Information and Incomplete Investor Protection

17 Pages Posted: 26 Mar 2006

See all articles by Karl Warneryd

Karl Warneryd

Stockholm School of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Date Written: June 29, 2007

Abstract

Poor legal protection of shareholders is an often cited impediment to the efficient financing of businesses in developing and transition economies. In the presence of informational asymmetry between entrepreneurs and investors, however, higher levels of legal enforcement of fiduciary duty may be associated with the selection of poorer projects on the part of the entrepreneur. Hence improved interim auditing capabilities, or mandatory disclosure of the firm's earnings, may be more important than giving investors an advantage over managers in court.

Keywords: investor protection, conflict, asymmetric information, project selection

JEL Classification: D74, D82, G34, K40, O17, P37

Suggested Citation

Warneryd, Karl, Information and Incomplete Investor Protection (June 29, 2007). Available at SSRN: https://ssrn.com/abstract=893442 or http://dx.doi.org/10.2139/ssrn.893442

Karl Warneryd (Contact Author)

Stockholm School of Economics ( email )

P.O. Box 6501
S-113 83 Stockholm
Sweden
+46 8 736 9206 (Phone)
+46 8 347 818 (Fax)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

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