Shareholder Protection: A Leximetric Approach

In this article we build a new and meaningful shareholder protection index for five countries and code the development of the law for over three decades. This quantification of legal rules (“leximetrics”) provides interesting possibilities for comparing variations across time series and across legal systems. For instance, our study finds, that in all of our panel countries shareholder protection has been improving in the last three decades; that the protection of minority against majority shareholders is considerably stronger in “blockholder countries” than in nonblockholder countries; and that convergence in shareholder protection has been taking place since 1993 and has been increasing since 2001. Finally, our examination of the legal differences between the five countries does not confirm the distinction between common law and civil law countries.