| Abstract: |
This paper uses a quasi-experimental framework provided by recent changes in
Russian corporate law to study the effect of investor protection on the value
of shares. The legal change analyzed involves the empowerment of preferred
(non-voting) shareholders to veto unfavorable changes in their class rights.
Based on a novel hand-collected dataset of dual class stock companies in
Russia and using the difference-in-difference estimator, the study finds a
statistically and economically significant effect of improved protection of
preferred shareholders on the value of their shares. The result is robust to
several changes in the empirical specification. |