“Law and finance” is a rather new and evolving research topic, initiated by La Porta, Lopez-de Silanes, Shleifer, and Vishny (henceforth LLSV). They investigated the differences between legal origins and their impact on economic performance. Two seminal papers published by LLSV in 1997 and 1998 addressed an important question: Does law matter? Their main idea was to evaluate the impact of legal protection of investors (shareholders and creditors) on three key areas: corporate governance, structure of ownership, and control and orientation of financial system. Their work was extensively referred by other researchers and is now considered as a new finance theory. So as the reader is able to appreciate the nuances of the theory which was postulated by LLSV, we propose a two-step approach: first, a detailed description of the theory which would be followed by a summarized discussion of related works on law and finance.