Shareholder Protection, Stock Market Development, and Politics
构建了一个政治经济学模型，揭示投资者保护与股票市场发展之间的双向反馈机制，并用47国面板数据验证了模型预测，发现股东保护存在国际趋同趋势且与跨境并购活动相关。
This paper presents a political economy model where there is mutual feedback between investor protection and stock market development.Better investor protection induces companies to issue more equity and thereby leads to a broader stock market.In turn, equity issuance expands the shareholder base and increases support for shareholder protection.This feedback loop can generate multiple equilibria, with investor protection and stock market size being positively correlated across equilibria.The model's predictions are tested on panel data for 47 countries over 1993-2002, controlling for country and year effects and endogeneity issues.We also document international convergence in shareholder protection to best-practice standards, and show that it is correlated with cross-border M&A activity, consistent with the model.