470 HARVARD LAW REVIEW [Vol.120:460 ing a decision until he has to to abstract rules of lperence counts...and so ne The civil law plans,the common law reacts. B.Legal Origins and Financial Progress According to the legal origins theory,these contrasts between civil and common law systems induce differences in financial law,which lead to differences in financial outcomes. The first link between legal origins and financial markets is said to be how the legal system protects small investo "[Clommon law countries protect shareholders better than do civil law countries and especially better than French civil law countries."13 If small investors fear that insiders could rob them,they will not invest in the insiders' firms.If outsiders do not buy.then a deep stock market does not de velop,and the big owners are locked in. founding families and their suc law s ystems pr well via judge-made fiduciary duties,s while civil law systems,the theory goes,are too rigid to protect minority stockholders.As Rafael La Porta,Florencio Lopez-de-Silanes,Andrei Shleifer,and Robert Vishny (LLSV)wrote: why common law protects investors Legal rules in the on law system are usu ally mad s and inspired ral princi es suc ary a uty or fairn es are expected to r e on n tuations pply e general pr ciples even as not yet been And "these rules [protecting investors]vary systematically by legal origin. d. Ed ard Gl eser,Rafa ez-de-Silanes&Andre 4 The most precise mode origin ian Ary A Re Workin Paper 7￥05999 http com/abstract=203110. 26(2 Johnson et al,,9 AM.ECON.REV.PAPERS&PROC.,3-24. cerningl the expro priation of by corporate insiders [Bright line rules]do not work weil in alls between the cracks'i ld.at law in investor protection 6 Rafael La Porta et al.,Investor Protection and Corporate Governance,58 J.FIN.ECON.3,9 et al.Legal DetHARVARD LAW REVIEW ing a decision until he has to.... Only experience counts.., and so he is not given to abstract rules of law.' 12 The civil law plans, the common law reacts. B. Legal Origins and Financial Progress According to the legal origins theory, these contrasts between civil and common law systems induce differences in financial law, which lead to differences in financial outcomes. The first link between legal origins and financial markets is said to be how the legal system protects small investors. "[C]ommon law countries protect shareholders better than do civil law countries and especially better than French civil law countries. 1 3 If small investors fear that insiders could rob them, they will not invest in the insiders' firms. If outsiders do not buy, then a deep stock market does not de￾velop, and the big owners - founding families and their successors - are locked in.' 4 Common law systems protect minority stockholders well via judge-made fiduciary duties,1 5 while civil law systems, the theory goes, are too rigid to protect minority stockholders. As Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert Vishny (LLSV) wrote: [There's a] 'judicial' explanation of why common law protects investors better than civil law .... Legal rules in the common law system are usu￾ally made by judges, based on precedents and inspired by general princi￾ples such as fiduciary duty or fairness. Judges are expected to rule on new situations by applying these general principles even when specific conduct has not yet been described or prohibited in the statutes. 16 And "these rules [protecting investors] vary systematically by legal origin."' 7 12 Id. 13 Simeon Djankov, Edward Glaeser, Rafael La Porta, Florencio Lopez-de-Silanes & Andrei Shleifer, The New Comparative Economics, 31 J. COMP. ECON. 595, 61o (2003). 14 The most precise model linking law to ownership diffusion does not tie the two via legal origin. See Lucian Arye Bebchuk, A Rent-Protection Theory of Corporate Ownership and Control 23-30 (Nat'l Bureau of Econ. Research, Working Paper No. 7203, 999), available at http:// ssrn.com/abstract=203 1o. 15 See, e.g., Simon Johnson et al., Tunneling, 90 AM. ECON. REv. PAPERS & PROC. 22, 23-24, 26 (2000). Additionally, see Glaeser & Shleifer, supra note 6, arguing: [Bright line rules] notoriously fail to catch undesirable conduct [concerning] the expro￾priation of investors by corporate insiders .... [Bright line rules] do not work well in this area because a broad range of creative behavior designed to expropriate investors 'falls between the cracks' in the rules .... [C]ommon law regimes . .. do better than civil law in ... investor protection .... Id. at 1222. 16 Rafael La Porta et al., Investor Protection and Corporate Governance, 58 J. FIN. EcON. 3, 9 (2000). 17 Rafael La Porta et al., Legal Determinants of External Finance, 52 J. FIN. 1131 (997). This is a foundational article in the law and finance literature. A deepening of the fiduciary duty ar- [V01. 120:46o