Citation
Publication Date:
Format:
Bibliography:
The Law and Finance account of the ubiquity of controlling shareholders in developing markets is based on conditions in the capital market: poor shareholder protection law prevents controlling shareholders from parting with control out of fear of exploitation by a new controlling shareholder who acquires a controlling position in the market. This explanation, however, does not address why we observe any minority shareholders in such markets, or why controlling shareholders in developing markets are most often family-based. This paper looks at the impact of bad law on shareholder distribution in a very different way. Developing countries typically provide not only poor minority protection, but poor commercial law generally. Specifically, the paper considers the impact on the distribution of shareholders of conditions in the product market, where the driving legal influence is the quality of commercial law that supports the corporation's actual business activities, and where the presence of a controlling family shareholder may help support reputation-based trading in a bad commercial law environment.
Other publications by this author
- Catalysing Corporate Governance: The Evolution of the United States System in the 1980s and 1990s
- Regulatory Dualism as a Development Strategy: Corporate Reform in Brazil, the United States, and the European Union
- Reflections on Value Creation
- Contract, Uncertainty and Innovation
- Rules for Growth
- Contract, Uncertainty and Innovation
- Braiding: The Interaction of Formal and Informal Contracting in Theory, Practice and Doctrine
- Economically Benevolent Dictators: Lessons for Developing Democracies
- That's My Money You're Using
- Regulatory Dualism as a Development Strategy: Corporate Reform in Brazil, the U.S., and the EU
Author
- Ronald J. Gilson
- Stanford Law School
- rgilson@stanford.edu
- 650 723.0614