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The Law BusinessmanTM: Five Essays on Legal Self-efficacy and Business Risk
Stockholm University, Faculty of Social Sciences, School of Business.
2013 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The thesis challenges the notion of effectiveness of law as being based on the formal institutions of courts, law enforcement and written law. It argues that the best way to measure the effectiveness of law is the legal self-efficacy of laymen who are the end users of law.  It presents a new perspective on the effectiveness of law. It turns the traditional perspective of studying the effects of legal institutions around and instead studies the effect of how individuals perceive their own ability to use law. This self-reflexive ability - legal self-efficacy -  is the answer to the question “How comfortable are with communicating with legal terminology?”. The thesis makes several comparisons using the traditional perspective and legal self-efficacy and finds that legal self-efficacy is a better measure of legal effectiveness.

This thesis analyzes 246 businesspeople in Russia and their risk behavior  with regards to economic transactions in relation to legal self-efficacy.  The theory behind legal self-efficacy is a combination of Luhmann’s theory of law as communication and Bandura’s concept of self-efficacy.  The first paper applies the traditional approach. It analyzes the effect of legal efficiency on leverage and debt maturity for listed and non-listed companies. The second paper is describes the conceptual foundation of the legal effectiveness based on the individual. The third paper compares the effect of private order (including legal self-efficacy) and public order institutions on the granting of trade credit.  The fourth paper analyzes the impact of legal self-efficacy and formal legal institutions on sanctions against clients in a comparative perspective. The final paper seeks out possible sources of legal self-efficacy.

Legal self-efficacy can be used to better understand the interaction of individuals and law including such fields of research as behavioral accounting, behavioral law and finance, legal sociology and legal studies. 

Place, publisher, year, edition, pages
Stockholm: School of Business, Stockholm University , 2013. , 88 p.
Keyword [en]
legal self-efficacy, legal effectiveness, legal terminology, trade credit, institutional effectiveness, mechanisms of risk reduction, public order, private order, legal family, leverage, long term debt, legal efficiency, trade sanctions, debt maturity, creditor rights, corporate governance, Luhmann, Russia, Central and Eastern Europe, legal sociology, law and finance, law and economics, legal studies, legal consciousness, self-efficacy
Keyword [sv]
rättssjälvtillit, rättseffektivitet, kreditrisk, handelskredit, sanktioner, institutionell effektivitet, redovisningssjälvtillit, riskreduceringsmekanismer offentliga och privata, rättsfamilj, handelssanktioner, långsiktiga skulder, kortsiktiga skulder, borgenärsrättitgheter, handelssanktioner, corporate governance, Luhmann, Ryssland, Central och Östeuropa, rättssociologi, rätt och finans, rättsekonomi, juridik, rättsmedvetandet, självtillit
National Category
Business Administration
Research subject
Business Administration
Identifiers
URN: urn:nbn:se:su:diva-97625ISBN: 978-91-7447-812-9 (print)OAI: oai:DiVA.org:su-97625DiVA: diva2:679665
Public defence
2014-01-24, Gröjersalen, hus 3, Kräftriket, Roslagsvägen 101, Stockholm, 13:00 (Swedish)
Opponent
Supervisors
Available from: 2014-01-02 Created: 2013-12-16 Last updated: 2014-01-14Bibliographically approved
List of papers
1. Legal variation and capital structure: Comparing listed and non-listed companies
Open this publication in new window or tab >>Legal variation and capital structure: Comparing listed and non-listed companies
2015 (English)In: European Journal of Law and Economics, ISSN 0929-1261, E-ISSN 1572-9990, Vol. 40, no 3, 511-543 p.Article in journal (Refereed) Published
Abstract [en]

We exploit the natural institutional variation in Western Europe to examine leverage (and debt maturity) for listed and non-listed companies (NLCs). We find that the legal efficiency measure (Djankov et al. 2008) is more closely related to the amount of leverage and debt maturity than is the creditor rights score of La Porta et al. (Law and Finance, NBER working paper 5661, 1996; J Financ 52:1131–1151, 1997). One component of the standard measure of creditor rights was consistently and positively associated with leverage: whether secured creditors are paid first in the event of distress. Firms located in French and German legal family countries have less leverage than companies in common law setting, but Scandinavian firms have more. Asset specificity has a negative impact on leverage, but a positive impact on debt maturity. Finally, using a matched sample of otherwise similar privately held companies, we find that listed firms have less debt, consistent with a corporate governance interpretation that presumably more dispersed publicly traded firms are more likely to avoid the disciplining device of leverage. The findings are robust to use of industry-level fixed effects.

Keyword
creditor rights, leverage, debt maturity, legal origin, borgenärsrättigheter, hävstångseffekt, rättsfamilj, löptid
National Category
Economics and Business
Research subject
Business Administration
Identifiers
urn:nbn:se:su:diva-98050 (URN)10.1007/s10657-012-9359-7 (DOI)000364565100006 ()
Funder
The Foundation for Baltic and East European Studies
Available from: 2013-12-26 Created: 2013-12-26 Last updated: 2017-12-06Bibliographically approved
2. Legal Effectiveness: Theoretical Developments Concerning Legal Transplants
Open this publication in new window or tab >>Legal Effectiveness: Theoretical Developments Concerning Legal Transplants
2005 (English)In: ARSP. Archiv für Rechts- und Socialphilosophie, ISSN 0001-2343, E-ISSN 2363-5614, Vol. 91, no 4, 515-534 p.Article in journal (Refereed) Published
Abstract [en]

The dominating view of legal effectiveness is based on the idea of a gap between what the law states, or commands, and how the population acts. When behaviour is not in accordance with law, the legal system or a norm is not considered effective. This idea is challenged in this article. Previous research on legal transplantation is used as reference for an analysis of legal application and legal effectiveness from a sociological and systems theoretical perspective. It is well known that imported laws functions less well than internally developed laws, but explanations differ. According to the currently known effectiveness concept the poorly functioning imported law is a paradox. In this article a new effectiveness concept is developed. It is shown how the poor functioning of legal transplants can be explained using our new approach to legal application and legal effectiveness.

Place, publisher, year, edition, pages
Franz Steiner Verlag, 2005
Keyword
legal effectiveness, legal transplants, Rechtseffektivität, Rechtstransfer, rättseffektivitet, rättstransplantationer
National Category
Business Administration
Research subject
Business Administration
Identifiers
urn:nbn:se:su:diva-98046 (URN)
Funder
The Foundation for Baltic and East European Studies
Available from: 2013-12-26 Created: 2013-12-26 Last updated: 2017-12-06Bibliographically approved
3. The Law Businessman and the Trade Credit Decision
Open this publication in new window or tab >>The Law Businessman and the Trade Credit Decision
2006 (English)In: The Uppsala Yearbook of East European Law, London: Simmonds & Hill , 2006, 226-266 p.Chapter in book (Refereed)
Abstract [en]

This study analyzes the impact of private and public order institutions on the provision of trade credit in Russia. It shows, ceteris paribus, that managers‘ perception of their own ability to use legal terminology and their perception of lawyers‘ effectiveness in the solution of commercial conflicts have a significant impact on the provision of trade credit to clients. The perception of the effectiveness of commercial courts and law enforcement has little or no impact at all on the provision of trade credit. 246 managers in three towns in northwest Russia participated in the survey. The results propose that internal legal determinants in the form of legal consciousness better explain provision of trade credit than do external legal determinants in contrast to current theory. This observation suggest that human legal capital has unexploited potential for explaining financial transactional behaviour.

Place, publisher, year, edition, pages
London: Simmonds & Hill, 2006
Keyword
Legal self-efficacy, self-efficacy, self-concept, lawyers, legal consciousness, trade associations, courts, law enforcement agencies, trade credit, Russia, contract enforcement mechanisms., handelskredit, rättssjälvtillit, domstolar, rättskipning, affärsrisk, Ryssland, kontraktsuppfyllnadsmekanismer, rättsmedvetande
National Category
Economics and Business
Research subject
Business Administration
Identifiers
urn:nbn:se:su:diva-98052 (URN)1-898029-67-9 (ISBN)
Funder
The Foundation for Baltic and East European Studies
Available from: 2013-12-26 Created: 2013-12-26 Last updated: 2014-01-10Bibliographically approved
4. Legal Self-efficacy and Managers’ Use of Law
Open this publication in new window or tab >>Legal Self-efficacy and Managers’ Use of Law
2009 (English)In: ARSP. Archiv für Rechts- und Socialphilosophie, ISSN 0001-2343, E-ISSN 2363-5614, Vol. 95, no 1, 79-101 p.Article in journal (Refereed) Published
Abstract [en]

This study demonstrates that legal effectiveness may depend on how an individual perceives him/herself as a competent user of law. The hypotheses tested in this study are that the self-perceptions of people may be more important for legal effectiveness than are the objective factors such as law enforcement agencies and the effectiveness of commercial legislation. The effectiveness concept was tested on survey data collected from 246 managers in northwest Russia. The result is that the subjective self-perceptions are a stronger determinant of the use of law than is the perceived institutional efficiency. Persons were to a lesser degree adopting law as an instrument conditioned on their calculation of the efficiency of courts and other institutions, but to a greater degree adopting law as a form of communication conditioned on their feeling of assuredness about their ability to communicate with legal terminology. Therefore there is a latent potential for improvement of legal effectiveness in the enhancement of how individuals perceive themselves as knowledgeable users of law.

Place, publisher, year, edition, pages
Franz Steiner Verlag, 2009
Keyword
Legal efficacy, legal transplants, self-efficacy, legal self-efficacy self-concept, sanctions, transition economy, Russia, rättssjälvtillit, rättstransplantation, självtillit, self-efficacy, sanktioner, transitionsekonomi
National Category
Economics and Business
Research subject
Business Administration; Private Law
Identifiers
urn:nbn:se:su:diva-98053 (URN)
Funder
The Foundation for Baltic and East European Studies
Available from: 2013-12-26 Created: 2013-12-26 Last updated: 2017-12-06Bibliographically approved
5. Legal Self-efficacy and its Latent Causes: Human Legal Capital, and Access to Information
Open this publication in new window or tab >>Legal Self-efficacy and its Latent Causes: Human Legal Capital, and Access to Information
2008 (English)Conference paper, Published paper (Other academic)
Abstract [en]

This study reveals that legal self-efficacy as well as access to and search for internal and external information concerning business risks each bring a significant reduction of business risk in two separate but interrelated channels. The direct channel of risk mediation is that of legal self-efficacy, while the indirect channel of risk mediation is that of information acquisition from texts, media and human sources. Both channels confirm previous findings by Jörgensen (2008) and Cho and Lee (2006). The results indicate that risk reduction can be achieved not only through legal human capital but also through behaviour related to the search for and finding of information. Previous research on contractual assurance and risk reduction has focused on the improvement of legal institutions such as courts and legal texts to address the problem of contractual assurance. This study takes an opposite approach of addressing the legal consciousness and behaviours of the end users of law. The policy implications are that managers can be taught to improve their legal self-efficacy or they can use risk-reducing behaviour to mitigate business risks.

Series
Svenska Nätverket för Europaforskning i Ekonomi
Keyword
legal self-efficacy, human legal capital, business risk, framing, rättssjälvtillit, humant kapital, humant rättskapital, affärsrisk, inramning
National Category
Economics and Business
Research subject
Business Administration; Private Law
Identifiers
urn:nbn:se:su:diva-98054 (URN)
Conference
Svenska Nätverket för Europaforskning i Ekonomi
Funder
The Foundation for Baltic and East European Studies
Available from: 2013-12-26 Created: 2013-12-26 Last updated: 2014-01-10Bibliographically approved

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