RFS Advance Access published online on September 14, 2009
Review of Financial Studies, doi:10.1093/rfs/hhp067
The "Antidirector Rights Index" Revisited
Harvard Law School
Send correspondence to Holger Spamann, Harvard Law School, Cambridge, MA 02139; telephone: (857) 413-8786. E-mail: hspamann{at}law.harvard.edu.
JEL Classification: G38, K22, P51
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Abstract |
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The "antidirector rights index" has been used as a measure of shareholder protection in over a hundred articles since it was introduced by La Porta et al. ("Law and Finance." 1998, Journal of Political Economy 106:1113–55). A thorough reexamination of the legal data, however, leads to corrections for thirty-three of the forty-six countries analyzed. The correlation between corrected and original values is only 0.53. Consequently, many empirical results established using the original index may not be replicable with corrected values. In particular, the corrected index fails to support three widely influential claims: that shareholder protection is higher in common than in civil law countries; that shareholder protection predicts stock market size or ownership dispersion; and that weak corporate governance explains the extent of exchange rate depreciation during the Asian financial crisis of 1997–1998.
This project would not have been possible without the help of the following lawyers who completed or checked the questionnaire for their respective country: Mohamed Abd-el-Wahab, Marco Amorese, Oluseye Arowolo, Jorge Asali Harfuch, Dimitris Babiniotis, David Bailey, Bernhard Berger, Florencia Mónica Celasco, Sofie Cools, Ian Dato, Prashant R. Deshpande, Gabriel Ejgenberg, María-Veronica Espina-Molina, Hsiao-Ling Fan, Rossa Fanning, Nicholas Flanagan, Martin Gelter, Kristoffel Grechenig, Gönenç Gürkaynak, Shachar Hadar, Matthias Haentjens, Edward Iacobucci, Issam A. Issa, Gonzalo Jiménez, Sofia Johan, Teddy Kalaw IV, Karoliina Koivunen, Chin Ching Lam, Hyun-Chul Lee, Magnus Lekander, Margarita Llorente, Ramone Madriñan, Ana Paula Martinez, Fernando Molina, Anne Hazel W. G. Mugo, Nicholas Owens, Claudia Paetzold, Eduardo Peixoto Gomes, Somika Phagapasvivat, Olav F. Perland, Salman Raja, Vesa Rasinaho, Caspar Rose, Calixto Salomão, Chi-Ling Seah, Shaun Teichner, Lucia Vaca, Rolef de Weijs, and one anonymous contributor. For additional legal information, leads to people with such information, and comments on various drafts, I thank Zaid Al-Ali, Augusta María Aljovín, Michal Barzuza, Laura Beny, Luca Enriques, Allen Ferrell, Andreas Fleckner, Stavros Gadinis, Tim Ganser, Martin Gelter, Yehonathan Givati, Carlos Gouvêa, Z. Özlem Gürakar, Shachar Hadar, Matthias Haentjens, Assaf Hamdani, Alan Douglas Harris, Campbell Harvey, Harald Hauge, Bert Huang, Howell Jackson, Harri Kalimo, Benjamin Kanovitch, Louis Kaplow, Magnus Karlsberg, Duangrat Laohapakakul, Shih Jern Liang, Amir Licht, Temitope Makinwa, Sufian Obeidat, Alejandro Gil Ortiz, Thomas J. Pate Paez, Nina Penna, Kosin Phimkitidej, Yuval Procaccia, Reem Raslan, Joanna Rutter, Maria Salema, Mathias Siems, Gillian Sinnott, Axel Spamann, Leo Strine, Andrew Tuch, Tom Vogl, Dina Waked, Mark Weinstein, John C. Wilcox, Tian Xiaoan, Jun Kul Yoo, Eon Kyoung Yun, seminar participants at Harvard Law School and at the annual meetings of the American Economic Association, the American Law and Economics Association, the European Association of Law and Economics, and the Law and Society Association, and especially Lucian Bebchuk, Mark Roe, Andrei Shleifer, the editor Matt Spiegel, and an anonymous referee. I gratefully acknowledge financial support from the German Academic Exchange Service, the Program on Corporate Governance at Harvard Law School, and a Terence M. Considine Fellowship through the John M. Olin Center for Law, Economics, and Business at Harvard Law School. All data used in this article, and an appendix documenting their derivation, are available online at http://rfs.oxfordjournals.org/.