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There has been some interesting research lately on how the differences in legal systems affect the viability of stock markets. Countries that take their legal systems from British Common Law tend to have vibrant legal systems. Whose who take their legal systems from the Napoleonic Code (or similar legal systems) tend to have stock markets that are only open to well established companies.

There are two reasons for this -- one is that these countries have more opaque accounting regulations and the second is that the legal system encourages maximization of value to stake-holders (stock-holders, bond-holders, employees, etc) rather than the maximization of value to shareholders. This leads to a less efficient form of corporate governance where banks have a lot of power.

One solution to this problem has been the rise of New Markets (e.g., the Nouveau Marche, the Nieuw Markt, etc). These markets require firms to have US/UK type accounting statements.

2007-02-20 09:12:14 · answer #1 · answered by Ranto 7 · 0 0

Check out http://www.ClassTopic.com They have some great topics that I've used in the past. Each topic has three good sources to get you started on the research, too.

2007-02-23 06:20:18 · answer #2 · answered by Danny B. 4 · 0 0

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