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Title: The cultural foundations of investor protection: Evidence from corporate governance practices across the U.S.

Citation Type: Miscellaneous

Publication Year: 2018

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Abstract: We find that U.S. firms in regions with residents tracing their ancestral roots to common law countries are more likely to adopt management-friendly provisions in their corporate bylaws, suggesting that investors in these areas are less concerned about expropriation from corporate insiders. Instrumenting local legal heritage with immigration from England at the turn of the 19 th century confirms that, legal norms aside, the cultural norms in common law countries provide better investor protection than the cultural norms in other countries. The effect of legal heritage on contractual obligations is stronger for the countries where these legal systems developed and for firms more strongly embedded in the local community.

Url: http://fmaconferences.org/SanDiego/Papers/LCG_FMA.pdf

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Authors: Gatchev, Vladimir A; Pirinsky, Christo A; Zhao, Mengxin

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Data Collections: IPUMS USA

Topics: Other

Countries: United States