69

We examine the spread of Undertakings for Collective Investment in Transferable Securities (UCITS) funds around the world and consider whether such mutual funds, which voluntarily adopt higher standards of investor protection, expand their operations to other countries with higher or lower investor protection regimes. The data indicate equity funds spread to countries with better anti-director rights and bond funds spread to countries with better creditor rights; however, either type of spread is uncorrelated with and unexplained by enforcement standards. The data therefore indicate that the loss of insider managerial benefits from UCITS constraints is smaller in countries where legal standards are higher, and this mechanism is a primary determinant of the spread of voluntary protection mechanisms among mutual funds. This central finding holds over a wide range of robustness checks and the use of treatment-effect models that account for self selection.