As we all known, investor protection plays a decisive role in the financial markets. Some literature asserts that the benefit of minority shareholders and creditors will be expropriated by controlling shareholders is a common situation. As a result, to some extent, the core idea of Corporate Governance is to prevent the right of investor deprived by manager and controlling shareholders. In previous studies, the problem that people most concerned about in enterprise agency is the agency problem between shareholders and managers. In the Berle and Means (1932) documentary, equity is very decentralized, any shareholder can't have an impact on managers. Berle and Means (1932) model is broadly consistent with the U.S. situation, however it's not suitable for most other countries. LLSV (2002) pointed out that in other countries, the problem between shareholders and minority shareholders turns out to be crucial, hence major shareholders should pay more attention to the expropriation issue of minority shareholders and creditors. The investors will gain some power which are protected by laws or regulations when they finance companies. Company, security, bankruptcy, takeover, competitions laws and also stock exchange regulations and accounting standards are the different sources to protect the investors through different jurisdictions. On the whole, due to the differences among legal origins, some countries protect all investors better than others.( R La Porta et al. 1999) If the rights has not been effectively protected, the external financing mechanisms would tend to collapse for the reason that insiders would not to repay the creditors or distribute profits to shareholders. Compared with civil laws, common law turns out to be more protective of minority shareholders and creditors by the vague fiduciary duty principles. The clear rules of civil law would let some malicious insiders use their imagination to take the advantage...
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