volume."); Spamann, supra note 21, at 468 n.3 (showing that LLSV
, are cited by Eun and Resnick as stating that "such differences can be explained largely by how well investors are protected by law from expropriation by the managers and controlling shareholders of firms." Furthermore, they highlight observations that English common law countries, such as Canada, the U.S and the U.K, provide the strongest form of protection for investors whilst French civil law countries such as Belgium, Italy, and Mexico, provide the weakest.
LLSV found that the global average of investor protection is inferior in civil law countries relative to those with a common law heritage; yet we find no evidence that our common law representative country (Ireland) had a lower coefficient for ROA.
(7.) Based on a study of shareholder protection in Central and Eastern Europe (Pistor, et al, 2000), Ukraine's level of statutory shareholder protection at 2.5 is inferior to the LLSV score of 4.0 for Common Law countries (including Ireland) and of 3.0 for Scandinavian countries (including Finland).
More recently, LLSV (2000) put emphasis on the relation between corporate payouts and the conflicts of interests between controlling and minority shareholders.
LLSV (2000) propose an alternative agency cost model of dividend policy with fundamentally different empirical implications.
In addition to the Anti-Director Rights Index, LLSV
also take into account two variables: "one share, one vote" and "mandatory dividends." See La Porta et al., supra note 13, at 1122-23.
question the wisdom of LLSV
and the NIE thinkers who, though differing
In terms of direct laws and regulations, a growing body of work examines how the law and enforcement mechanisms protecting outside investors influence stock markets, banks, and economic growth (LLSV
; Beck, Demirguc-Kunt, and Levine, forthcoming).
Creditor rights: index for the protection of creditor rights, called 'LLSV
', measured by Pistor et al.
The governance index, which is taken from La Porta, Lopez-de-Silanes, Shleifer, and Vishny (hereafter, LLSV
) (1998), is an average of the efficiency of the judicial system, the (narrowed) rule of law, the corruption, the risk of expropriation, and accounting standards.
This variable ranges from 0 to 4 and is constructed by adding 1 for each of the four rights: 1) the country imposes restrictions, such as creditor's consent or minimum dividends, to file for reorganization; 2) secured creditors are able to gain possession of their security once the reorganization petition has been approved (no automatic stay); 3) secured creditors are ranked first in the distribution of the proceeds that result from the disposition of the assets of a bankrupt firm; and 4) the debtor does not retain the administration of his property pending the resolution of the reorganization; source: LLSV
(1997); SHRHT (Shareholders' rights index) measures the rights of minority shareholders in the firm.