Evaluation of the Adequacy of the Rules of Shareholders' Protection in the Commercial Code of Ethiopia 1960: A Leximetric Approach

Shareholders in Ethiopian share companies are the providers of capital, the owners of shares, and residual risk bearers. Shareholders’ meeting is one of the management organs of the company. These powers of shareholders provide them with a larger stake and justify the protection of their corporate interests. The rules of shareholder protection refer to the provisions of the law destined to protect the interest of shareholders. Strong rules of shareholder protection are typical tools of corporate governance that reduce agency costs. By applying the leximetric approach, this article evaluates the adequacy of the rules of shareholders’ protection in the Commercial Code of Ethiopia and argues that such rules are inadequate to protect the interest of shareholders.