ABSTRACT This article examines the impact of legal protection on the sensitivity of investment to stock prices in eleven countries of the Asian Pacitfic region, We use two measures - an indicator for common-law country and an investor protection index 一 as a proxy for legal protection,and find that investment-Price sensitivity is more positive in common-iaw countries and countries with better investor protection, especially among financially unconstrained (nonequity-dependent) firms. This relation is supported by our empirical finding that stock prices are more informative in common-law countries and countries with better investor protection, while stock price informativeness has been documented to have strong positive effect on the investment-price sensitivity.