Corporate Insider

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In this paper, we will look at what makes a minority shareholder more attractive to protect than in corporate insider in different states. A minority shareholder is someone who doesn’t own enough shares to have a controlling vote in a company. While a corporate insider might be a manager or someone that owns voting shares in a company as well as anyone who uses insider knowledge of a company in order to manipulate the market. The main question that Cioffi and Hopner try to answer in the article why do some states protect minority shareholders from rent seeking of corporate insiders.
Cioffi and Hopner’s approach an answer for this looking at a domestic political perspective of the right vs, the left. Post WW2 The banks in Germany formed a network
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They hoped to increase the revenue of markets and investment in Germany. The second of which created the first federal security’s office that banned, insider trading, required transparency, and disclosure of regulation beneath security laws. Although the intention of these new regulations were meant to help the domestic market and not change how business was done, the SPD (Social democratic party) “began to alter the core structures of the corporation and thus the basic logic of German corporate governance” This began to fuel the debate for corporate governess even further. The SPD used a series of financial scandals in the 1990’s as a way of making reform more attractive, also captured a way of gathering votes of the middle class. Unions and employees were for these pro-shareholder reforms because of they had an interest being on the German supervisory board. They second they didn’t want insider trading or a neglect of responsibility on the manager’s side. The line between and employees and shareholders becomes gray as the majority of employees are buying and receiving stock, so they want to be taken care …show more content…
It is harder for countries with low investor rights to incentives people in foreign economies to invest. Rent seeking is a deterrent when investors enter the market. The negative outcomes for which drive come with rent seeking such as a build-up of outside debt, low share prices, and low income which affects the voter the most. These effects incentivize governments to enforce anti-rent-seeking policy’s and pro-investor rights or corporate governance. In turn, countries are more likely to adapt insider trading laws to protect investors as international competitiveness goes up, while the motivation for becoming competitive rises as economic performance rises.
The first hypothesis for these underlying causes is that in a majoritarian system are more likely to pass and enforce investor protection laws. This theory relies on the voter share of the incumbency being affected by corporate investment laws. If it has no affect on voters than the government would have no incentive to pass laws in order maintain their incumbency. If they do not pass investor protection laws then it reduces the amount of capital flowing internationally through the

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