Research Discussion Papers, Bank of Finland
No 8/2002:
Law of finance: Evidence from Finland
Ari Hyytinen ()
, Iikka Kuosa and Tuomas Takalo ()
Abstract: Although it is widely acknowledged that the benefits of
corporate governance reform could be substantial, systematic evidence on
such reforms is scant. We both document and evaluate a contemporary
corporate governance reform by constructing 18 measures of shareholder and
creditor protection for Finland for the period 1980–2000. The measures
reveal that shareholder protection has been strengthened whereas creditor
protection has been weakened. We also demonstrate how the reform is
consistent with a reorganisation of the Finnish financial market in which a
bank-centred financial system shifted from relationship-based debt finance
towards increasing dominance by the stock market. We find evidence that the
development of shareholder protection has been a driver of the
reorganisation, whereas the changes in creditor protection have mirrored
market developments.
Keywords: corporate finance; financial intermediation; corporate governance; (follow links to similar papers)
JEL-Codes: E50; G21; G24; G32; (follow links to similar papers)
60 pages, May 22, 2002
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