Articles week 5 Flashcards
(6 cards)
1
Q
Which legal system offers the strongest investor protections?
A
Common law systems.
2
Q
What are examples of legal investor protections?
A
Voting rights, dividend rights, and the right to sue for expropriation.
3
Q
What is the central claim of La Porta et al. (2000)?
A
Legal protection of outside investors is the foundation of effective corporate governance.
4
Q
What is the key criticism of broad governance indexes?
A
They include many provisions that do not affect firm value, diluting their usefulness.
5
Q
2 main reasons for hostile takeover
A
- Punish management
- Creative destruction
6
Q
What does Sinha conclude about takeover targets, regarding their performance?
A
They are not always underperforming or poorly governed.
