Download or read book Corporate Governance Investor Protection and the Home Bias written by Magnus Dahlquist and published by . This book was released on 2012 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: If investors are poorly protected, it is optimal for firms to be closely held because selling shares to minority shareholders is otherwise too expensive. Empirically, most firms in countries with poor investor protection are closely held so that investors cannot hold the market portfolio. We show that the prevalence of closely held firms in countries with poor investor protection explains part of the home bias of U.S. investors. We construct an estimate of the world portfolio of shares available to investors who are not controlling shareholders (the world float portfolio). The world float portfolio differs sharply from the world market portfolio. In regressions explaining the portfolio weights of U.S. investors, the world float portfolio has a positive significant coefficient but the world market portfolio has no additional explanatory power. This result holds when we control for country characteristics. An analysis of foreign investor holdings at the firm level for Sweden confirms the importance of the float portfolio as a determinant of these holdings.

Download or read book Investor Protection and the Demand for Equity written by Mariassunta Giannetti and published by . This book was released on 2008 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Anecdotal evidence suggests that investor protection affects the demand for equity, but existing theories emphasize only the effect of investor protection on the supply of equity. We build a model showing that the demand for equity is important in explaining stock market development. If the level of investor protection is low, wealthy investors have an incentive to become controlling shareholders, because they can earn additional benefits by expropriating outside shareholders. In equilibrium, since the market price reflects the demand from both controlling and outside shareholders, the stock price of weak corporate governance stocks is not low enough to fully discount the extraction of private benefits. This generates the following empirical implications. First, stocks have lower expected return when investor protection is weak. Second, differences in stock market participation rates across countries, home equity bias and flow of foreign direct investment depend on investor protection. Finally, we uncover a good country bias in investment decisions as portfolio investors from countries with low level of investor protection hold relatively more foreign equity. We provide novel international evidence on stock market participation rates, and on holdings of domestic and foreign stocks consistent with the predictions of the model.

Download or read book Corporate Governance and the Home Bias written by Lee Pinkowitz and published by . This book was released on 2001 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: In most countries, many of the largest corporations are controlled by large shareholders. We show that, under reasonable assumptions, this stylized fact implies that portfolio holdings of U.S. investors should exhibit a home bias in equilibrium. We construct an estimate of the world portfolio of shares available to investors who are not controlling shareholders. This available world portfolio differs sharply from the world market portfolio. In regressions explaining the portfolio weights of U.S. investors, the world portfolio of available shares has a positive significant coefficient but the world market portfolio has no additional explanatory power. This result holds when we control for country characteristics.

Download or read book Investor Protection and Corporate Governance written by Alberto Chong and published by A copublication of Stanford Economics and Finance. This book was released on 2007 with total page 596 pages. Available in PDF, EPUB and Kindle. Book excerpt: Investor Protection in Latin America represents the largest data-gathering effort of firm-level corporate governance practices, ownership structures, and dividend policies. The results presented show that on top of country-wide legal protection of investors, there is a positive effect on valuation and performance of higher firm-level protections and better corporate governance practices. This evidence matches previous research in the area for other regions of the world.

Download or read book Investor Protection and Corporate Governance written by and published by . This book was released on 2001 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Trends in Corporate Governance and Investor Protection written by Louis Loss and published by . This book was released on 1981 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Selling Hope Selling Risk written by Donald C. Langevoort and published by Oxford University Press. This book was released on 2016 with total page 225 pages. Available in PDF, EPUB and Kindle. Book excerpt: "An examination of the efficacy of investor protection regulations"--Provided by publisher.

Download or read book Investor Protection Equity Returns and Financial Globalization written by Mariassunta Giannetti and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the effects of investor protection on stock returns and portfolio allocation decisions. In our theoretical model, if investor protection is weak, wealthy investors have an incentive to become controlling shareholders. In equilibrium, the stock price reflects the demand from both controlling shareholders and portfolio investors. Due to the high demand from controlling shareholders, the price of weak corporate governance stocks is not low enough to fully discount the extraction of private benefits. Thus, stocks have lower expected returns when investor protection is weak. This has implications for domestic and foreign investors' stockholdings. In particular, we show that portfolio investors' participation in the domestic stock market and home equity bias are positively related to investor protection and provide original evidence in their support.

Download or read book The Cambridge Handbook of Investor Protection written by Arthur B. Laby and published by Cambridge University Press. This book was released on 2022-10-27 with total page 687 pages. Available in PDF, EPUB and Kindle. Book excerpt: The topic of investor protection has occupied investors, businesses, regulators, academics, and courts since the 1930s. The topic exploded in importance after the 2008 financial crisis and the Bernard Madoff Ponzi scheme of the same year. Investor protection scholarship now seeks to respond to developments such as the institutionalization of the markets, the democratization of finance, and the enhanced role of market professionals and other gatekeepers. Additionally, although the philosophy of full disclosure remains the guiding principle behind the securities laws, recent research has questioned the merits of a disclosure-based regime. In light of these trends, regulators try to strike the right balance between imposing a strict investor protection regime, on the one hand, and giving businesses the freedom to innovate new projects, market new services, and reduce costs, on the other. The Cambridge Handbook of Investor Protection brings together leading scholars to inform this debate and fill a gap left by these developments.

Download or read book Corporate Governance Investor Protection and Performance in Emerging Markets written by Leora F. Klapper and published by . This book was released on 2004 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent research studying the link between law and finance has concentrated on country-level investor protection measures and focused on differences in legal systems across countries and legal families. Klapper and Love extend this literature and provide a study of firm-level corporate governance practices across emerging markets and a greater understanding of the environments under which corporate governance matters more. Their empirical tests show that better corporate governance is highly correlated with better operating performance and market valuation. More important, the authors provide evidence showing that firm-level corporate governance provisions matter more in countries with weak legal environments. These results suggest that firms can partially compensate for ineffective laws and enforcement by establishing good corporate governance and providing credible investor protection. The authors' tests also show that firm-level governance and performance is lower in countries with weak legal environments, suggesting that improving the legal system should remain a priority for policymakers.This paper - a product of Finance, Development Research Group - is part of a larger effort in the group to study corporate governance around the world.

Download or read book Investor Protection and Corporate Governance written by Mark L. DeFond and published by . This book was released on 2007 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent research asserts that an essential feature of good corporate governance is strong investor protection, where investor protection is defined as both (1) the extent of the laws that protect investors' rights and (2) the strength of the legal institutions that facilitate law enforcement. The purpose of this study is to test whether the two components of investor protection are associated with an important role of good corporate governance: identifying and terminating poorly performing CEOs. Our tests find no relation between CEO turnover and firm performance in countries with extensive laws protecting investors. However, we find that CEO turnover is associated with poor firm performance in countries with strong law enforcement institutions. We also find that in countries with strong law enforcement, CEO turnover is associated with poor stock returns when stock prices are more informative, and with poor earnings otherwise. Further, our findings are robust to controlling for the influence of public opinion, the effects of block-holders, the level of financial market development, a country's legal origin, and several alternative research design specifications.Our results suggest that strong law enforcement institutions are important in fostering corporate governance mechanisms that eliminate unfit CEOs, but that extensive laws are not. This finding is consistent with: (1) limited investor protection laws being capable of cultivating good corporate governance as long as law enforcement institutions are strong; and (2) insiders (including directors and CEOs) in countries with weak law enforcement being more likely to engage in collusive behavior to expropriate shareholder wealth, thereby reducing directors' incentives to dismiss poorly performing CEOs. More generally these findings suggest that good corporate governance requires law enforcement institutions capable of protecting shareholders' property rights (i.e. protecting shareholders from expropriation by insiders), but does not require extensive shareholder protection laws.

Download or read book Challenges in Securities Markets Regulation written by Pablo Casós and published by . This book was released on 2015 with total page 94 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Corporate Governance Investor Protection and Performance in Emerging Markets written by Leora Klapper and published by . This book was released on 2002 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Investor Protection and Corporate Governance written by Alberto Chong and published by World Bank Publications. This book was released on 2007-06-26 with total page 584 pages. Available in PDF, EPUB and Kindle. Book excerpt: 'Investor Protection and Corporate Governance' analyzes the impact of corporate governance on firm performance and valuation. Using unique datasets gathered at the firm-level the first such data in the region and results from a homogeneous corporate governance questionnaire, the book examines corporate governance characteristics, ownership structures, dividend policies, and performance measures. The book's analysis reveals the very high levels of ownership and voting rights concentrations and monolithic governance structures in the largest samples of Latin American companies up to now, and new data emphasize the importance of specific characteristics of the investor protection regimes in several Latin American countries. By and large, those firms with better governance measures across several dimensions are granted higher valuations and thus lower cost of capital. This title will be useful to researchers, policy makers, government officials, and other professionals involved in corporate governance, economic policy, and business finance, law, and management.

Download or read book Regulation of Issuers and Investor Protection in the US and EU written by Pieter Alexander van der Schee and published by Eleven International Publishing. This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Since the 17th century, when corporations started to finance their businesses by issuing securities to investors in the open market, the appearance of misleading prospectuses and/or intermediate information to the market has led regulators to promulgate preventive and repressive rules to mitigate such abuses. This occurred both during the South Sea Bubble (1719) and the Great Crash (1929). More recently, the series of corporate scandals (2002-2003) similarly resulted in pressure on regulators and gatekeepers to introduce enhanced investor protection and market regulation, coinciding with the already ongoing worldwide debate on corporate governance. This study focuses on a comparative analysis of the remarkably different regulatory responses that were established on both sides of the Atlantic Ocean. The book reveals the divergent regulatory policies that were followed to answer the question of whether investors should primarily be protected 'as shareholders' by corporate law or by securities law and market regulation. It offers a useful, analytical, comparative tool for evaluating current corporate and securities law, as well as for assessing the need for, and design of, new regulatory responses. The book will contribute to a better understanding of the key regulatory issues facing lawmakers today. History does not stop and a variety of new questions will ultimately emerge. It underscores that finding clear and efficient regulatory responses to new developments should start with a proper analysis of the aims and means of securities and corporate law.

Download or read book Investor Protection and the Coasian View written by Nittai Bergman and published by . This book was released on 2004 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt: Some legal regimes leave gaps in the protection provided by the law to firm investors. This paper considers the decision by a firm to opt out of the law and bridge those gaps using contracts. Examining the charters of a sample of Mexican firms, we find that private firms often enhance significantly the protection offered by the law to their investors, but public firms rarely do so. Motivated by these findings, we construct a model that endogenizes the degree of investor protection that firms provide, using as springboard the assumption that legal regimes differ in their ability to enforce what we call precisely filtering contracts, namely, contracts that provide protection only in those cases where expropriation can occur. Our model generates predictions about the types of contracts that would be employed and the levels of investor protection that they would provide across different legal regimes in both private and in public firms. Keywords: Corporate governance, investor protection, expropriation, contract design. JEL Classifications: G31, G32, G34.

Download or read book Investor Protection written by Rafael La Porta and published by . This book was released on 1999 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent research has documented large differences between countries in ownership concentration in publicly traded firms, in the breadth and depth of capital markets, in dividend policies, and in the access of firms to external finance. We suggest that there is a common element to the explanations of these differences, namely how well investors, both shareholders and creditors, are protected by law from expropriation by the managers and controlling shareholders of firms. We describe the differences in laws and the effectiveness of their enforcement across countries, discuss the possible origins of these differences, summarize their consequences, and assess potential strategies of corporate governance reform. We argue that the legal approach is a more fruitful way to understand corporate governance and its reform than the conventional distinction between bank-centered and market-centered financial systems