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The Value of Judicial Independence: Evidence from Eighteenth Century England

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  • Daniel M. Klerman

Abstract

This article 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. Copyright 2005, Oxford University Press.

Suggested Citation

  • Daniel M. Klerman, 2005. "The Value of Judicial Independence: Evidence from Eighteenth Century England," American Law and Economics Review, American Law and Economics Association, vol. 7(1), pages 1-27.
    • Handle: RePEc:oup:amlawe:v:7:y:2005:i:1:p:1-27
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    File URL: http://hdl.handle.net/10.1093/aler/ahi005
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    Cited by:

    1. Eric Langlais & Marie Obidzinski, 2013. "Elected vs appointed public law enforcers," Working Papers 2013-06, CRESE.
    2. Ross Levine, 2005. "Law, Endowments and Property Rights," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 61-88, Summer.
    3. Mark Weinstein, 2010. "Larry Fisher: our Sherpa into the mountains of data," Review of Quantitative Finance and Accounting, Springer, vol. 35(2), pages 127-135, August.
    4. John Dove & William J. Byrd, 2022. "Judicial independence and lynching in historical context: an analysis of US States," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 16(3), pages 639-672, September.
    5. Elliott Ash & W. Bentley MacLeod, 2015. "Intrinsic Motivation in Public Service: Theory and Evidence from State Supreme Courts," Journal of Law and Economics, University of Chicago Press, vol. 58(4).
    6. Chemin, Matthieu, 2021. "Can judiciaries constrain executive power? Evidence from judicial reforms," Journal of Public Economics, Elsevier, vol. 199(C).
    7. Dan Bogart, 2016. "The East Indian Monopoly and the Transition from Limited Access in England, 1600–1813," NBER Chapters, in: Organizations, Civil Society, and the Roots of Development, pages 23-49, National Bureau of Economic Research, Inc.
    8. Yuexin Huang & Ruijing Li & Danglun Luo & Rongli Yuan, 2024. "Political uncertainty and litigation efficiency: Evidence from China," Economics and Politics, Wiley Blackwell, vol. 36(2), pages 1020-1055, July.
    9. Peter Grajzl & Peter Murrell, 2023. "Of families and inheritance: law and development in England before the Industrial Revolution," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 17(3), pages 387-432, September.
    10. Hans-Bernd Schaefer & Rok Spruk, 2024. "Islamic Law, Western European Law and the Roots of Middle East's Long Divergence: a Comparative Empirical Investigation (800-1600)," Papers 2401.14435, arXiv.org, revised Mar 2024.
    11. Dove, John A., 2018. "It's easier to contract than to pay: Judicial independence and US municipal default in the 19th century," Journal of Comparative Economics, Elsevier, vol. 46(4), pages 1062-1081.
    12. Tarverdi, Yashar & Saha, Shrabani & Campbell, Neil, 2019. "Governance, democracy and development," Economic Analysis and Policy, Elsevier, vol. 63(C), pages 220-233.
    13. Stephen Quinn, 2008. "Securitization of Sovereign Debt: Corporations as a Sovereign Debt Restructuring Mechanism in Britain, 1694-1750," Working Papers 200701, Texas Christian University, Department of Economics.
    14. Fleck, Robert K. & Hanssen, F. Andrew, 2010. "Repeated adjustment of delegated powers and the history of eminent domain," International Review of Law and Economics, Elsevier, vol. 30(2), pages 99-112, June.
    15. Klerman, Daniel & Mahoney, Paul G., 2007. "Legal origin?," Journal of Comparative Economics, Elsevier, vol. 35(2), pages 278-293, June.
    16. Hadfield, Gillian K., 2008. "The levers of legal design: Institutional determinants of the quality of law," Journal of Comparative Economics, Elsevier, vol. 36(1), pages 43-73, March.

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