The paper "What Works in Securities Laws?" by Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer examines the impact of securities laws on stock market development in 49 countries. The authors find that public enforcement through securities laws does not significantly benefit stock markets, while private enforcement mechanisms that facilitate disclosure and liability rules do. They analyze the relationship between specific provisions in securities laws governing initial public offerings and various measures of stock market development. The study draws on a theory of social control of business, suggesting that the efficiency of control strategies depends on the trade-off between market and government failure. The authors hypothesize three broad hypotheses: no government intervention, private enforcement, and public enforcement. They collect data on securities laws from attorneys in 49 countries and measure the strength of private and public enforcement. The results show that extensive disclosure requirements and a lighter burden of proof for investors are strongly associated with more developed stock markets. In contrast, public enforcement, such as having an independent regulator or criminal sanctions, has a modest impact and is only significant in specific contexts. The findings suggest that optimal securities laws reduce the costs of private contracting and litigation, rather than relying heavily on public regulatory enforcement.The paper "What Works in Securities Laws?" by Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer examines the impact of securities laws on stock market development in 49 countries. The authors find that public enforcement through securities laws does not significantly benefit stock markets, while private enforcement mechanisms that facilitate disclosure and liability rules do. They analyze the relationship between specific provisions in securities laws governing initial public offerings and various measures of stock market development. The study draws on a theory of social control of business, suggesting that the efficiency of control strategies depends on the trade-off between market and government failure. The authors hypothesize three broad hypotheses: no government intervention, private enforcement, and public enforcement. They collect data on securities laws from attorneys in 49 countries and measure the strength of private and public enforcement. The results show that extensive disclosure requirements and a lighter burden of proof for investors are strongly associated with more developed stock markets. In contrast, public enforcement, such as having an independent regulator or criminal sanctions, has a modest impact and is only significant in specific contexts. The findings suggest that optimal securities laws reduce the costs of private contracting and litigation, rather than relying heavily on public regulatory enforcement.