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The Latvian Group of Companies Law focuses on creditor and minority shareholder protection and is less concerned with pursuing the interest of the group. This research paper will look at the regulation of group of companies in Latvia. It will question whether the interest of the group is effectively recognised in the Latvian Group of Companies Law. The methodology used will be that of legal doctrinal and comparative research, legal theory method and reform agenda research. The research paper will conclude that creditor protection under Article 27, paragraph 5 of Group of Companies Law (Koncernu likums) is ineffective. [ABSTRACT FROM AUTHOR]

This paper presents a model that a firm issues external equity, in the presence of costs of underpricing 'asset in place', and conducts comparative statics analysis of its decision to issue external equity at different levels of minority shareholder protection. In the model, minority shareholder protection influences the stock market outcomes through two channels: The cost of external finance and controller's private benefits. As a result, its effects on different stock market outcomes are heterogeneous. Using a newly assembled panel data with shareholder protection index in 25 countries for 11 years, the empirical part applies system GMM estimator to a dynamic specification and confirms such divergent effects. The minority shareholder protection is negatively correlated with the number of listed firms, but is positively correlated with the stock market capitalization. [ABSTRACT FROM AUTHOR]