Culture, Law, and Corporate Governance

47 Pages Posted: 25 Mar 2004  

Amir N. Licht

Interdisciplinary Center (IDC) Herzliyah - Radzyner School of Law; European Corporate Governance Institute (ECGI)

Chanan Goldschmidt

Interdisciplinary Center (IDC) Herzliyah - Radzyner School of Law

Shalom H. Schwartz

Hebrew University of Jerusalem - Department of Psychology; National Research University Higher School of Economics

Date Written: February 20, 2004

Abstract

This article advances a new framework for investigating a simple yet fundamental question: In what ways does the law on the books reflect cultural values? We analyze relations between indices of investors' legal rights - as coded by La Porta et al. (LLSV) - and national cultural profiles. These indices correlate with cultural priorities that are consistent with societal acceptance of litigation. Indices of formalism in civil procedure exhibit similar correlations. Such societal stance may be related to a heritage of British rule. Grouping countries according to legal families - the cornerstone of LLSV's legal approach - provides only a partial depiction of the universe of corporate governance regimes. Our findings cast doubt on the alleged general supremacy of statutes in common law countries. These findings have implications for understanding diversity and convergence in corporate governance systems and for a systematic analysis of the interface between law and social institutions.

Keywords: corporate governance, investor rights, litigation, civil procedure, formalism, culture, social institutions

JEL Classification: G34, K22, K41, Z13

Suggested Citation

Licht, Amir N. and Goldschmidt, Chanan and Schwartz, Shalom H., Culture, Law, and Corporate Governance (February 20, 2004). Available at SSRN: https://ssrn.com/abstract=508402 or http://dx.doi.org/10.2139/ssrn.508402

Amir N. Licht (Contact Author)

Interdisciplinary Center (IDC) Herzliyah - Radzyner School of Law ( email )

P.O. Box 167
Herzliya, 46150
Israel
972-9-952-7332 (Phone)
952-9-9513323 (Fax)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
952-9-9513323 (Fax)

HOME PAGE: http:/www.ecgi.org

Chanan Goldschmidt

Interdisciplinary Center (IDC) Herzliyah - Radzyner School of Law ( email )

P.O. Box 167
Herzliya, 46150
Israel

Shalom H. Schwartz

Hebrew University of Jerusalem - Department of Psychology ( email )

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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