Abstract

This article utilises leximetric analysis, which involves the numerical coding of
the strength of legal protections, to show changes in levels of shareholder
and creditor protection in Australia for the period 1970 to 2010. This form of
analysis, originally developed by La Porta et al, and subsequently used by
many scholars in different legal fields, allows for the production of graphs
which illustrate changes to the law, reducing complexities and allowing for
comparisons of shareholder and creditor protection. The data show levels of
shareholder protection have increased, most notably against actions of the
board of directors rather than against other shareholders. In contrast, levels
of creditor protection have been relatively stable. The article explores how
and why these developments in shareholder and creditor protection have
occurred. The research also identifies that for most of the 40-year period of
study, there was a positive correlation between shareholder and creditor
protection. However, this is no longer the case for recent years and possible
explanations for this finding are identified.

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