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The Value of Judicial Independence: Evidence from 18th Century England

Daniel M. Klerman, USC Law School
Paul G. Mahoney, University of Virginia School of Law

Abstract

This paper assesses the impact of changes in judicial independence on equity markets. North and Weingast (1989) argue that judicial independence and other institutional changes inaugurated by the Glorious Revolution of 1688-89 improved public and private finance in England by putting restraints on the government. We calculate abnormal equity returns at critical points in the passage of statutes giving judges greater security of tenure and higher salaries. Early eighteenth-century legislation granting tenure during good behavior is associated with large and statistically significant positive abnormal returns. Other statutes had positive but generally insignificant effects.

Subject Area

Judges

Recommended Citation

Daniel M. Klerman and Paul G. Mahoney, "The Value of Judicial Independence: Evidence from 18th Century England" (January 2005). University of Southern California. University of Southern California Law and Economics Working Paper Series. Working Paper 24.
http://law.bepress.com/usclwps/lewps/art24

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