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Journal of Finance Vol. 57 No. 3 2002

Investor Protection and Corporate Valuation

Rafael La Porta; Florencio López‐de‐Silanes; Andrei Shleifer1; Robert W. Vishny2

1 Harvard University · 2 University of Chicago

open access

Abstract

We present a model of the effects of legal protection of minority shareholders and of cash‐flow ownership by a controlling shareholder on the valuation of firms. We then test this model using a sample of 539 large firms from 27 wealthy economies. Consistent with the model, we find evidence of higher valuation of firms in countries with better protection of minority shareholders and in firms with higher cash‐flow ownership by the controlling shareholder.

DOI
10.1111/1540-6261.00457
Volume
57
Issue
3
Pages
1147-1170
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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