How can we ensure corporations play by the “rules of the game”—that is, laws encouraging firms to avoid socially harmful conduct? Corporate compliance programs play a central role in society’s current response. Prosecutors give firms incentives—through discounts to penalties—to implement compliance programs that guide and monitor employees’ behavior. However, focusing on the incentives of firms overlooks the perspective of managers, who decide how much firms invest in compliance. We show that stock-based pay, ubiquitous for corporate executives, creates systematic incentives to short-change compliance. Compliance is a long-term investment for firms, whereas managers’ time horizon is truncated to the date they expect to liquidate stock. Moreover, investors find it hard to value compliance programs because firms routinely disclose little or nothing about their compliance activities. We show that stock-compensated managers prefer not to disclose compliance because such disclosure can reveal private information about a firm’s propensity to misconduct. As a result, both managers and markets are likely myopic about compliance. How can this problem be resolved for the benefit of society and shareholders? Boards of directors are supposed to act as monitors to control managerial agency costs. We show that the increasing use of stock-based compensation for directors, justified as a means of encouraging more vigorous oversight of business decisions, also has a corrosive effect on boards’ monitoring incentives for compliance. Directors in theory face liability for compliance oversight failures, but only if so egregious as to amount to bad faith. We argue that this standard of liability, established in an era before ubiquitous stock-based compensation for both managers and directors, has now become too lax. We propose more assertive directors’ liability for compliance failures, limited in quantum to a proportionate clawback of stock-based pay. This would add power to the alignment of directors’ interests with those of shareholders— directors would stand to lose more than just a decrease in the value of their stock in the event of a compliance failure—but limiting liability in this way would avoid pushing boards to overinvest in compliance. We outline ways in which this proposal could be implemented either by shareholder proposals or judicial innovation.
{"title":"Taking Compliance Seriously","authors":"J. Armour, Jeffrey N. Gordon, Geeyoung Min","doi":"10.2139/SSRN.3244167","DOIUrl":"https://doi.org/10.2139/SSRN.3244167","url":null,"abstract":"How can we ensure corporations play by the “rules of the game”—that is, laws encouraging firms to avoid socially harmful conduct? Corporate compliance programs play a central role in society’s current response. Prosecutors give firms incentives—through discounts to penalties—to implement compliance programs that guide and monitor employees’ behavior. However, focusing on the incentives of firms overlooks the perspective of managers, who decide how much firms invest in compliance. \u0000 \u0000We show that stock-based pay, ubiquitous for corporate executives, creates systematic incentives to short-change compliance. Compliance is a long-term investment for firms, whereas managers’ time horizon is truncated to the date they expect to liquidate stock. Moreover, investors find it hard to value compliance programs because firms routinely disclose little or nothing about their compliance activities. We show that stock-compensated managers prefer not to disclose compliance because such disclosure can reveal private information about a firm’s propensity to misconduct. As a result, both managers and markets are likely myopic about compliance. \u0000 \u0000How can this problem be resolved for the benefit of society and shareholders? Boards of directors are supposed to act as monitors to control managerial agency costs. We show that the increasing use of stock-based compensation for directors, justified as a means of encouraging more vigorous oversight of business decisions, also has a corrosive effect on boards’ monitoring incentives for compliance. Directors in theory face liability for compliance oversight failures, but only if so egregious as to amount to bad faith. We argue that this standard of liability, established in an era before ubiquitous stock-based compensation for both managers and directors, has now become too lax. \u0000 \u0000We propose more assertive directors’ liability for compliance failures, limited in quantum to a proportionate clawback of stock-based pay. This would add power to the alignment of directors’ interests with those of shareholders— directors would stand to lose more than just a decrease in the value of their stock in the event of a compliance failure—but limiting liability in this way would avoid pushing boards to overinvest in compliance. We outline ways in which this proposal could be implemented either by shareholder proposals or judicial innovation.","PeriodicalId":10506,"journal":{"name":"Columbia Law School","volume":"7 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-09-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85216695","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In two earlier papers I outlined how some stakeholders, large companies and private advocacy groups are currently engaged in a concerted effort to enact major copyright policy changes in Asia Pacific. (SSRN: Barker 2016 and Barker 2018). In this paper I review another new report this time written for Google in New Zealand, authored by Deloitte: Access Economics (2018) in New Zealand, entitled “Copyright in the digital age: An economic assessment of fair use in New Zealand”. This new report purports to assess the economic effect of introducing in to New Zealand law a US style statutory fair use exception to copyright found in the section 107 of the US Copyright Act of 1976 (henceforth called US Style fair use). This new Deloitte New Zealand (Deloitte NZ) report is in fact very similar to, and copies a lot of the material, from another paper in Australia written for Google in Australia, again by Deloitte: Access Economics (2018), also entitled ‘Copyright in the Digital Age’, which was the subject of one of my previous (second) review papers mentioned above Barker (2018). In this paper I review a number of errors in the Deloitte NZ report. Many of these errors replicate the Deloitte Australia Report. However there are key new elements in the Deloitte NZ report to address. The new material is in part due to differences between Australian and New Zealand law, and the fact Deloitte New Zealand replaced the anecdotal evidence in the Australian report, with anecdotal evidence from interviews in New Zealand to make its case more relevant to the local market. The Deloitte NZ report also relied heavily on a model from Scotchmer (2004) to make the case for US style fair use. This was not presented or relied on in the Australian report. I therefore provide a number of additional sections on this in my review of chapter two of the Deloitte NZ report. I also present a new critique of the Deloitte NZ economic model of the responsiveness of US style fair use in my review of chapter five of the Deloitte report, and include a new and better model that clearly contradicts Deloitte NZ's predictions. The main conclusions of my review of the Deloitte New Zealand Report however remain the same as that for the Deloitte Australia Report involving four key flawed assertions in the paper. Assertion 1: that substantial downstream value is lost as a result of current copyright law in New Zealand. The downstream uses of copyright works involved include: text and data mining, digital analytics, cloud computing, transformative, educational and informational uses involving existing copyright works. Assertion 2: that this downstream value is lost due to current copyright law in New Zealand reducing cumulative innovation, and that a US style fair use law can remedy that. Assertion 3: that creativity is booming in the digital world and that introducing a US style fair use law in New Zealand will benefit creative output. Assertion 4: that transaction costs would be lower under a US s
{"title":"More Unfair Claims About Fair Use: This Time in New Zealand","authors":"G. Barker","doi":"10.2139/ssrn.3214827","DOIUrl":"https://doi.org/10.2139/ssrn.3214827","url":null,"abstract":"In two earlier papers I outlined how some stakeholders, large companies and private advocacy groups are currently engaged in a concerted effort to enact major copyright policy changes in Asia Pacific. (SSRN: Barker 2016 and Barker 2018). In this paper I review another new report this time written for Google in New Zealand, authored by Deloitte: Access Economics (2018) in New Zealand, entitled “Copyright in the digital age: An economic assessment of fair use in New Zealand”. This new report purports to assess the economic effect of introducing in to New Zealand law a US style statutory fair use exception to copyright found in the section 107 of the US Copyright Act of 1976 (henceforth called US Style fair use). This new Deloitte New Zealand (Deloitte NZ) report is in fact very similar to, and copies a lot of the material, from another paper in Australia written for Google in Australia, again by Deloitte: Access Economics (2018), also entitled ‘Copyright in the Digital Age’, which was the subject of one of my previous (second) review papers mentioned above Barker (2018). In this paper I review a number of errors in the Deloitte NZ report. Many of these errors replicate the Deloitte Australia Report. However there are key new elements in the Deloitte NZ report to address. The new material is in part due to differences between Australian and New Zealand law, and the fact Deloitte New Zealand replaced the anecdotal evidence in the Australian report, with anecdotal evidence from interviews in New Zealand to make its case more relevant to the local market. The Deloitte NZ report also relied heavily on a model from Scotchmer (2004) to make the case for US style fair use. This was not presented or relied on in the Australian report. I therefore provide a number of additional sections on this in my review of chapter two of the Deloitte NZ report. I also present a new critique of the Deloitte NZ economic model of the responsiveness of US style fair use in my review of chapter five of the Deloitte report, and include a new and better model that clearly contradicts Deloitte NZ's predictions. The main conclusions of my review of the Deloitte New Zealand Report however remain the same as that for the Deloitte Australia Report involving four key flawed assertions in the paper. Assertion 1: that substantial downstream value is lost as a result of current copyright law in New Zealand. The downstream uses of copyright works involved include: text and data mining, digital analytics, cloud computing, transformative, educational and informational uses involving existing copyright works. Assertion 2: that this downstream value is lost due to current copyright law in New Zealand reducing cumulative innovation, and that a US style fair use law can remedy that. Assertion 3: that creativity is booming in the digital world and that introducing a US style fair use law in New Zealand will benefit creative output. Assertion 4: that transaction costs would be lower under a US s","PeriodicalId":10506,"journal":{"name":"Columbia Law School","volume":"51 4 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-07-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83588467","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Why are some contractual terms revised continuously while others are stubbornly fixed? We offer an account of both change and stickiness in standard-form contracts. We hypothesize that drafters (sellers) are more likely to revise their standard terms when they have an opportunity to learn about the terms’ costs from experience. Consider a warranty. Offering a warranty in an initial period will expose sellers to claims about malfunction by purchasers, allowing sellers to learn whether it is desirable to offer it going forward. When drafters are unable to learn in this manner, either because they fail to experiment or because the term in question is one where there is no increased opportunity to learn from experience, such terms will be revised relatively less frequently. While learning and change occur through various channels, we posit that, all else equal, terms that carry an opportunity to learn from experience will be revised more frequently, whereas terms or term modalities that do not will contribute to stickiness and stagnation. Our results support this hypothesis. Using a large sample of changes in business and consumer standard-form contracts over a period of seven years, we find that sellers are more likely to revise terms that offer an opportunity to learn from experience than those that do not. These findings are further illustrated and supported by interviews with in-house counsel. The results suggest that standard-form contract terms evolve over time as sellers learn experientially about their costs and risks. Our analysis offers new accounts for the use of boilerplate, stickiness, and change and has normative implications for the optimal design of default rules and product features (JEL codes: K12).
{"title":"Learning in Standard Form Contracts: Theory and Evidence","authors":"","doi":"10.2139/ssrn.3133791","DOIUrl":"https://doi.org/10.2139/ssrn.3133791","url":null,"abstract":"\u0000 Why are some contractual terms revised continuously while others are stubbornly fixed? We offer an account of both change and stickiness in standard-form contracts. We hypothesize that drafters (sellers) are more likely to revise their standard terms when they have an opportunity to learn about the terms’ costs from experience. Consider a warranty. Offering a warranty in an initial period will expose sellers to claims about malfunction by purchasers, allowing sellers to learn whether it is desirable to offer it going forward. When drafters are unable to learn in this manner, either because they fail to experiment or because the term in question is one where there is no increased opportunity to learn from experience, such terms will be revised relatively less frequently. While learning and change occur through various channels, we posit that, all else equal, terms that carry an opportunity to learn from experience will be revised more frequently, whereas terms or term modalities that do not will contribute to stickiness and stagnation. Our results support this hypothesis. Using a large sample of changes in business and consumer standard-form contracts over a period of seven years, we find that sellers are more likely to revise terms that offer an opportunity to learn from experience than those that do not. These findings are further illustrated and supported by interviews with in-house counsel. The results suggest that standard-form contract terms evolve over time as sellers learn experientially about their costs and risks. Our analysis offers new accounts for the use of boilerplate, stickiness, and change and has normative implications for the optimal design of default rules and product features (JEL codes: K12).","PeriodicalId":10506,"journal":{"name":"Columbia Law School","volume":"43 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-03-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81429417","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Disclosure enjoys a unique position within the spectrum of campaign finance regulation. It is the only regulation that courts have looked upon with consistent approval. Since Buckley v. Valeo, courts have upheld disclosure requirements as advancing an “informational interest”—very broadly defined as the interest in educating voters about the sponsors behind political messages. Disclosure’s informational interest has been deemed sufficient to outweigh its incidental burdens on speech, something that interests advanced by other forms of campaign finance regulation have failed to do. Yet despite the goodwill, after Citizens United, disclosure seems to be on the defensive as advocates against campaign finance regulation turn their attention to disclosure.
This Note argues that since Citizens United, courts have differed in their application of disclosure’s informational interest and that the phrase has been used to embody several different strands of disclosure’s informative benefits. This inconsistency, compounded with growing theoretical pressures arguing that disclosure’s ability to educate the public is greatly overstated, puts disclosure on shaky First Amendment footing. If left unresolved, this uncertainty presents problems for states seeking to craft campaign-related disclosure statutes. In response, this Note proposes that placing a greater emphasis on disclosure’s ability to elevate discourse—both in terms of the volume of speech that is generated and the depth of the discussion that is produced—can provide a more robust justification for future reform.
{"title":"Disclosure's Last Stand? The Need to Clarify the 'Informational Interest' Advanced by Campaign Finance Disclosure","authors":"Lear Jiang","doi":"10.2139/ssrn.3262349","DOIUrl":"https://doi.org/10.2139/ssrn.3262349","url":null,"abstract":"Disclosure enjoys a unique position within the spectrum of campaign finance regulation. It is the only regulation that courts have looked upon with consistent approval. Since Buckley v. Valeo, courts have upheld disclosure requirements as advancing an “informational interest”—very broadly defined as the interest in educating voters about the sponsors behind political messages. Disclosure’s informational interest has been deemed sufficient to outweigh its incidental burdens on speech, something that interests advanced by other forms of campaign finance regulation have failed to do. Yet despite the goodwill, after Citizens United, disclosure seems to be on the defensive as advocates against campaign finance regulation turn their attention to disclosure.<br><br>This Note argues that since Citizens United, courts have differed in their application of disclosure’s informational interest and that the phrase has been used to embody several different strands of disclosure’s informative benefits. This inconsistency, compounded with growing theoretical pressures arguing that disclosure’s ability to educate the public is greatly overstated, puts disclosure on shaky First Amendment footing. If left unresolved, this uncertainty presents problems for states seeking to craft campaign-related disclosure statutes. In response, this Note proposes that placing a greater emphasis on disclosure’s ability to elevate discourse—both in terms of the volume of speech that is generated and the depth of the discussion that is produced—can provide a more robust justification for future reform.","PeriodicalId":10506,"journal":{"name":"Columbia Law School","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83550913","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper reviews the several proposed tax reforms articulated by President Donald Trump, both during his presidential campaign, and since taking office, in light of economic theory, and the Modigliani-Miller Irrelevance Theorem, to show that companies will adapt their polices, in light of new taxes, and that this impacts the effectiveness of reform. In support, I survey two empirical studies, one in relation to the repatriation efforts of President Bush’s Homeland Investment Act, and another in relation to unexpected changes to the taxation of Canadian income trusts to show that reform measures can lead to unanticipated results. I then apply the principles from these studies, the general economic theories and the Modigliani-Miller Irrelevance Theorem, to cast uncertainty on the net effect of Trump’s tax reforms. Next, I review the constitutionality of a proposed “border adjustment tax”, and I analyze whether this reform is a direct tax that isn’t apportioned between the States, and does not qualify as income under the 16th amendment, and is thereby unconstitutional. I show that such a constitutional challenge is a difficult undertaking given the substantive arguments in favour of constitutionality, the rarity of judicial intervention in overturning tax laws, and the wide discretion of Congress to levy taxes on income. Finally, I conclude by considering the role of economic analysis on the border adjustment constitutional question and provide an overview of the arguments, both for and against utilizing economic analysis in constitutional tax litigation, including a review of the various cases, and defining principles, with emphasis to the decisions of Judge Richard Posner, where economic analysis has been used in the statutory interpretation of tax laws.
{"title":"Trump's 'Big-League' Tax Reform: Assessing the Impact and Constitutionality of the President's Proposed Changes","authors":"Ryan Clements","doi":"10.2139/SSRN.3012637","DOIUrl":"https://doi.org/10.2139/SSRN.3012637","url":null,"abstract":"This paper reviews the several proposed tax reforms articulated by President Donald Trump, both during his presidential campaign, and since taking office, in light of economic theory, and the Modigliani-Miller Irrelevance Theorem, to show that companies will adapt their polices, in light of new taxes, and that this impacts the effectiveness of reform. In support, I survey two empirical studies, one in relation to the repatriation efforts of President Bush’s Homeland Investment Act, and another in relation to unexpected changes to the taxation of Canadian income trusts to show that reform measures can lead to unanticipated results. I then apply the principles from these studies, the general economic theories and the Modigliani-Miller Irrelevance Theorem, to cast uncertainty on the net effect of Trump’s tax reforms. Next, I review the constitutionality of a proposed “border adjustment tax”, and I analyze whether this reform is a direct tax that isn’t apportioned between the States, and does not qualify as income under the 16th amendment, and is thereby unconstitutional. I show that such a constitutional challenge is a difficult undertaking given the substantive arguments in favour of constitutionality, the rarity of judicial intervention in overturning tax laws, and the wide discretion of Congress to levy taxes on income. Finally, I conclude by considering the role of economic analysis on the border adjustment constitutional question and provide an overview of the arguments, both for and against utilizing economic analysis in constitutional tax litigation, including a review of the various cases, and defining principles, with emphasis to the decisions of Judge Richard Posner, where economic analysis has been used in the statutory interpretation of tax laws.","PeriodicalId":10506,"journal":{"name":"Columbia Law School","volume":"172 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2017-08-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77896313","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper explores the different ways in which negotiators to three recent environmental instruments accounted for different national circumstances in formulating commitments and other aspects of cooperation in the instruments. The author finds that the negotiators of these instruments have significantly expanded the arsenal of differentiation tools based on considerations pertaining to logic, fairness, limited capacity, and negotiating leverage.
{"title":"I Beg to Differ: Taking Account of National Circumstances under the Paris Agreement, the ICAO Market-Based Measure, and the Montreal Protocol's HFC Amendment","authors":"Susan Biniaz","doi":"10.7916/D8JM2B77","DOIUrl":"https://doi.org/10.7916/D8JM2B77","url":null,"abstract":"This paper explores the different ways in which negotiators to three recent environmental instruments accounted for different national circumstances in formulating commitments and other aspects of cooperation in the instruments. The author finds that the negotiators of these instruments have significantly expanded the arsenal of differentiation tools based on considerations pertaining to logic, fairness, limited capacity, and negotiating leverage.","PeriodicalId":10506,"journal":{"name":"Columbia Law School","volume":"245 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2017-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74125373","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2016-08-12DOI: 10.1093/acprof:oso/9780198766353.003.0014
Fernando Esteban de la Rosa
The aim of the chapter is to analyse the challenges that the Spanish legislation will have to overcome in order to adapt to the new European Law on CADR. Spain counts with a long way experience in CADR consisting both in public and private ADR entities. In the public field the main role belongs to arbitration (the SCAS) and mediation (the OMICs), extended over the whole geography. Apparently this situation puts Spanish legislation in a good starting point for the adaptation. A closer look reveals, however, that every territorial entity (both CAB and OMICs) does not depart from the same position in order to reach the fulfilling of the European standards. Its decentralized character could orientate solutions towards a deep reform of the system to make it possible for every single entity (OMIC or CAB) to obtain its own accreditation. The legislator seems also willing to increase the role of private ADR, and also Ombudsmen paid directly by the trader, but only to some extent. This position counts today with the objection of many of the stakeholders. The Draft also leaves many questions waiting for answers by the future legislation. The chapter highlights some of the decisions the Spanish legislator should take when adapting the CADR system to the new European law.
{"title":"Challenges for the Implementation of the Consumer ADR Directive in Spain (Retos Para La Transposición a España De La Directiva Sobre Resolución Alternativa De Litigios De Consumo)","authors":"Fernando Esteban de la Rosa","doi":"10.1093/acprof:oso/9780198766353.003.0014","DOIUrl":"https://doi.org/10.1093/acprof:oso/9780198766353.003.0014","url":null,"abstract":"The aim of the chapter is to analyse the challenges that the Spanish legislation will have to overcome in order to adapt to the new European Law on CADR. Spain counts with a long way experience in CADR consisting both in public and private ADR entities. In the public field the main role belongs to arbitration (the SCAS) and mediation (the OMICs), extended over the whole geography. Apparently this situation puts Spanish legislation in a good starting point for the adaptation. A closer look reveals, however, that every territorial entity (both CAB and OMICs) does not depart from the same position in order to reach the fulfilling of the European standards. Its decentralized character could orientate solutions towards a deep reform of the system to make it possible for every single entity (OMIC or CAB) to obtain its own accreditation. The legislator seems also willing to increase the role of private ADR, and also Ombudsmen paid directly by the trader, but only to some extent. This position counts today with the objection of many of the stakeholders. The Draft also leaves many questions waiting for answers by the future legislation. The chapter highlights some of the decisions the Spanish legislator should take when adapting the CADR system to the new European law.","PeriodicalId":10506,"journal":{"name":"Columbia Law School","volume":"25 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-08-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78064996","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The appropriate division of authority between a company’s board and its shareholders has been the central issue in the corporate governance debate for decades. This issue presents most vividly for defensive tactics: the extent to which the board of a potential acquisition target is allowed to prevent the shareholders from responding directly to a hostile bid. In the US today, the board’s power is extensive; control largely lies with the board. Normative evaluations of current law face two obstacles. First, defensive tactics raise the social welfare question whether, or to what extent, these tactics deter ex ante efficient takeovers. This question cannot be answered empirically because the econometrician can observe bids but cannot observe deterred bids. The social welfare issue is also difficult to resolve using current analytical techniques because the market for corporate control is unusually complex: in it, financial and strategic buyers search for mismanaged companies or synergy targets; and some synergy targets search for acquirers. Turning to targets, the question which defensive tactics level maximizes shareholder welfare also is difficult to answer because of the qualitative nature of defensive tactics: Is a poison pill more or less privately efficient than a staggered board? What are the welfare consequences of combining a pill with a staggered board or a supermajority voting requirement? In this paper, we write a search equilibrium model of the market for corporate control and solve it by simulating plausible parameters for the variables of interest. Because we specify the number of ex ante efficient acquisitions that could be made, we can estimate market efficiency – the ratio of made matches to good matches – under legal regimes that are more or less friendly to defensive tactics. Also, we argue that the common metric among defensive tactics is time: the ability of various tactics to delay bid completion and thus reduce bidder, and thereby increase target, returns. We have two important results: First, strong defensive tactics reduce market efficiency significantly. Our simulations suggest that approximately a $100 billion in deal value is lost each year in consequence of these tactics. Simulations are only suggestive and our simulated model likely overstates the welfare loss. Nevertheless, the result that defensive tactics cause economically significant welfare losses would stand even if our magnitude estimate is halved. Second, the defensive tactics level that maximizes target shareholder welfare is materially higher than the level that maximizes social welfare. These results also support a methodological claim: equilibrium analysis can illuminate regulatory issues regarding the market for corporate control.
{"title":"Defensive Tactics and Optimal Search: A Simulation Approach","authors":"R. Gilson, Alan L. Schwartz","doi":"10.2139/ssrn.2805529","DOIUrl":"https://doi.org/10.2139/ssrn.2805529","url":null,"abstract":"The appropriate division of authority between a company’s board and its shareholders has been the central issue in the corporate governance debate for decades. This issue presents most vividly for defensive tactics: the extent to which the board of a potential acquisition target is allowed to prevent the shareholders from responding directly to a hostile bid. In the US today, the board’s power is extensive; control largely lies with the board. Normative evaluations of current law face two obstacles. First, defensive tactics raise the social welfare question whether, or to what extent, these tactics deter ex ante efficient takeovers. This question cannot be answered empirically because the econometrician can observe bids but cannot observe deterred bids. The social welfare issue is also difficult to resolve using current analytical techniques because the market for corporate control is unusually complex: in it, financial and strategic buyers search for mismanaged companies or synergy targets; and some synergy targets search for acquirers. Turning to targets, the question which defensive tactics level maximizes shareholder welfare also is difficult to answer because of the qualitative nature of defensive tactics: Is a poison pill more or less privately efficient than a staggered board? What are the welfare consequences of combining a pill with a staggered board or a supermajority voting requirement? In this paper, we write a search equilibrium model of the market for corporate control and solve it by simulating plausible parameters for the variables of interest. Because we specify the number of ex ante efficient acquisitions that could be made, we can estimate market efficiency – the ratio of made matches to good matches – under legal regimes that are more or less friendly to defensive tactics. Also, we argue that the common metric among defensive tactics is time: the ability of various tactics to delay bid completion and thus reduce bidder, and thereby increase target, returns. We have two important results: First, strong defensive tactics reduce market efficiency significantly. Our simulations suggest that approximately a $100 billion in deal value is lost each year in consequence of these tactics. Simulations are only suggestive and our simulated model likely overstates the welfare loss. Nevertheless, the result that defensive tactics cause economically significant welfare losses would stand even if our magnitude estimate is halved. Second, the defensive tactics level that maximizes target shareholder welfare is materially higher than the level that maximizes social welfare. These results also support a methodological claim: equilibrium analysis can illuminate regulatory issues regarding the market for corporate control.","PeriodicalId":10506,"journal":{"name":"Columbia Law School","volume":"53 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-07-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87148862","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The scientific paper covers specific aspects of the concept of home in connection to a professional`s office, according to the jurisprudence of the European Court of Human Rights. It focuses on two specific cases (Niemietz v. Germany and Societe Colas Est and Others v. France). The concept of home is usually related to individuals/natural persons and their private issues. What happens if there is no clear separation between business and private life? Can legal persons claim the same protection as individuals, according to the provisions of the Convention for the Protection of Human Rights and Fundamental Freedoms?
根据欧洲人权法院的判例，这篇科学论文涵盖了与专业人员办公室有关的家概念的具体方面。它侧重于两个具体案例(Niemietz诉德国和Societe Colas Est and Others诉法国)。家的概念通常与个人/自然人和他们的私人问题有关。如果商业和私人生活没有明确的界限，会发生什么?根据《保护人权和基本自由公约》的规定，法人是否可以要求与个人同样的保护?
{"title":"The Concept of 'Home' in Relation to a Professional's Office, According to the Jurisprudence of the European Court of Human Rights","authors":"A. Seucan","doi":"10.2139/SSRN.2658046","DOIUrl":"https://doi.org/10.2139/SSRN.2658046","url":null,"abstract":"The scientific paper covers specific aspects of the concept of home in connection to a professional`s office, according to the jurisprudence of the European Court of Human Rights. It focuses on two specific cases (Niemietz v. Germany and Societe Colas Est and Others v. France). The concept of home is usually related to individuals/natural persons and their private issues. What happens if there is no clear separation between business and private life? Can legal persons claim the same protection as individuals, according to the provisions of the Convention for the Protection of Human Rights and Fundamental Freedoms?","PeriodicalId":10506,"journal":{"name":"Columbia Law School","volume":"6 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-09-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76625647","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Patent policy is typically thought to be the product of the Patent and Trademark Office, the Court of Appeals for the Federal Circuit, and, in some instances, the Supreme Court. This simple topography, however, understates the extent to which outsiders can shape the patent regime. Indeed, a variety of administrative actors influence patent policy through the exercise of their regulatory authority and administrative power. This Article offers a novel description of the ways in which nonpatent agencies intervene into patent policy. In particular, it examines agency responses to conflicts between patent and other regulatory aims, uncovering a relative preference for complacency (“inaction�?) and resort to outside help (“indirect action�?) over regulation (“direct action�?). This dynamic has the striking effect of shifting authority from nonpatent agencies to patent policymakers, thereby supplanting some regulatory designs with the patent regime’s more general incentives. This Article thus offers agencies new options for facing patent conflict, including an oft-overlooked theory of regulatory authority for patent-related regulation. Such intervention and regulation by nonpatent agencies can give rise to a more efficient and context-sensitive regime that is better aligned with other regulatory goals.
{"title":"Patent Conflicts","authors":"Tejas N. Narechania","doi":"10.31228/osf.io/dxqcz","DOIUrl":"https://doi.org/10.31228/osf.io/dxqcz","url":null,"abstract":"Patent policy is typically thought to be the product of the Patent and Trademark Office, the Court of Appeals for the Federal Circuit, and, in some instances, the Supreme Court. This simple topography, however, understates the extent to which outsiders can shape the patent regime. Indeed, a variety of administrative actors influence patent policy through the exercise of their regulatory authority and administrative power. This Article offers a novel description of the ways in which nonpatent agencies intervene into patent policy. In particular, it examines agency responses to conflicts between patent and other regulatory aims, uncovering a relative preference for complacency (“inaction�?) and resort to outside help (“indirect action�?) over regulation (“direct action�?). This dynamic has the striking effect of shifting authority from nonpatent agencies to patent policymakers, thereby supplanting some regulatory designs with the patent regime’s more general incentives. This Article thus offers agencies new options for facing patent conflict, including an oft-overlooked theory of regulatory authority for patent-related regulation. Such intervention and regulation by nonpatent agencies can give rise to a more efficient and context-sensitive regime that is better aligned with other regulatory goals.","PeriodicalId":10506,"journal":{"name":"Columbia Law School","volume":"78 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-08-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74041817","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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