How Does Law Affect Finance

This paper mainly investigates the relationship among finance expropriation, performance and marked reaction as investor's legal protection levels improved . In specific level of investors'legal protection listed corporations of different expropriation had different marked value. When the level of investors'legal protection is improved the expropriation situation is bettered; whereas the corporations which suffered serious expropriation are promoted little.On the basis of empirical study investors do pay attention on the change of the legal protection. It is predicted that when the investor protection is improved, market value and cumulated reaction are higher on the corporation of which expropriation is lowed more. Nevertheless, the degree of expropriation rebounds with time flies. In the long run, the degree of tunneling falls slightly. We also find that investors are really protected when the content of law related specific operations. It doesn't work when the law is to regulate the stock trading. The more specific regulation is and the easier it is to implement, the better outcome. At present china's investors'protection regulations mainly rely on the government to execute.