What Works in Securities Laws?





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    • La Porta is at Tuck School of Business, Dartmouth College; Lopez-de-Silones is at the University of Amsterdam; and Shleifer is at Harvard University. We are grateful to the Inter-American Development Bank, the Gildor Foundation, the BSI Gamma Foundation, the NSF, the International Institute for Corporate Governance at Yale University, and the Doing Business project of the World Bank for financial support; to Alfredo Larrea-Falcony and Qian Sun for significant contributions to this work; to Constanza Blanco, John C. Coates IV, Luis Leyva Martinez, Carlos Orta Tejeda, Tuffic Miguel Ortega, Jorge Gabriel Taboada Hoyos, Annette L. Nazareth, and Robert Strahota for assistance in developing the questionnaire; to Douglas Baird, Jack Coffee, Frank Easterbrook, Richard Epstein, Merritt Fox, Edward Glaeser, Simon Johnson, Lawrence Katz, Paul Mahoney, Mark Ramseyer, Kevin Murphy, Eric Posner, Richard Posner, Roberta Romano, Luigi Spaventa, the editor, and two referees of this journal for helpful comments; and to Jeffrey Friedman, Mario Gamboa-Cavazos, Amy Levin, Anete Pajuste, and Vasudev Vadlamudi for excellent research assistance. The data used in this paper can be downloaded from http://post.economics.harvard.edu/faculty/shleifer/papers/securities_data.xls.


We examine the effect of securities laws on stock market development in 49 countries. We find little evidence that public enforcement benefits stock markets, but strong evidence that laws mandating disclosure and facilitating private enforcement through liability rules benefit stock markets.