The Value of Judicial Independence: Evidence from 18th Century England

39 Pages Posted: 6 Sep 2004 Last revised: 19 Dec 2014

See all articles by Daniel M. Klerman

Daniel M. Klerman

University of Southern California Gould School of Law

Paul G. Mahoney

University of Virginia School of Law

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Abstract

This paper assesses the impact of changes in judicial independence on equity markets. North and Weingast (1989) argue that judicial independence and other institutional changes inaugurated by the Glorious Revolution of 1688-89 improved public and private finance in England by putting restraints on the government. We calculate abnormal equity returns at critical points in the passage of statutes giving judges greater security of tenure and higher salaries. Early eighteenth-century legislation granting tenure during good behavior is associated with large and statistically significant positive abnormal returns. Other statutes had positive but generally insignificant effects.

Keywords: Judicial independence, Glorious Revolution, law and finance

JEL Classification: H11, K40, N43

Suggested Citation

Klerman, Daniel M. and Mahoney, Paul G., The Value of Judicial Independence: Evidence from 18th Century England. 7 American Law & Economics Review 1-27 (2005); USC CLASS Research Paper No. 04-27. Available at SSRN: https://ssrn.com/abstract=587383

Daniel M. Klerman

University of Southern California Gould School of Law ( email )

699 Exposition Boulevard
Los Angeles, CA 90089
United States
213-740-7973 (Phone)
213-740-5502 (Fax)

HOME PAGE: http://weblaw.usc.edu/contact/contactInfo.cfm?detailID=227

Paul G. Mahoney (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States
434-924-7121 (Phone)
434-924-7536 (Fax)

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