Investors Protection and Its Consequences

In public corporations, laws are of particular importance because of the relative complexity of the relationship between the components of the company. Since most of the directors of companies are usually determined by major shareholders, the issue that is emphasized more than other issues in the corporate law is to protect the rights of investors, especially minority investors against major executives and shareholders. Major shareholders and directors of the company may, in a variety of ways, abuse their authority, because of the mastery of the resources involved, if weak support is provided to minority investors. In this paper, after introducing the investor protection and its evolution, we consider the necessity and consequences of protecting the rights of investors. The study of the effect of protecting the rights of investors on economic indicators has been studied in various studies. These studies show that the better the rights of minority investors, the amount of investment will be improved and the economic indicators will be more appropriate.