Better investor protection by listing their stocks in

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Unformatted text preview: elves credibly to better investor protection by listing their stocks in countries with strong investor protection. countries 25 Law and Corporate Governance Commercial legal systems of most countries Commercial derive from a relatively few legal origins. derive – English common law – French civil law – German civil law – Scandinavian civil law Thus the content of law protecting investors’ Thus rights varies a great deal across countries rights It should also be noted that the quality of law It enforcement varies a great deal across countries enforcement 26 Consequences of Law The pattern of corporate ownership and valuation – Weak investor protection => concentrated ownership Weak – large shareholders can abuse smaller shareholders: Cash flow vs large control rights control Development of capital markets – When investors are assured of receiving fair returns on their funds, When they will be willing to pay more for securities they – Thus strong investor protection will be conducive to large capital Thus markets markets • Financial development contribute to economic growth – – – It enhances savings It It channels savings toward real investments in productive capacities It enhances the efficiency of investment allocation 27 Corporate Governance Reform Scandal weary investors around the world are Scandal demanding corporate governance reform demanding It’s not just the companies’ internal governance It’s mechanisms that failed; auditors, r...
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This document was uploaded on 01/15/2014.

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