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Following the initial publication of La Porta et al. (1997) an ever growing number of researchers published empirical evidence on the influence of corporate governance rules on external financing. Whereas the empirical links have been researched extensively, suitable analytical models are still rare. This book extends Holmström and Tirole (1997)´s model of corporate finance to predict the influence of legal changes on outside funding. Finally, the book summarizes the empirical law and finance literature. I find that better corporate governance rules raise the number of firms that receive external financing as well as the amount of investment per firm. At last it is found that the aggregate investment shifts upwards once better corporate governance rules are introduced.

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Born in 1986, Philipp Kuhn-Régnier has been a student at the University of St. Gallen, Switzerland and HEC Paris, France. During his Master in Finance he researched how legal environments shape the incentives for corporate financing. This book is a result of his research.

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