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Part IV: Business and Society
opportunities deteriorate. The total value of fi rms may increase
as a result of legal reform, as expropriation declines and investors
fi nance new projects on more attractive terms. Still, the fi rst order
effect on the insiders is a massive redistribution of wealth from
them to outside investors. No wonder, then that in all countries from
Latin America, to Asia to Western and Eastern Europe—the families
are opposed to legal reform.” According to these authors, there is
also another reason why the insiders in such fi rms are opposed to
reforms and the expansion of capital markets. Under the existing
conditions, these fi rms can fi nance their own investment projects
internally or through captive banks or subsidiary ...