Tag: Expropriation
Empirical results of the relation between the minority shareholders protection and equity markets
My thesis examined empirically whether higher levels of legal protection for minority shareholders are associated with equity markets which were larger, more active, and faster in issuing new securities, that is to say equity market development. Using a sample of 16 MENA countries over the period between 2005-2009, panel data analyses as well as the ...
Shareholder Protection and Corporate Value
Empirical analyses, such as that of Brockman and Chung (2003), Caprio et al., (2007), Claessens and Fan (2002), Johnson et al. (2000a) and La Porta et al. (2002) suggest that the legal protection of shareholders’ rights influences the valuation of firms. This is important for this thesis as the size of financial markets which is ...
Shareholders’ Protection and the Ownership Pattern
The image of the public corporation as a firm owned by dispersed shareholders, while control is concentrated in the hands of management, as suggested by Berle and Means (1932), has been shown to be the exception rather than the rule in most countries around the world (La Porta et al., 1999; Coffee, 2001). Different studies ...
Sanctions against Minority Shareholders Expropriations
The law can deter wrongdoing by using sanctions such as fines and prison terms against abusive self-dealing by the controlling shareholder and those who approved the transaction. Fines and criminal sanctions can be imposed upon the interested director and the approving body ranging from criminal intent to obtaining unlawful profits to breaching duties of care ...
Remedies Against Minority Shareholders Expropriations
Legal strategies against minority shareholders expropriations are of course pointless without appropriate remedies and enforcement mechanisms. In order to have appropriate remedies, minority shareholders should be easily able to prove the wrongdoing (Djankov et al., 2008; Conac et al., 2007). Accordingly, ex post disclosure is required first in annual reports and periodic filings which in ...
Self-Dealing; Approval and Disclosures Procedural Requirements
Legal systems often impose procedural requirements on self-dealing transactions to determine their structure and to encourage companies to follow a given procedure thereby making it harder for shareholder plaintiff’s to challenge procedurally fair transactions (Conac et al., 2007). Djankov et al. (2008) give examples of how the law can regulate a transaction involving self-dealing so ...
Legal System Strategies against Self-Dealing
It is appropriate to note that self-dealing transactions traditionally fall within the scope of insider’s fiduciary duty of loyalty (Enriques, 2000, p. 5), that is, the duty to subordinate their own interests to those of the corporation whenever a conflict arises (Henn and Alexander, 1983). Often, the rationale for the regulation of self-dealing transactions is ...
Evidences of Minority Shareholders Expropriation
Minority shareholders are defined as outside or non-controlling shareholders because their holdings are small in absolute terms and relative to the corporation’s total outstanding shares. With only a small portion of the corporation’s outstanding shares, these investors have limited voting rights and accordingly have little power of control within the corporation. Sometimes their investment is ...