3.3. Measuring institutions
We use the measures for efficiency of the legal system, corruption, rule of law, and strength of corporate governance reported in LLSV (1998). Efficiency of the legal system is the assessment by an independent organization, Business International Corporation, of `the efficiency and integrity of the legal environment as it affects business (LLSV, 1998, p. 1124). Corruption is an assessment by another independent organization, International Country Risk Services, of the extent of corruption in the government, particularly the extent to which businesses have to pay bribes. The rule of law is also an assessment by International Country Risk Services and is their opinion of the `law and order tradition in the country (LLSV 1998, Table 1). Corporate governance is LLSV's (1998) assessment of the de jure rights of shareholders (particularly what they call `anti-director rights). LLSV (1998) also provide measures of creditor rights. The "final LLSV (1998) measure we use is their index of accounting standards. The raw data and precise definitions for all these measures are reported in Table 3.