Common Law vs. Civil Law: Which System Provides More Protection to Shareholders and Creditors and Promotes Financial Development

Sarkar, Prabirjit

doi:10.2139/ssrn.1913624

Cited by 8 publications

(7 citation statements)

References 24 publications

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“…In this paper, we demonstrated the importance of signaling theory (Ross 1977) and of the institutional and legal environment in the choice of the means of exchange in mergers and acquisitions in the industry of travel agencies and tour operators. Findings are in line with the predictions of the legal origins and the nature of investor protection (La Porta et al 2008;Sarkar 2011). However, we did not consider the opportunistic behavior of acquirers when facing less informed targets.…”

Section: Discussionsupporting

confidence: 86%

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The Medium of Exchange in Mergers and Acquisitions: The Cases of Travel Agencies and Tour Operators

Coelho

Girón

2020

Administrative Sciences

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The choice of the means of exchange is one of the critical decisions in mergers and acquisitions. Travel agencies and tour operating-industries compete in a volatile environment, and in addition to generating economies of scale, investments in the industry involve important sunk costs. This paper’s focus is on the determinants of the medium of exchange in mergers and acquisitions in the travel and tour-operating industries. Previous research on the ‘law and finance’ perspectives argues that some country of origin legal systems offer better investment protection to investors. Accordingly, civil law-based systems offer weaker protection to investors when compared to common-law-based systems. For this purpose, we use a logistics regression to model the determinants of cash in a sample of 750 mergers and acquisitions by combining the research streams above. Our results provide evidence of the relationship between investor protection and the use of cash.

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Section: Discussionsupporting

confidence: 86%

“…The findings of our empirical study are in line with the predictions of the legal origins and the nature of investor protection (La Porta et al 2008;Sarkar 2011). Investor protection is highly associated with transnational mergers and acquisitions (Rossi and Volpin 2004).…”

Section: Discussionsupporting

confidence: 85%

The Medium of Exchange in Mergers and Acquisitions: The Cases of Travel Agencies and Tour Operators

Coelho

Girón

2020

Administrative Sciences

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“…In contrast with these traditional findings, Coffee (2001) finds that civil law countries also show dispersed ownership, and Sarkar (2011) observes that some civil law countries provide better minority shareholder protection than common law countries. Some recent studies even challenge the traditional methodology of using law origins as a basis for analysis, suggesting that most legal systems are hybrids in reality (Siems, 2007).…”

Section: Robustness Test By Including Law Originmentioning

confidence: 67%

Economic freedom and IPO underpricing

Chen

Wang

Tong

et al. 2017

Front. Bus. Res. China

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This paper examines how the difference in institutional environments constitutes differential IPO underpricing across countries. Using the Heritage Foundation's Index of Economic Freedom (IEF) as a proxy for the heterogeneous institutional environment, and a sample of 3728 IPOs from 22 countries and regions over the period 1993-2014, we find that countries with higher economic freedom have significantly less serious IPO underpricing problems. Moreover, we find that among the 10 economic freedom factors covered by theIEF, financial freedom related factors play a more important role in reducing the IPO underpricing problem. Finally, consistent with the market sentiment hypothesis, we find strong evidence that pre-IPO market sentiment influences IPO firstday returns, and that the IPO underpricing problem is less severe when the market is bearish.

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“…As better-governed firms make more frequent disclosures to the market, Beekes et al (2016) find greater disclosure in common law relative to code law countries. It observes that the civil law countries (France and Germany) provided better minority shareholder protection (Sarkar, 2011). In fact, the UK and France are two countries that exhibit differences regarding the role of the government and of companies in deploying CSR.…”

Section: The Theoretical Frameworkmentioning

confidence: 99%

The mediating role of corporate social responsibility on the relationship between governance and tax avoidance: UK common law versus French civil law

Salhi

Riguen

Kachouri

et al. 2019

SRJ

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Purpose The purpose of this paper is to investigate the direct and indirect links between corporate governance and tax avoidance using corporate social responsibility (CSR). Design/methodology/approach This study is based on a sample consisting of 300 UK and 200 French firms over the period 2005-2017. This study is motivated by structural equations and system models that specify both a direct link and an indirect link between corporate governance and tax avoidance. Findings The results show that CSR fully mediates the relationship between corporate governance and tax avoidance in UK firms. In addition, in French firms, CSR partially mediates the relation between corporate governance and tax avoidance. Practical implications The findings may be of interest to the academic researchers, practitioners and regulators who are interested in discovering corporate governance score, tax avoidance and CSR. Regulators must evaluate their actual corporate governance mechanisms and their country’s legal system before mandating additional governance mechanisms for firms in their country. Social implications This study proved empirically that firms with a higher level of social responsibility are better positioned to obtain more transparency through reducing tax avoidance. Originality/value This paper extends the existing literature by examining the mediation effect of CSR on the relationship between tax avoidance and corporate governance.

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Common Law vs. Civil Law: Which System Provides More Protection to Shareholders and Creditors and Promotes Financial Development

Cited by 8 publications

References 24 publications

The Medium of Exchange in Mergers and Acquisitions: The Cases of Travel Agencies and Tour Operators

The Medium of Exchange in Mergers and Acquisitions: The Cases of Travel Agencies and Tour Operators

Economic freedom and IPO underpricing

The mediating role of corporate social responsibility on the relationship between governance and tax avoidance: UK common law versus French civil law

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