Business Environment, 1st Edition by Pearson

Chapter 26: Investor Protection | 321 |

Expropriation also is done by insiders selling additional securities

in the fi rm they control to another fi rm or subsidiaries they own

at below market prices, with assistance from obliging interlock-

ing directorates, and also by diverting corporate opportunities to

subsidiaries and so on. Such practices, though often legal, have the

same effect as theft. However, it must be stressed that these sharp

practices of insiders vary from country to country depending on

the existence or non-existence of democratic and corporate values,

maturity or otherwise of the securities market, fi nancial systems,

pace of new security issues, corporate ownership structures, divi-

dend policies, effi ciency of investment ...