NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Zvika Neeman

The Eitan Berglas School of Economics
Tel Aviv University
P.O.B. 39040
Ramat Aviv, Tel Aviv, 69978
ISRAEL

E-Mail: zvika@post.tau.ac.il

NBER Working Papers and Publications

March 2010Investor Protection and Interest Group Politics
with Lucian A. Bebchuk
in Corporate Governance, Michael Weisbach, editor
December 2007Investor Protection and Interest Group Politics
with Lucian A. Bebchuk: w13702
We model how lobbying by interest groups affects the level of investor protection. In our model, insiders in existing public companies, institutional investors (financial intermediaries), and entrepreneurs who plan to take companies public in the future, compete for influence over the politicians setting the level of investor protection. We identify conditions under which this lobbying game has an inefficiently low equilibrium level of investor protection. Factors that operate to reduce investor protection below its efficient level include the ability of corporate insiders to use the corporate assets they control to influence politicians, as well as the inability of institutional investors to capture the full value that efficient investor protection would produce for outside investors. The...

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