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Andrei Shleifer

Bio: Andrei Shleifer is an academic researcher from Harvard University. The author has contributed to research in topics: Government & Shareholder. The author has an hindex of 171, co-authored 514 publications receiving 271880 citations. Previous affiliations of Andrei Shleifer include National Bureau of Economic Research & University of Chicago.


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TL;DR: In this paper, the authors present a new theory of pervasive shortages under socialism, based on the assumption that the planners are self-interested, meaning that it is in their interest to create shortages of output and to collect bribes from the rationed consumers.
Abstract: We present a new theory of pervasive shortages under socialism, based on the assumption that the planners are self-interested. Because the planners -- meaning bureaucrats in the ministries and managers of firms -- cannot keep the official profits that firms earn, it is in their interest to create shortages of output and to collect bribes from the rationed consumers. Unlike official profits, bribes are not turned over to the state, and so shortages enable the key decision makers who collect them to profit personally. The theory suggests that an increase in the official price of a good might reduce output. The theory also suggests that market socialism is bound to fail even without computational complexities facing the planners.

141 citations

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TL;DR: In this paper, the authors defined an institution as a firm that employs professionals to manage money for the benefit of others (firms or individuals) and defined the New York Stock Exchange as a "place where professionals can be employed for managing money for others".
Abstract: IN 1990 TOTAL FINANCIAL assets in U.S. capital markets amounted to $13.7 trillion, of which $3.4 trillion was equities, and the rest were bonds, government securities, tax-exempt securities, and mortgages. These financial assets were held by two principal types of investors: individuals and institutions. The New York Stock Exchange defines an institution as a firm that employs professionals to manage money for the benefit of others (firms or individuals). At the end of 1990, $6.1 trillion of the total U.S. financial assets was held by institutions. Both the amount of institutional assets and the fraction of the total they represent have increased sharply over the past 30 years. In 1950, for example, institutional assets comprised $107 billion out of a $500 billion total, or 21 percent compared with 45 percent in 1990.1 The growth of institutional ownership of equities has paralleled their growth in the ownership of other financial assets. In 1955 institutions owned 23 percent of equities compared with 77 percent owned by individuals; in

141 citations

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TL;DR: The authors present a theory of consumer choice that combines elements of limited recall and of allocation of attention distorted by salience. But their model does not explain how consumers under or overreact to information, depending on what draws their attention.
Abstract: We present a theory of consumer choice that combines elements of limited recall and of allocationof attention distorted by salience. The theory helps clarify and organize a variety of evidence dealingwith consumer reaction to information, including surprises in quality and prices, unshrouding ofhidden attributes such as taxes or maintenance costs, and reminders. Our model explains howconsumers under or overreact to information, depending on what draws their attention. It also yieldsa normative analysis of reaction to reminders which adjusts the \sucient statistic" methodology.

140 citations

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TL;DR: In contrast to the common image, by the late 1990s Russia had become a typical middle-income capitalist democracy as discussed by the authors, and the 1990s were a decade of catastrophe for its citizens.
Abstract: During the 1990s, Russia underwent an extraordinary transformation from a communist dictatorship to a multi-party democracy, from a centrally planned economy to a market economy, and from a belligerent adversary of the West to a cooperative partner Yet a consensus in the US circa 2000 viewed Russia as a disastrous and threatening failure, and the 1990s as a decade of catastrophe for its citizens Analyzing a variety of economic and political data, we demonstrate a large gap between this perception and the facts In contrast to the common image, by the late 1990s Russia had become a typical middle- income capitalist democracy

140 citations

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TL;DR: In this paper, the authors present a model of trade in which similar countries trade more with each other than very different countries, and explain why high human capital countries have a comparative advantage at producing high quality goods, but are also rich enough to want to consume high quality.
Abstract: We present a model of trade in which similar countries trade more with each other than very different countries. The reason is that high human capital countries have a comparative advantage at producing high quality goods, but are also rich enough to want to consume high quality. As a result, countries choose trading partners at a similar level of development, who produce similar quality products. The model helps account for the observed trade patterns, and sheds light on international income comparisons. It also helps explain recent concerns of Eastern European countries that they have "nothing to sell" to the West.

137 citations


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TL;DR: This paper examined legal rules covering protection of corporate shareholders and creditors, the origin of these rules, and the quality of their enforcement in 49 countries and found that common law countries generally have the best, and French civil law countries the worst, legal protections of investors.
Abstract: This paper examines legal rules covering protection of corporate shareholders and creditors, the origin of these rules, and the quality of their enforcement in 49 countries. The results show that common law countries generally have the best, and French civil law countries the worst, legal protections of investors, with German and Scandinavian civil law countries located in the middle. We also find that concentration of ownership of shares in the largest public companies is negatively related to investor protections, consistent with the hypothesis that small, diversified shareholders are unlikely to be important in countries that fail to protect their rights.

14,563 citations

Journal ArticleDOI
TL;DR: In this article, the authors examined legal rules covering protection of corporate shareholders and creditors, the origin of these rules, and the quality of their enforcement in 49 countries and found that common-law countries generally have the strongest, and French civil law countries the weakest, legal protections of investors, with German- and Scandinavian-civil law countries located in the middle.
Abstract: This paper examines legal rules covering protection of corporate shareholders and creditors, the origin of these rules, and the quality of their enforcement in 49 countries. The results show that common-law countries generally have the strongest, and Frenchcivil-law countries the weakest, legal protections of investors, with German- and Scandinavian-civil-law countries located in the middle. We also find that concentration of ownership of shares in the largest public companies is negatively related to investor protections, consistent with the hypothesis that small, diversified shareholders are unlikely to be important in countries that fail to protect their rights.

13,984 citations

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TL;DR: The authors surveys research on corporate governance, with special attention to the importance of legal protection of investors and of ownership concentration in corporate governance systems around the world, and presents a survey of the literature.
Abstract: This paper surveys research on corporate governance, with special attention to the importance of legal protection of investors and of ownership concentration in corporate governance systems around the world.

13,489 citations

Journal ArticleDOI
TL;DR: Corporate Governance as mentioned in this paper surveys research on corporate governance, with special attention to the importance of legal protection of investors and of ownership concentration in corporate governance systems around the world, and shows that most advanced market economies have solved the problem of corporate governance at least reasonably well, in that they have assured the flows of enormous amounts of capital to firms, and actual repatriation of profits to the providers of finance.
Abstract: This article surveys research on corporate governance, with special attention to the importance of legal protection of investors and of ownership concentration in corporate governance systems around the world. CORPORATE GOVERNANCE DEALS WITH the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment. How do the suppliers of finance get managers to return some of the profits to them? How do they make sure that managers do not steal the capital they supply or invest it in bad projects? How do suppliers of finance control managers? At first glance, it is not entirely obvious why the suppliers of capital get anything back. After all, they part with their money, and have little to contribute to the enterprise afterward. The professional managers or entrepreneurs who run the firms might as well abscond with the money. Although they sometimes do, usually they do not. Most advanced market economies have solved the problem of corporate governance at least reasonably well, in that they have assured the flows of enormous amounts of capital to firms, and actual repatriation of profits to the providers of finance. But this does not imply that they have solved the corporate governance problem perfectly, or that the corporate governance mechanisms cannot be improved. In fact, the subject of corporate governance is of enormous practical impor

10,954 citations

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TL;DR: In this article, the authors show that strategies that buy stocks that have performed well in the past and sell stocks that had performed poorly in past years generate significant positive returns over 3- to 12-month holding periods.
Abstract: This paper documents that strategies which buy stocks that have performed well in the past and sell stocks that have performed poorly in the past generate significant positive returns over 3- to 12-month holding periods. We find that the profitability of these strategies are not due to their systematic risk or to delayed stock price reactions to common factors. However, part of the abnormal returns generated in the first year after portfolio formation dissipates in the following two years. A similar pattern of returns around the earnings announcements of past winners and losers is also documented

10,806 citations