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Coase V. The Coasians
Open accessAbstract
The Coase theorem implies that, in a world of positive transaction costs, any of a number of strategies, including judicially enforced private contracts, judicially enforced laws, or even government regulation, may be the cheapest way to bring about efficient resource allocation. Unfortunately, some Coasians have ignored the possibility that the last of these strategies may sometimes be the best. This paper compares the regulation of financial markets in Poland and the Czech Republic in the 1990s, when the judicial systems remained underdeveloped in both countries. In Poland, strict enforcement of the securities law by an independent Securities and Exchange Commission was associated with rapid development of the stock market. In the Czech Republic, hands-off regulation was associated with a near collapse of the stock market. These episodes illustrate the centrality of law enforcement in making markets work, and the possible role of regulators in law enforcement.
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The Polish reform was followed by a remarkable development of the Polish stock market, with both new and already listed companies raising equity.
“This reform was followed by a remarkable development of the Polish stock market, with both new and already listed companies raising equity in the market.”
From Investor protection and corporate governance (2000) · cites this paper as Johnson and Shleifer 1999
The Neuer Markt in Germany mandated that firms listing on it comply with international accounting standards and more stringent disclosure requirements than those applicable to already listed firms.
“As part of a private contract with firms wishing to list on the Neuer Markt, the Deutsche Bourse --which operates the Frankfurt Stock Exchange --has mandated that these firms must comply with international accounting standards, and agree to more stringent disclosure requirements than those applicable to already listed firms.”
From Investor protection and corporate governance (2000) · cites this paper as Johnson 1999
Government regulation of financial markets may be useful when court enforcement of private contracts or even of laws cannot be relied on.
“A third-and potentially more controversial-principle of successful reform is that government regulation of financial markets may be useful when court enforcement of private contracts or even of laws cannot be relied on (Johnson and Shleifer 1999).”
From Investor protection and corporate governance (2000) · cites this paper as Johnson and Shleifer 1999
The Neuer Markt's greater restrictions on entrepreneurs sharply accelerated the pace of initial public offerings in Germany.
“The new listing venue-with its greater restrictions on the entrepreneurs-has sharply accelerated the pace of initial public offerings in Germany.”
From Investor protection and corporate governance (2000) · cites this paper as Johnson 1999
The Czech government chose neither to introduce tough securities laws nor to create a powerful market regulator at the time of privatization.
“By contrast, the Czech government chose neither to introduce tough securities laws nor to create a powerful market regulator at the time of privatization.”
From Investor protection and corporate governance (2000) · cites this paper as Johnson and Shleifer 1999
The Czech markets have been plagued by massive expropriation of minority shareholders (tunneling) and stagnated, with hundreds of companies delisted and virtually no public equity financing.
“Perhaps as a consequence, the Czech markets have been plagued by massive expropriation of minority shareholders-the socalled”
From Investor protection and corporate governance (2000) · cites this paper as Johnson and Shleifer 1999
The Polish government introduced a tough securities law focused on shareholder protection in the early 1990s, with disclosure, licensing, administrative oversight, and a powerful SEC not relying on courts.
“In the early 1990s, the Polish government introduced a tough securities law focused on shareholder protection.”
From Investor protection and corporate governance (2000) · cites this paper as Johnson and Shleifer 1999
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References 23 · Cited by 17
Research works printed but not linked: 40
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Metadata
- Authors
- Johnson, S., & Shleifer, A.
- Affiliations
- National Bureau of Economic Research (US)
- Corresponding author
- Shleifer, Andrei
- ORCID
- Johnson, Simon
- Venue
- SSRN Electronic Journal
- Publisher
- Elsevier BV
- Published
- 1999
- ISSN
- 1556-5068 (ISSN-L)
- OpenAlex
- W3121467484
- Cited by
- 17
- References
- 23
- Type
- posted content
- Language
- en
- Open access
- green
- doi.org
- Locations
- SSRN Electronic Journal (acceptedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- National Bureau of Economic Research (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Law, Economics, and Judicial Systems
- Social Sciences › Economics, Econometrics and Finance › Finance › Finance, Markets, and Regulation
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Legal and Constitutional Studies
- Keywords
- Coase theorem, transaction costs, financial market regulation, securities enforcement, Securities and Exchange Commission, stock market development, Poland, Czech Republic, post-communist transition
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