Author
Andrei Shleifer
Other affiliations: National Bureau of Economic Research, University of Chicago, Pompeu Fabra University ...read more
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.
Topics: Government, Shareholder, Stock market, Enforcement, Corruption
Papers published on a yearly basis
Papers
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TL;DR: In this article, the authors describe how managers can entrench themselves by making manager-specific investments that make it costly for shareholders to replace them, by reducing the probability of being replaced and obtaining more latitude in determining corporate strategy.
2,040 citations
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TL;DR: This article found that the returns to bidding shareholders are lower when their firm diversifies, when it buys a rapidly growing target, and when the performance of its managers has been poor before the acquisition.
Abstract: This paper documents for a sample of 327 US acquisitions between 1975 and 1987 three forces that systematically reduce the announcement day return of bidding firms. The returns to bidding shareholders are lower when their firm diversifies, when it buys a rapidly growing target , and when the performance of its managers has been poor before the acquisition. These results are consistent with the proposition that managerial rather than shareholders' objectives drive bad acquisitions.
1,947 citations
TL;DR: In this article, the authors investigate cross-country determinants of private credit, using new data on legal creditor rights and private and public credit registries in 129 countries, and find that both creditor protection through the legal system and information sharing institutions are associated with higher ratios of the private credit to GDP.
1,908 citations
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TL;DR: The authors showed that in most countries, rent seeking rewards talent more than entrepreneurship does, leading to stagnation, and showed that countries with a higher proportion of engineering college majors grow faster; whereas countries with higher proportions of law concentrators grow slower.
Abstract: A country's most talented people typically organize production by others, so they can spread their ability advantage over a larger scale. When they start firms, they innovate and foster growth, but when they become rent seekers, they only redistribute wealth and reduce growth. Occupational choice depends on returns to ability and to scale in each sector, on market size, and on compensation contracts. In most countries, rent seeking rewards talent more than entrepreneurship does, leading to stagnation. Our evidence shows that countries with a higher proportion of engineering college majors grow faster; whereas countries with a higher proportion of law concentrators grow slower.
1,889 citations
TL;DR: In this article, the authors present a possibly empirically important exception to this argument, based on the prevalence of positive feedback investors in financial markets, who buy securities when prices rise and sell when prices fall.
Abstract: Analyses of rational speculation usually presume that it dampens fluctuations caused by "noise" traders. This is not necessarily the case if noise traders follow positivefeedback strategies-buy when prices rise and sell when prices fall. It may pay to jump on the bandwagon and purchase ahead of noise demand. If rational speculators' early buying triggers positive-feedback trading, then an increase in the number of forwardlooking speculators can increase volatility about fundamentals. This model is consistent with a number of empirical observations about the correlation of asset returns, the overreaction of prices to news, price bubbles, and expectations. WHAT EFFECT DO RATIONAL speculators have on asset prices? The standard answer, dating back at least to Friedman (1953), is that rational speculators must stabilize asset prices. Speculators who destabilize asset prices do so by, on average, buying when prices are high and selling when prices are low; such destabilizing speculators are quickly eliminated from the market. By contrast, speculators who earn positive profits do so by trading against the less rational investors who move prices away from fundamentals. Such speculators rationally counter the deviations of prices from fundamentals and so stabilize them. Recent work on noise trading and market efficiency has accepted this argument (Figlewski, 1979; Kyle, 1985; Campbell and Kyle, 1988; DeLong, Shleifer, Summers, and Waldmann, 1987). In this work, risk aversion keeps rational speculators from taking large arbitrage positions, so noise traders can affect prices. Nonetheless, the effect of rational speculators' trades is to move prices in the direction of, even if not all the way to, fundamentals. Rational speculators buck noisedriven price movements and so dampen, but do not eliminate, them. In this paper we present a possibly empirically important exception to this argument, based on the prevalence of positive feedback investors in financial markets. Positive feedback investors are those who buy securities when prices rise and sell when prices fall. Many forms of behavior common in financial markets can be described as positive feedback trading. It can result from extrapolative expectations about prices, or trend chasing. It can also result from stoploss orders, which effectively prompt selling in response to price declines. A
1,825 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
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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
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
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