Tag: Self-Dealing
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 ...
Investor Protection and Dividend Policy
LLSV (2000b) show that countries with strong shareholder rights are able to force firms to disgorge cash and pay higher dividends. They find that dividend policies vary across legal regimes in ways consistent with a particular version of the agency theory of dividends. Specifically, firms in common law countries, where investor protection is typically better, ...
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 ...
The Financial Markets Development and Economic Growth
The literature argues that financial markets are the fundamental channel through which most governments attempt to regulate their economies’ performance including combating inflation, promoting economic growth in the output of goods and services, and providing employment (Merton, 1990). It has been noted that the most successful economies have well developed financial markets (Levine and Zervos, ...
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 ...
Legal origin and Shareholders protection
In the past decade, LLSV spearheaded a rapidly evolving mass of literature emphasising the part played by legal institutions in moulding the national pattern of financial management and economic growth. What the literature argued was a core concept for corporate governance was the protection of investor rights against the expropriation by insiders and legal enforcement ...
Corporate Governance
Corporate governance tackles the detachment between ownership and domination and has been a topic of special interest in academic research for a long time. Corporate governance has moved to the forefront in all sectors of the public domain due to its apparent importance in the economic health of corporations in particular and the broader society ...