The discussion of laws in the financial area and the relationship between law and finance originates back to Ronald Coase (1960).
The Coase Theorem proposes that problems between issuers and investors are resolved through private contracting with the consequence of efficient markets. The past shows that the Coase Theorem in its purest form, which abandons transaction costs, is not applicable to investor – issuer- relationships, because the existence of transaction costs makes the enforcement of private contracts inefficient. Therefore judicially – enforced and government – enforced laws/ regulations have developed, in order to make contracting and thus the financial market more efficient.
The aim of this paper is to explain to the reader the interdependencies that exist between law and finance by explaining law and finance issues on a theoretical basis and by finally showing the influence of globalization on these law and finance issues.
Important developments are presently happening in the law and finance area of global corporations aiming at a further convergence of both law and finance. Although these developments are to a large extent driven by capital market needs, they will also have consequences for the accounting area in general, regulatory issues and for companies which have not yet decided to turn to the capital markets in order to satisfy their need for capital.
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Inhaltsverzeichnis (Table of Contents)
- Introduction
- Legal and regulatory systems
- Major legal systems in the world
- The legal framework in an economy
- Characterisation of differences in national legal and regulatory systems
- Principal Agent Theorem
- Shareholders
- Interdependence between legal systems and shareholder protection
- Shareholder protection and dividend payoff
- Influence of investor protection on finance and economy
- Corporate Ownership Structure
- A historical view
- Triggers for concentration
- Structure of concentration
- A critical analysis
- Creditor Rights
- Soundness of contract enforcement
- Level of corporate accounting standards
- Impact of the legal and regulatory environment on Financial Intermediates and on economic growth
- Legal and financial framework and firm growth
- Financial Intermediaries and Growth
- Globalization of Law and Finance
- The phenomenon of Convergence
- Convergence in financial markets
- Convergence of Accounting Practices
- Institutional Framework
- Harmonisation Initiatives
- International regulatory cooperation
- Regulatory issues and networks
- Standard setting instead of strict rules and recent developments in international regulation
- Barriers to International Regulatory Cooperation
- The phenomenon of Convergence
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper aims to explain the interdependencies between law and finance by exploring these issues on a theoretical basis and then demonstrating the impact of globalization on them. It specifically focuses on developments in the law and finance area of global corporations aiming at the convergence of both law and finance.
- The relationship between law and finance, focusing on the role of legal systems in influencing financial markets.
- The impact of legal frameworks on investor rights and corporate ownership structures.
- The influence of legal and regulatory systems on firm growth and the role of financial intermediaries.
- The phenomenon of globalization in law and finance, including convergence in financial markets and the internationalization of accounting practices.
- The challenges and opportunities presented by international regulatory cooperation.
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: This chapter introduces the central theme of the paper, which is the relationship between law and finance. It explains the Coase Theorem and its limitations in understanding investor-issuer relationships, highlighting the need for legal and regulatory frameworks to promote efficiency in financial markets.
- Legal and regulatory systems: This chapter explores the major legal systems in the world, focusing on the civil and common law traditions. It describes the key characteristics and differences between these systems, highlighting their impact on legal and regulatory frameworks across various countries.
- Globalization of Law and Finance: This chapter examines the ongoing trend of globalization in law and finance. It discusses the convergence of financial markets, the internationalization of accounting practices, and the emergence of international regulatory cooperation.
Schlüsselwörter (Keywords)
This work focuses on the intersection of law and finance, exploring legal systems, regulatory frameworks, investor protection, corporate ownership structures, firm growth, financial intermediaries, globalization, convergence, and international regulatory cooperation. It examines the impact of these factors on financial markets and economic growth.
- Quote paper
- Christoph Trixl (Author), 2001, Law and Finance, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/1155