Globalization, free markets and investor protection

Using data from 29 countries, this paper is the first attempt to examine whether economic, political and social integration explain how well investors, both shareholders and creditors, are protected from expropriation by firms. We show that: (i) globalization drives both shareholder and creditor protection; (ii) least restrictive markets rather than paternalistic markets matter particularly for shareholders’ protection; (iii) the globalization-protection nexus favoured only creditors during the crisis; and (iv) our result significantly holds for OECD-member countries.