http://blogs.law.harvard.edu/corpgov/2008/05/16/do-differences-in-legal-protections-explain-differences-in-ownershi/ Sponsored by the HLS Corporate Governance Program Mon, 23 Nov 2009 18:31:21 -0500 http://wordpress.org/?v=2.8.4 hourly 1 http://blogs.law.harvard.edu/corpgov/2008/05/16/do-differences-in-legal-protections-explain-differences-in-ownershi/comment-page-1/#comment-19235 Thilo Kuntz Mon, 19 May 2008 08:17:41 +0000 http://blogs.law.harvard.edu/corpgov/2008/05/16/do-differences-in-legal-protections-e#comment-19235 Perhaps the findings of this study are not that astonishing considering the fact that it builds on a paper published by La Porta et al. This paper contains some serious flaws (see, e.g., Sofie Cools, The Real Difference in Corporate Law between the United States and Continental Europe: Distribution of Powers; Holger Spamann, Law and Finance Revisited, both available on SSRN). It is questionable that the study not even discusses the criticism with respect to La Porta et al., especially since the shortcomings could explain at least some of the evidence. Moreover, even if one takes La Porta et al. as basis, attention should be paid to the fact that this study was published ten years ago. During the period of the last ten years, European law and the law of many European countries underwent major changes in the legal environment. Thus, the question has to be asked if the current ownership structure examined in the study above should be scrutinized based on the legal data provided by La Porta et al. Another important point which was not part of the La Porta et al. paper is the tax environment. Ownership concentration is not understandable without taking taxes into view as well. Perhaps the findings of this study are not that astonishing considering the fact that it builds on a paper published by La Porta et al. This paper contains some serious flaws (see, e.g., Sofie Cools, The Real Difference in Corporate Law between the United States and Continental Europe: Distribution of Powers; Holger Spamann, Law and Finance Revisited, both available on SSRN). It is questionable that the study not even discusses the criticism with respect to La Porta et al., especially since the shortcomings could explain at least some of the evidence. Moreover, even if one takes La Porta et al. as basis, attention should be paid to the fact that this study was published ten years ago. During the period of the last ten years, European law and the law of many European countries underwent major changes in the legal environment. Thus, the question has to be asked if the current ownership structure examined in the study above should be scrutinized based on the legal data provided by La Porta et al. Another important point which was not part of the La Porta et al. paper is the tax environment. Ownership concentration is not understandable without taking taxes into view as well.

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