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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.


Papers
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Journal ArticleDOI
TL;DR: In this article, the authors illustrate this point using the example of pre-privatization restructuring of state firms, and discuss its implications for foreign economic assistance, showing that the more appropriate model, that of a badly divided government, often leads to very different policy recommendations.

55 citations

ReportDOI
TL;DR: The authors showed that the combination of rapid credit and asset price growth over the prior three years, whether in the non-financial business or the household sector, is associated with about a 40% probability of entering a financial crisis within the next three years.
Abstract: Using historical data on post-war financial crises around the world, we show that crises are substantially predictable. The combination of rapid credit and asset price growth over the prior three years, whether in the nonfinancial business or the household sector, is associated with about a 40% probability of entering a financial crisis within the next three years. This compares with a roughly 7% probability in normal times, when neither credit nor asset price growth has been elevated. Our evidence cuts against the view that financial crises are unpredictable “bolts from the sky” and points toward the Kindleberger-Minsky view that crises are the byproduct of predictable, boom-bust credit cycles. The predictability we document favors macro-financial policies that “lean against the wind” of credit market booms. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

55 citations

Posted Content
TL;DR: In the United States, the two principal modes of producing local government services are inhouse provision by government employees and contracting out to private suppliers, also known as privatization as discussed by the authors, and the evidence indicates that state clean government laws and state laws restricting county spending encourage privatization, whereas strong public unions discourage it.
Abstract: In the United States, the two principal modes of producing local government services are inhouse provision by government employees and contracting out to private suppliers, also known as privatization. We examine empirically how United States counties choose their mode of providing services. The evidence indicates that state clean- government laws and state laws restricting county spending encourage privatization, whereas strong public unions discourage it. The evidence is inconsistent with the view that efficiency considerations alone govern the provision mode, and points to the important roles played by political patronage and taxpayer resistance to government spending in the privatization decision.

52 citations

Journal ArticleDOI
TL;DR: In this paper, the authors match the U.S. data with a relative risk aversion of 4 and an elasticity of intertemporal substitution (EIS) of 2 and show that extrapolators' overreaction to dividend news generates countercyclical expected returns while attenuating their consumption response.
Abstract: Many stockholders irrationally believe that high recent stock market returns predict high future stock market returns. The presence of these extrapolators can help resolve the equity premium puzzle if the elasticity of intertemporal substitution (EIS) is greater than one. In our model, extrapolators’ overreaction to dividend news generates countercyclical expected returns while attenuating their consumption response. The equity premium is high because extrapolators believe stocks are a bad hedge and rational investors’ limited risk-bearing capacity prevents them from fully compensating for extrapolators’ reluctance to hold stocks. We match the U.S. data with a relative risk aversion of 4 and an EIS of 2.

52 citations

Journal ArticleDOI
TL;DR: In this article, the authors investigate the evolution of common law under overruling, a system of precedent change in which appellate courts replace existing legal rules with new ones, and they find that overruling leads to unstable legal rules that rarely converge to efficiency.

52 citations


Cited by
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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

Posted Content
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

Journal ArticleDOI
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