Globalization, free markets and investor protection

Authors

DOI:

https://doi.org/10.17811/ebl.9.1.2020.8-13

Abstract

 

Using data from 29 countries, this paper is the first attempt to examine whether economic, political and social integration explain how well investors, both shareholders and creditors, are protected from expropriation by firms. We show that: (i) globalization drives both shareholder and creditor protection; (ii) least restrictive markets rather than paternalistic markets matter particularly for shareholders’ protection; (iii) the globalization-protection nexus favoured only creditors during the crisis; and (iv) our result significantly holds for OECD-member countries.

References

Alesina, A., Spolaore, E., Wacziarg, R., 2000. Economic integration and political disintegration. American Economic Review 90, 1276-1296.

Allin, P., Hand, D. J., 2017. New statistics for old?—measuring the wellbeing of the UK. Journal of the Royal Statistical Society: Series A (Statistics in Society) 180, 3-43.

Balli, F., Pericoli, F. M., Pierucci, E., 2018. Globalization and international risk-sharing: The role of social and political integration. European Journal of Political Economy 55, 324-345.

Djelic, M., Quack, S., 2018. Globalization and business regulation. Annual Review of Sociology 44, 123-143.

Dorn, F., Fuest, C., Potrafke, N., 2018. Globalization and income inequality revisited. CESifo Working Paper Series No. 6859.

Flood, R. P., Marion, N. P., Matsumoto, A., 2012. International risk sharing during the globalization era. Canadian Journal of Economics 45, 394-416.

Gwartney, J., Lawson, R., 2003. The concept and measurement of economic freedom. European Journal of Political Economy 19, 405-430.

Gygli, S., Haelg, F., Potrafke, N., Sturm, J., 2018. The KOF globalisation index–revisited. The Review of International Organizations, 1-32.

Lane, P. R., Milesi-Ferretti, G. M., 2007. The external wealth of nations mark II: Revised and extended estimates of foreign assets and liabilities, 1970–2004. Journal of International Economics 73, 223-250.

Liu, L., Zhang, G., Fang, Y., 2016. Bank credit default swaps and deposit insurance around the world. Journal of International Money and Finance 69, 339-363.

Persakis, A., Iatridis, G. E., 2015. Cost of capital, audit and earnings quality under financial crisis: A global empirical investigation. Journal of International Financial Markets, Institutions and Money 38, 3-24.

Shleifer, A., Wolfenzon, D., 2002. Investor protection and equity markets. Journal of Financial Economics 66, 3-27.

Sobol, K., Cleveland, M., Laroche, M., 2018. Globalization, national identity, biculturalism and consumer behavior: A longitudinal study of Dutch consumers. Journal of Business Research 82, 340-353.

Steenkamp, J., 2019. The uncertain future of globalization: Implications for global consumer culture and global brands. International Marketing Review.

Weber, R. A., Camerer, C. F., 2003. Cultural conflict and merger failure: An experimental approach. Management Science 49, 400-415.

Downloads

Published

29-01-2020

How to Cite

Lartey, T., & Danso, A. (2020). Globalization, free markets and investor protection. Economics and Business Letters, 9(1), 8–13. https://doi.org/10.17811/ebl.9.1.2020.8-13

Issue

Section

Articles