Does deterioration in rule of law per se create or destroy value?

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Collection:
Mokslo publikacijos / Scientific publications
Document Type:
Žurnalų straipsniai / Journal articles
Language:
Anglų kalba / English
Title:
Does deterioration in rule of law per se create or destroy value?
Authors:
In the Journal:
International journal of management and economics, 2023, 59, 4, 277-296
Subject Category:
LT
Lenkija (Poland); Latvija (Latvia); Lietuva (Lithuania); Estija (Estonia); Finansai. Kapitalas / Finance. Capital; Ekonominė politika. Globalizacija. Integracija / Economic policy. Globalisation. Integration.
Summary / Abstract:

ENWe investigate the link between the rule of law and equity returns in post-transitional economies over the period January 2010–December 2020 by using panel data regressions. By applying several ruleof- law proxies for national legal frameworks and justice system quality as proxies for the rule-of-law principle, the data sets from the capital markets of Poland, Latvia, Lithuania, and Estonia showed that country-level judicial system quality is an important driver of company market performance, and that posttransitional countries with lower rule-of-law measures exhibit higher returns on equity than those with better measures. Our results support the idea that since poor governance and country instability increase agency and transaction costs, in addition to decreasing growth prospects and profitable projects available to companies, the risk premium demanded by investors increases, leading to higher equity returns. Keywords: capital markets, country governance, equity returns, rule of law.

DOI:
10.2478/ijme-2023-0016
ISSN:
2299-9701
Subject:
Ekonomika / Economics
Permalink:
https://www.lituanistika.lt/content/107301
Updated:
2026-02-25 13:53:40
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