I just discovered an interesting paper by Sean Dougherty entitled “Legal Reform, Contract Enforcement and Firm Size in Mexico.” The abstract is a little dense, so I will quote excerpts from it and the introduction to give you an idea of what Dougherty studies:
“This paper uses the variation in legal system quality across states in Mexico to examine the relationship between judicial quality and firm size. Although the country has a single legal system, its implementation and procedures vary widely, while development outcomes there are more imbalanced and unequal than in any other country of the OECD.”
and what he finds:
“Firms in states with higher judicial quality tend to be substantially larger than those in remaining states, and this result is robust to a variety of alternative measures of firm size, as well as to instrumentation for the potential endogeneity of judicial quality. Additionally, we find…
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