Twenty Years of 'Law and Finance': Time to Take Law Seriously
50 Pages Posted: 15 Oct 2018
Date Written: March 2018
The Law and Finance School (LFS) has become an important stream of research in management and socio-economic studies. This paper provides the first comprehensive discussion of the first twenty years of LFS literature. Drawing on legal theory, we show that, despite the centrality of law to the LFS, the LFS is based on a surprisingly ‘thin’ theory of law. It does not provide a coherent definition of what primary function law plays in the economy, what criterion makes law ‘valid’ law, and what mechanism links law to actors’ behaviours. Therefore, contrary to existing criticisms of the LFS, we argue that the main issue is not that the LFS overstates the importance of law, but rather that it does not take law seriously enough. We propose ways in which future research could develop a more solid conceptual framework to empirically investigate the impact of law on economic and social outcomes.
Keywords: law, regulation, corporate governance, theory
JEL Classification: K0, L5, O1
Suggested Citation: Suggested Citation