Author
Rafael La Porta
Other affiliations: Harvard University, National Bureau of Economic Research, Brown University
Bio: Rafael La Porta is an academic researcher from Dartmouth College. The author has contributed to research in topics: Shareholder & Enforcement. The author has an hindex of 66, co-authored 107 publications receiving 107032 citations. Previous affiliations of Rafael La Porta include Harvard University & National Bureau of Economic Research.
Topics: Shareholder, Enforcement, Capital market, Expropriation, Government
Papers published on a yearly basis
Papers
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TL;DR: In this article, the authors studied the evolution of legal rules between 1950 and 2000 and found that between the two simple disputes, the formalism of legal procedure did not converge, and possibly diverged, between common law and French civil law countries.
Abstract: Djankov et al. (2003a) propose and measure for 109 countries in the year 2000 an index of formalism of legal procedure for two simple disputes: eviction of a non-paying tenant and collection of a bounced check. For a sub-sample of 40 countries, we compute this index every year starting in 1950, which allows us to study the evolution of legal rules. We find that between 1950 and 2000, the formalism of legal procedure did not converge, and possibly diverged, between common law and French civil law countries. At least in this specific area of law, the results are inconsistent with the hypothesis that national legal systems are converging, and support the view that legal origins exert long lasting influence on legal rules.
46 citations
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TL;DR: In this paper, the authors address the question of why firms pay dividends, the so-called "dividend puzzle," from the agency perspective, and outline two agency models of dividends.
Abstract: This paper addresses the question of why firms pay dividends, the so-called "dividend puzzle," from the agency perspective. We outline two agency models of dividends. On what we call "the outcome" model, dividends are the result of effective pressure by minority shareholders to force corporate insiders to disgorge cash. Under this model, stronger minority shareholder rights should be associated with higher dividends. On what we call "the substitute" model, insiders choose to pay dividends to establish a reputation for decent treatment of minority shareholders so that firms can raise equity finance in the future. Under this model. stronger minority shareholder rights reduce the need for establishing a reputation, and so should be associated with lower dividends. We compare these models on a cross-section of 4,000 companies from around the world, which operate in 33 countries with different levels of shareholder protection, and therefore different strength of minority shareholder rights. The findings on payout levels and other results support the outcome agency model of dividends.
38 citations
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TL;DR: This article investigated empirically the determinants of the quality of governments in a large cross-section of countries and found that countries that are poor, close to the equator, ethnolinguistically heterogeneous, use French of socialist laws, or have high proportions of Catholics or Muslims exhibit inferior government performance.
Abstract: We investigate empirically the determinants of the quality of governments in a large cross-section of countries. We assess government performance using measures of government intervention, public sector efficiency, public good provision, size of government, and political freedom. We find that countries that are poor, close to the equator, ethnolinguistically heterogeneous, use French of socialist laws, or have high proportions of Catholics or Muslims exhibit inferior government performance. We also find that the larger governments tend to be the better performing ones. The importance of historical factors in explaining the variation in government performance across countries sheds light on the economic, political, and cultural theories of institutions.
37 citations
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TL;DR: In this paper, the authors investigate the determinants of regional development using a newly constructed database of 1569 sub-national regions from 110 countries covering 74 percent of the world's surface and 96 percent of its GDP.
Abstract: We investigate the determinants of regional development using a newly constructed database of 1569 sub-national regions from 110 countries covering 74 percent of the world's surface and 96 percent of its GDP. We combine the cross-regional analysis of geographic, institutional, cultural, and human capital determinants of regional development with an examination of productivity in several thousand establishments located in these regions. To organize the discussion, we present a new model of regional development that introduces into a standard migration framework elements of both the Lucas (1978) model of the allocation of talent between entrepreneurship and work, and the Lucas (1988) model of human capital externalities. The evidence points to the paramount importance of human capital in accounting for regional differences in development, but also suggests from model estimation and calibration that entrepreneurial inputs and human capital externalities are essential for understanding the data.
36 citations
TL;DR: This paper examined the design of the legal process for civil litigation in 40 countries between 1950 and 2000 and found that large differences in procedural formalism between common and civil law countries existed in 1950 and widened by 2000.
Abstract: dural formalism every year since 1950 We find that large differences in procedural formalism between common and civil law countries existed in 1950 and widened by 2000 For this area of law, the find ings are inconsistent with the hypothesis that national legal systems are converging, and support the view that legal origins exert long lasting influence on legal rules (JEL K41, 017) oth the standard historical narrative and recent empirical research show that national legal systems vary systematically according to the legal traditions or origins that countries belong to In particular, both substantive and procedural legal rules and regulations of civil (or Roman) law countries differ systematically from those of common (or English) law countries (Konrad Zweigert and Hein Kotz 1998; La Porta, Lopez-de-Silanes, and Shleifer 2008) The observed variation raises a number of questions Are these observed differences in laws and regulations merely a figment of recent data, or have they been present historically as well? Are legal rules coming from different legal traditions converging? Answers to these questions are central to the interpretation of legal origins, since some degree of permanence of their influence is central to the accounts of why they matter today In addition, we wish to know which factors economic, political, or even internal to the legal system itself determine the nature and the pace of legal change In this paper, we examine the design of the legal process for civil litigation in 40 countries between 1950 and 2000 We focus on civil procedure, defined as the "body of law concerned with methods, procedures and practices used in civil liti
34 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
TL;DR: The authors showed that countries with poorer investor protections, measured by both the character of legal rules and the quality of law enforcement, have smaller and narrower capital markets than those with stronger investor protections.
Abstract: Using a sample of 49 countries, we show that countries with poorer investor protections, measured by both the character of legal rules and the quality of law enforcement, have smaller and narrower capital markets. These findings apply to both equity and debt markets. In particular, French civil law countries have both the weakest investor protections and the least developed capital markets, especially as compared to common law countries.
10,005 citations
TL;DR: In this paper, the authors use data on ownership structures of large corporations in 27 wealthy economies to identify the ultimate controlling shareholders of these firms, and they find that, except in economies with very good shareholder protection, relatively few firms are widely held, in contrast to Berle and Means's image of ownership of the modern corporation.
Abstract: We use data on ownership structures of large corporations in 27 wealthy economies to identify the ultimate controlling shareholders of these firms. We find that, except in economies with very good shareholder protection, relatively few of these firms are widely held, in contrast to Berle and Means’s image of ownership of the modern corporation. Rather, these firms are typically controlled by families or the State. Equity control by financial institutions is far less common. The controlling shareholders typically have power over firms significantly in excess of their cash f low rights, primarily through the use of pyramids and participation in management.
8,270 citations