TY - JOUR
T1 - Investor protection and the Coasian view
AU - Bergman, Nittai K.
AU - Nicolaievsky, Daniel
N1 - Funding Information:
This paper is based on the first chapter of the authors’ dissertations at Harvard University. We are very grateful to our advisors Andrei Shleifer, Jeremy Stein, and Philippe Aghion for their detailed suggestions. We are also thankful for comments by Lucian Bebchuk, Yaacov Bergman, Pablo Casas-Arce, Oliver Hart, Dirk Jenter, Josh Lerner, Stewart Myers, Rafael La Porta, Raghuram Rajan, David Scharfstein, Antoinette Schoar, an anonymous referee, and seminar participants at the 2004 American Finance Association Meeting, 2004 Western Finance Association Meeting, Anderson School of Management, Kellogg School of Management, MIT Sloan, Carroll School of Management, DuPree College of Management, Harvard Business School, Goizueta Business School, Stern School of Business, and Olin School of Business. We gratefully acknowledge the financial support of the John M. Olin Center for Business, Law and Economics.
PY - 2007/6
Y1 - 2007/6
N2 - The corporate charters of a sample of Mexican firms show that private firms often significantly enhance the legal protection offered to investors, but public firms rarely do so. We construct a model that endogenizes the degree of investor protection that firms provide, using as a springboard the assumption that legal regimes differ in their ability to enforce precisely filtering 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 would prevail across different legal regimes in both private and public firms.
AB - The corporate charters of a sample of Mexican firms show that private firms often significantly enhance the legal protection offered to investors, but public firms rarely do so. We construct a model that endogenizes the degree of investor protection that firms provide, using as a springboard the assumption that legal regimes differ in their ability to enforce precisely filtering 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 would prevail across different legal regimes in both private and public firms.
KW - Corporate charters
KW - Financial contracting
KW - Investor protection
UR - http://www.scopus.com/inward/record.url?scp=34247591953&partnerID=8YFLogxK
U2 - 10.1016/j.jfineco.2005.11.003
DO - 10.1016/j.jfineco.2005.11.003
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AN - SCOPUS:34247591953
VL - 84
SP - 738
EP - 771
JO - Journal of Financial Economics
JF - Journal of Financial Economics
SN - 0304-405X
IS - 3
ER -