Culture, openness, and finance |
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Authors: | Ren M Stulz Rohan Williamson |
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Institution: | a Fisher College of Business, The Ohio State University, Columbus, OH 43210, USA;b McDonough School of Business, Georgetown University, Washington, DC 20057, USA |
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Abstract: | Differences in culture, proxied by differences in religion and language, cannot be ignored when examining why investor protection differs across countries. We show that a country's principal religion predicts the cross-sectional variation in creditor rights better than a country's natural openness to international trade, its language, its income per capita, or the origin of its legal system. Catholic countries protect the rights of creditors less well than Protestant countries. A country's natural openness to international trade mitigates the influence of religion on creditor rights. Culture proxies are also helpful in understanding how investor rights are enforced across countries. |
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Keywords: | Investor protection Culture Religion Language |
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