014). Critical Finance Review, Vol. 5, No. 1, 2016. Available at SSRN:

Clifford G. Holderness (Contact Author)

Boston College - Department of Finance ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States
617-552-2768 (Phone)
617-277-8071 (Fax)

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