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Legal variation and capital structure: Comparing listed and non-listed companies
Stockholm University, Faculty of Social Sciences, Stockholm Business School.ORCID iD: 0000-0002-7908-3958
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.

Place, publisher, year, edition, pages
2015. Vol. 40, no 3, 511-543 p.
Keyword [en]
creditor rights, leverage, debt maturity, legal origin
Keyword [sv]
borgenärsrättigheter, hävstångseffekt, rättsfamilj, löptid
National Category
Economics and Business
Research subject
Business Administration
URN: urn:nbn:se:su:diva-98050DOI: 10.1007/s10657-012-9359-7ISI: 000364565100006OAI: diva2:682263
The Foundation for Baltic and East European Studies
Available from: 2013-12-26 Created: 2013-12-26 Last updated: 2017-12-06Bibliographically approved
In thesis
1. The Law BusinessmanTM: Five Essays on Legal Self-efficacy and Business Risk
Open this publication in new window or tab >>The Law BusinessmanTM: Five Essays on Legal Self-efficacy and Business Risk
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.
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, 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
urn:nbn:se:su:diva-97625 (URN)978-91-7447-812-9 (ISBN)
Public defence
2014-01-24, Gröjersalen, hus 3, Kräftriket, Roslagsvägen 101, Stockholm, 13:00 (Swedish)
Available from: 2014-01-02 Created: 2013-12-16 Last updated: 2014-01-14Bibliographically approved

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