Reform, Financial Systems and Legal Frameworks
- The CRC Series on Competition, Regulation and Development
Edited by Thankom Gopinath Arun and John Turner
Priya P. Lele and Mathias M. Siems INTRODUCTION The discussion of shareholder protection has various dimensions: it is topical in the context of the new EU Directive on Shareholder Rights (EU, 2007; for a critical comment see Siems, 2005b). It is significant for the consideration of good corporate governance (Bebchuk, 2005a, 2005b; see also Bebchuk and Fried, 2004), and time and again comes to the forefront in the growing literature on ‘law and finance’. Following the pioneering work of a group of financial economists, there is an increasing trend to quantify the law in relation to shareholder protection. However, in our view, this has not been done in a satisfactory manner. Thus, the next section identifies some of the problems with the existing indices, and the following section discusses the building of a more meaningful shareholder protection index; in particular, it addresses the question of selection of variables and method of coding. The penultimate section presents some of the results that are indicative of interesting possibilities that a leximetric approach (the term was first used by Cooter and Ginsburg, 2003) opens up into the study of comparative shareholder protection law and the final section offers conclusions on the chapter. Our results contribute to the contemporary discussion on comparative company law and corporate governance. Adopting a leximetric approach, we have made some interesting findings on questions such as which of the studied countries scores the maximum on our shareholder protection index, how much legal systems have changed over the years, whether...
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