University of Virginia Legal Working Paper Series
University of Virginia John M. Olin Program in Law and Economics Working Paper Series
The Value of Judicial Independence: Evidence from 18th Century England
Article comments
forthcoming in the American Law & Economics Review
Abstract
This paper assesses the impact of 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 allowed the English government credibly to commit to repay sovereign debt and more generally to protect contractual and property rights. Although they provide some supporting empirical evidence, they do not investigate the effect of judicial independence separately from that of other institutional innovations. This paper is the first to attempt to do so. We look at share price movements at critical points in the passage of the 1701 Act of Settlement and other events which gave judges greater security of tenure and higher salaries. Our results suggest that giving judges tenure during good behavior had a large and statistically significant positive impact on share prices, while salary increases and other improvements to judicial independence had positive but generally insignificant impacts.
Subject Area
Law and Economics, Legal History
Recommended Citation
Paul G. Mahoney and Daniel M. Klerman,
"The Value of Judicial Independence: Evidence from 18th Century England"
(October 2004).
University of Virginia Legal Working Paper Series.
University of Virginia John M. Olin Program in Law and Economics Working Paper Series.
Working Paper 6.
http://law.bepress.com/uvalwps/olin/art6
No readers' reactions have been posted for this article. To submit one, copy the URL for this article (http://law.bepress.com/uvalwps/olin/art6) and click here.