6.2 Corporate governance
In contrast, the results using our legal variable are much stronger (see Table 7). The judicial efficiency value is not significant, but the other legal environment variable are significant in most specifications.
Corruption, plotted against stock market performance in Fig. 5, is significant both by itself and with the East Asia dummy. The regression coefficient implies that a one-point improvement in the corruption index is associated with 7.6% better cumulative stock market performance. The adjusted R-squared is 0.09 without the East Asia dummy. Corruption becomes more significant and has a larger coefficient when we control for reserves, but it is insignificant when we include both reserves and the East Asia dummy.