The Law and Economics of Self-Dealing

We present a new measure of legal protection of minority shareholders against expropriation by corporate insiders: the anti-self-dealing index.

Author(s):

Simeon Djankov

The World Bank

Rafael La Porta

National Bureau of Economic Research

Florencio Lopez-de-Silanes

EDHEC Business School

Andrei Shleifer

National Bureau of Economic Research

Assembled with the help of Lex Mundi law firms, the index is calculated for 72 countries based on legal rules prevailing in 2003, and focuses on private enforcement mechanisms, such as disclosure, approval, and litigation, governing a specific self-dealing transaction. This theoretically-grounded index predicts a variety of stock market outcomes, and generally works better than the previously introduced index of anti-director rights.

Type: Working paper
Date: le 06/11/2006
Research Cluster : Finance

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