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Patterns of legal change: shareholder and creditor rights in transition economies
This paper analyses changes in the legal protection of shareholder and
creditor rights in 24 transition economies from 1990 to 1998. It documents
differences in the initial conditions and a tendency towards convergence of
formal legal rules as the result of extensive legal reforms. Convergence seems
to be primarily the result of foreign technical assistance programmes as well
as of harmonisation requirements for countries wishing to join the European
Union. The external supply of legal rules notwithstanding, the pattern of
legal reforms suggests that law reform has been primarily retroactive rather
than proactive. In comparison, the pre-socialist heritage of transition
economies has little explanatory power for the observed patterns of legal
change. A partial exception are countries with German legal heritage, which
favour creditor over shareholder protection and display substantially better
creditor protection than other transition economies. The paper discusses the
implications of the response pattern of legal change with externally supplied
legal solutions for the prospects of effective law enforcement and compliance
with the law in transition economies.
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