Shareholder Protection: A Leximetric Approach

In this paper we build a new and meaningful shareholder protection index for five countries and code the development of the law for over three decades. At-tributing and comparing legal differences by numbers is contrary to the tradi-tional way of doing comparative law and the use of a quantitative methodology to account for variations across legal systems has been subjected to some searching criticisms. However, we believe that with a cautious approach, it has the potential to open new vistas of research in the area of comparative law and as such should not be shunned. This paper provides an illustration of the inter-esting possibilities that diligent quantification of legal rules ('leximetrics') pro-vides for comparing variations across time series and across legal systems. For instance, our study finds, that in all of our panel countries shareholder protec-tion has been improving in the last three decades; that the protection of minority against majority shareholders is considerably stronger in 'blockholder countries' as compared to the non-blockholder countries and that convergence in share-holder protection is taking place since 1993 and is increasing since 2001. Fi-nally, our examination of the legal differences between the five countries does not confirm the distinction between common law and civil law countries.