Theoretical And Empirical Research On Legal Protection Of Investor

On the basis of the legal protection of investors, the paper looks for mechanisms and channels to increase the degree of protection of shareholders, and confirms the propositions using countries' data. The paper consists of three sections including six chapters. The previous two sections tend to theoretical analysis. It proposes the mechanisms and channels to increase the degree of protection of shareholders from legal settings out of firms and ownership structure in firms. Section 3 tests these propositions using a sample of listed firms in China, based on theoretical analysis. The main content of the whole paper is structured as follows:Section 1, including chapter 1 and chapter 2, proposes the dominant theme of the paper. By referring to research background and significance, Chapter 1 deduces the importance of legal protection given investors. Chapter 2 overviews the issues on determination and consequences of investor protection and raises the view of the paper on how to increase the degree of investor protection, after introducing the concept, meaning and measure of legal protection given investors.Section 2,including chapter 3 and chapter 4, documents and partly confirms the propositions of investor protection . Chapter 3 examines the specific mechanism from legal setting out of firms, i.e. the determinant of legal protection of investor in theory. Establishment of legal Rules involves in both legislation and litigation. The paper presents a formal theoretical model of lobbying adding on litigation, based on the analysis of legislation, litigation and their interaction. The model demonstrates that the degree of legal protection given investor is determined by legislation, litigation and their interaction boiling down to two ingredients: the degree of judicial independence and the difference in endowments of the related interest groups. By referring to the historical description and empirical study, chapter 3 elaborates that legal origin, history, politic, culture and the degree of economic development impact on the degree of investor protection through the two ingredients. So the paper not only finds the specific mechanism of the two ingredients, but also explains the differences across countries in legal protections of investors. Chapter 4 examines substitute ownership structures in a given legal environment. Chapter 4 considers how an entrepreneur deals with agency problems by designing ownership structure under the condition of (1) hiring a manager to implement the project and (2) implementing the project himself. The result indicates that insider ownership concentration and legal shareholder protection are both substitute that can be more robust when the law is poor; that outside block ownership is effective when the law is of intermediate quality; that outside block ownership is small and exogenous balance of ownership structure is not stable. Chapter 4 deduces (1) the relation of insider ownership and performance is nonlinear. The positive relation is robust when investor protection is poor ;( 2) the relation of outside block ownership and performance is nonlinear and the relation can be negative only when investor protection is poor.Section 3, including chapter 5 and chapter 6, confirms the propositions and puts forward some feasible suggestions of legal reform. Chapter 5 examines the degree of investorprotection in China, by being compared with other countries' at first. Secondly it tests three hypotheses using data of Chinese listed corporate and a case of fighting for corporate control, which include that performance by accounting return is first decreasing with ownership of the largest shareholder and increasing then, that performance by accounting return is significantly decreasing with ownership of the second largest shareholder, and that ownership of the second largest shareholder is small and exogenous balance of ownership structure which may lead to fight for control is not stable. Finally chapter 5 argues that the cause why there are so much divergent experiences in the transition o...