Pub Date : 2019-03-01DOI: 10.1002/9783527632794.ch22
William K. Sjostrom
The Article examines Private Investments in Public Equity (PIPEs), an important source of financing for small public companies. The Article describes common characteristics of PIPE deals, including the types of securities issued and the basic trading strategy employed by hedge funds, the most common investors in small company PIPEs. The Article argues that by investing in a PIPE and promptly selling short the issuer's common stock, a hedge fund is essentially underwriting a follow-on public offering while legally avoiding many of the regulations applicable to underwriters. This regulatory arbitrage makes it possible for hedge funds to secure the advantageous terms responsible for the market-beating returns they have garnered from PIPE investments. Additionally, the article details securities law compliance issues with respect to PIPE transactions and explores recent SEC PIPE-related enforcement actions and regulatory maneuvers. The Article concludes that a more measured and transparent SEC approach to PIPE regulation is in order.
{"title":"PIPEs","authors":"William K. Sjostrom","doi":"10.1002/9783527632794.ch22","DOIUrl":"https://doi.org/10.1002/9783527632794.ch22","url":null,"abstract":"The Article examines Private Investments in Public Equity (PIPEs), an important source of financing for small public companies. The Article describes common characteristics of PIPE deals, including the types of securities issued and the basic trading strategy employed by hedge funds, the most common investors in small company PIPEs. The Article argues that by investing in a PIPE and promptly selling short the issuer's common stock, a hedge fund is essentially underwriting a follow-on public offering while legally avoiding many of the regulations applicable to underwriters. This regulatory arbitrage makes it possible for hedge funds to secure the advantageous terms responsible for the market-beating returns they have garnered from PIPE investments. Additionally, the article details securities law compliance issues with respect to PIPE transactions and explores recent SEC PIPE-related enforcement actions and regulatory maneuvers. The Article concludes that a more measured and transparent SEC approach to PIPE regulation is in order.","PeriodicalId":140847,"journal":{"name":"ERPN: Corporate Law (Other) (Sub-Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126137990","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}
An overwhelming proportion of businesses in the world are very small, consisting of just one person with no or very few employees. Despite the small size of such businesses, it is extremely important to the economic wellbeing of states that they thrive and grow. In order to achieve this, access to finance is critical. While there have been some positive developments towards this goal, such as Government-run programmes to foster the creation of start-ups (mostly micro-businesses) and to enhance access to finance for smaller enterprises, or the widespread growth of microfinance in developing and middle income countries, these measures tend to be limited in their operation and usefulness. Secured financing, especially when provided by financial institutions, is necessary for most micro-businesses to achieve their potential, but access to this type of financing is, at present, restricted and, in some situations, non-existent. The legal structure for secured financing provided by the UNCITRAL Model Law can alleviate some of the problems preventing access to secured financing for micro-businesses. This paper examines these problems, and the difference that adoption of the Model Law system could make. It also identifies some areas in which the Model Law is not entirely suitable for the financing of micro-businesses, as well as specific issues which must be addressed by other areas of law and regulation if financing to micro-businesses is to flourish. While the primary focus is on micro-businesses in developing economies, it is suggested that the problems faced by micro-businesses in accessing finance arise even in the more developed jurisdictions, and that at least some of the solutions suggested are appropriate for consideration in all parts of the world.
{"title":"Financing Micro-Businesses and Uncitral's Model Law on Secured Transactions","authors":"L. Gullifer, Ignacio Tirado","doi":"10.2139/SSRN.3033114","DOIUrl":"https://doi.org/10.2139/SSRN.3033114","url":null,"abstract":"An overwhelming proportion of businesses in the world are very small, consisting of just one person with no or very few employees. Despite the small size of such businesses, it is extremely important to the economic wellbeing of states that they thrive and grow. In order to achieve this, access to finance is critical. While there have been some positive developments towards this goal, such as Government-run programmes to foster the creation of start-ups (mostly micro-businesses) and to enhance access to finance for smaller enterprises, or the widespread growth of microfinance in developing and middle income countries, these measures tend to be limited in their operation and usefulness. Secured financing, especially when provided by financial institutions, is necessary for most micro-businesses to achieve their potential, but access to this type of financing is, at present, restricted and, in some situations, non-existent. The legal structure for secured financing provided by the UNCITRAL Model Law can alleviate some of the problems preventing access to secured financing for micro-businesses. This paper examines these problems, and the difference that adoption of the Model Law system could make. It also identifies some areas in which the Model Law is not entirely suitable for the financing of micro-businesses, as well as specific issues which must be addressed by other areas of law and regulation if financing to micro-businesses is to flourish. While the primary focus is on micro-businesses in developing economies, it is suggested that the problems faced by micro-businesses in accessing finance arise even in the more developed jurisdictions, and that at least some of the solutions suggested are appropriate for consideration in all parts of the world.","PeriodicalId":140847,"journal":{"name":"ERPN: Corporate Law (Other) (Sub-Topic)","volume":"34 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-09-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127405503","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}
A dominant view in the Coasean law-and-economics tradition is that the firm (including in its form as the corporation) is nothing but a nexus of contracts: the firm is entirely a matter of contract law, and the corporate entity, the legal fiction of corporate personhood, is nothing but a name for a bundle of contracts. This view has implication both for the theory of the firm and for the political economy of the corporation – for the question of the “rights” of corporate entities. By asserting that the corporation is nothing but a set of contractual arrangements, the nexus-of-contracts view implies that any rights possessed by contracting individuals “pass through” to the corporation itself. Unsurprisingly, the powerful phalanx of writers who wish to limit the rights of the corporation take square and largely exclusive aim at the nexus-of-contracts view, assuming that arguments against that view are necessarily arguments against all kinds of “bottom up” accounts of the corporate form. I will argue that critics of the nexus-of-contracts view are indeed right in one sense (though by no means in every sense). Yet, despite this, the fact that the corporation cannot be constructed solely out of voluntary contract narrowly understood does not destroy the argument that the corporation is ultimately “nothing but” a form of cooperation among rights-holding individuals. The corporation understood from the perspective of property rights is both an object of ownership and a form of ownership. Much of the confusion in the literature arises from a procrustean attempt to appraise the corporation in light of simplified and partial accounts of the rights involved.
{"title":"The Corporation is Not a Nexus of Contracts. It's an iPhone","authors":"R. Langlois","doi":"10.2139/ssrn.2856631","DOIUrl":"https://doi.org/10.2139/ssrn.2856631","url":null,"abstract":"A dominant view in the Coasean law-and-economics tradition is that the firm (including in its form as the corporation) is nothing but a nexus of contracts: the firm is entirely a matter of contract law, and the corporate entity, the legal fiction of corporate personhood, is nothing but a name for a bundle of contracts. This view has implication both for the theory of the firm and for the political economy of the corporation – for the question of the “rights” of corporate entities. By asserting that the corporation is nothing but a set of contractual arrangements, the nexus-of-contracts view implies that any rights possessed by contracting individuals “pass through” to the corporation itself. Unsurprisingly, the powerful phalanx of writers who wish to limit the rights of the corporation take square and largely exclusive aim at the nexus-of-contracts view, assuming that arguments against that view are necessarily arguments against all kinds of “bottom up” accounts of the corporate form. I will argue that critics of the nexus-of-contracts view are indeed right in one sense (though by no means in every sense). Yet, despite this, the fact that the corporation cannot be constructed solely out of voluntary contract narrowly understood does not destroy the argument that the corporation is ultimately “nothing but” a form of cooperation among rights-holding individuals. The corporation understood from the perspective of property rights is both an object of ownership and a form of ownership. Much of the confusion in the literature arises from a procrustean attempt to appraise the corporation in light of simplified and partial accounts of the rights involved.","PeriodicalId":140847,"journal":{"name":"ERPN: Corporate Law (Other) (Sub-Topic)","volume":"3 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-07-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131963874","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}
Under the Companies Act of 1956 the definition of body corporate excluded from its scope ‘a corporation sole’ but the Act of 2013 has removed this exception and come up with a new revolutionary concept i.e. one person company (OPC). But there is a difference between the two. The concept of OPC allows a single person to run a company limited by shares, and Sole proprietorship means an entity where it is run and owned by one individual and where there is no distinction between the owner and the business, whereas it is not so in case of OPC. In OPC, the company will acquire corporate personality and enjoy all the advantages of a private company viz., limited liability, perpetual succession, separate property, capacity to sue and be sued, contractual rights, etc.
{"title":"One Person Company: An Analytical Study","authors":"Vinay Haswani, Dr Krati Rajoria","doi":"10.2139/SSRN.3806325","DOIUrl":"https://doi.org/10.2139/SSRN.3806325","url":null,"abstract":"Under the Companies Act of 1956 the definition of body corporate excluded from its scope ‘a corporation sole’ but the Act of 2013 has removed this exception and come up with a new revolutionary concept i.e. one person company (OPC). But there is a difference between the two. The concept of OPC allows a single person to run a company limited by shares, and Sole proprietorship means an entity where it is run and owned by one individual and where there is no distinction between the owner and the business, whereas it is not so in case of OPC. In OPC, the company will acquire corporate personality and enjoy all the advantages of a private company viz., limited liability, perpetual succession, separate property, capacity to sue and be sued, contractual rights, etc.","PeriodicalId":140847,"journal":{"name":"ERPN: Corporate Law (Other) (Sub-Topic)","volume":"26 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-07-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116864857","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}
Universities, like many other organisations, have an insatiable need for funding. It appears that student fees, government funding, alumni support and endowments are insufficient to fund the expectations that universities will undertake myriad research projects, knowledge dissemination and staff and student development. Rather than depending on multi-millionaire donors or company commissions, universities may seek to package research into discrete parcels to market to enthusiastic supporters. Thus they will require a funding platform which draws on a multitude of smaller investors/donors. Klaes (2012) notes that crowdfunding, a vehicle through which this can be achieved is a disruptive technology of financial intermediation. However it is unclear whether the development a crowdfunding market will complement, supplement or crowd-out other funding. In addition, the marketability of certain projects may crowd-out less popular projects and further reduce the viability of necessary research.The research question addressed in this study is: does crowd-funding represent a threat or opportunity to the continuation of more traditional research funding sources for the University sector? This paper reviews recent research in the evolution of crowdfunding, legislation governing crowdfunding, and then examines in detail the University crowdfunding sites which are used to generate funds for staff research. This paper describes a few successful University projects which have raised research funds for staff on such sites, and also sought to review both the disadvantages and advantages of this funding method. Advantages include the potential to break the stranglehold on research funding from hyper-bureaucratic organisations. But the downside may be (as conjectured in this paper) that the purported democratization of research is both a dumbing-down and homogenization, a beauty pageant, where those more attractive and popular will be 'winners', and those who cannot position themselves to curry popular favour are losers in this game. The appeal of such a market-led mechanism for university research funding may, in time, lead away from Government funding for the authentic assessment of (at times) apparently unpopular but genuine projects where outcomes are highly technical, may involve a large amount of intellectual property rights, and their funding depends on the open minds of highly experienced and informed decision makers, not those at the other end of a computer mouse. The research question addressed in this study is: does crowd-funding represent a threat or opportunity to the continuation of more traditional research funding sources for the University sector, responding to calls that academics could collect and research crowdfunding, and also increase interest in educating our students as to its evolution and characteristics. The use by Universities to raise material amounts of research funding by such means is scare. This is a surprising result, given how long
{"title":"Crowdfunding: A Threat or Opportunity for University Research Funding?","authors":"R. Baskerville, C. Cordery","doi":"10.2139/ssrn.2458638","DOIUrl":"https://doi.org/10.2139/ssrn.2458638","url":null,"abstract":"Universities, like many other organisations, have an insatiable need for funding. It appears that student fees, government funding, alumni support and endowments are insufficient to fund the expectations that universities will undertake myriad research projects, knowledge dissemination and staff and student development. Rather than depending on multi-millionaire donors or company commissions, universities may seek to package research into discrete parcels to market to enthusiastic supporters. Thus they will require a funding platform which draws on a multitude of smaller investors/donors. Klaes (2012) notes that crowdfunding, a vehicle through which this can be achieved is a disruptive technology of financial intermediation. However it is unclear whether the development a crowdfunding market will complement, supplement or crowd-out other funding. In addition, the marketability of certain projects may crowd-out less popular projects and further reduce the viability of necessary research.The research question addressed in this study is: does crowd-funding represent a threat or opportunity to the continuation of more traditional research funding sources for the University sector? This paper reviews recent research in the evolution of crowdfunding, legislation governing crowdfunding, and then examines in detail the University crowdfunding sites which are used to generate funds for staff research. This paper describes a few successful University projects which have raised research funds for staff on such sites, and also sought to review both the disadvantages and advantages of this funding method. Advantages include the potential to break the stranglehold on research funding from hyper-bureaucratic organisations. But the downside may be (as conjectured in this paper) that the purported democratization of research is both a dumbing-down and homogenization, a beauty pageant, where those more attractive and popular will be 'winners', and those who cannot position themselves to curry popular favour are losers in this game. The appeal of such a market-led mechanism for university research funding may, in time, lead away from Government funding for the authentic assessment of (at times) apparently unpopular but genuine projects where outcomes are highly technical, may involve a large amount of intellectual property rights, and their funding depends on the open minds of highly experienced and informed decision makers, not those at the other end of a computer mouse. The research question addressed in this study is: does crowd-funding represent a threat or opportunity to the continuation of more traditional research funding sources for the University sector, responding to calls that academics could collect and research crowdfunding, and also increase interest in educating our students as to its evolution and characteristics. The use by Universities to raise material amounts of research funding by such means is scare. This is a surprising result, given how long","PeriodicalId":140847,"journal":{"name":"ERPN: Corporate Law (Other) (Sub-Topic)","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-06-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115698002","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}
We investigate two potential deterrents of aggressive pro forma reporting. First, the design of compensation contracts can encourage managers to adopt either a short- or a long-term focus. While it is difficult to observe whether compensation contracts are tied directly to pro forma earnings numbers, we posit that managers with a short-term horizon are more likely to make aggressive pro forma exclusions than managers with a long-term focus. Second, auditor effort can discourage potentially misleading pro forma earnings adjustments. Consistent with our predictions, we find that when compensation contracts include a long-term performance plan, managers are less likely to make potentially misleading pro forma earnings adjustments. Similarly, we find some evidence of a negative association between auditor effort (as proxied by higher-than-normal audit fees) and potentially misleading earnings adjustments. Taken together, this evidence is consistent with the notion that the design of compensation contracts and auditor effort can significantly influence managers’ pro forma reporting decisions. The results also suggest that investors discount earnings information when opportunism is likely to motivate managers’ earnings adjustments. Moreover, when managers make aggressive earnings exclusions in the presence of safeguards that limit opportunistic behavior, investors appear to react even more negatively.
{"title":"The Effects of Executive Compensation Contracts and Auditor Effort on Pro Forma Reporting Decisions","authors":"Dirk E. Black, E. Black, Theodore E. Christensen","doi":"10.2139/ssrn.1312562","DOIUrl":"https://doi.org/10.2139/ssrn.1312562","url":null,"abstract":"We investigate two potential deterrents of aggressive pro forma reporting. First, the design of compensation contracts can encourage managers to adopt either a short- or a long-term focus. While it is difficult to observe whether compensation contracts are tied directly to pro forma earnings numbers, we posit that managers with a short-term horizon are more likely to make aggressive pro forma exclusions than managers with a long-term focus. Second, auditor effort can discourage potentially misleading pro forma earnings adjustments. Consistent with our predictions, we find that when compensation contracts include a long-term performance plan, managers are less likely to make potentially misleading pro forma earnings adjustments. Similarly, we find some evidence of a negative association between auditor effort (as proxied by higher-than-normal audit fees) and potentially misleading earnings adjustments. Taken together, this evidence is consistent with the notion that the design of compensation contracts and auditor effort can significantly influence managers’ pro forma reporting decisions. The results also suggest that investors discount earnings information when opportunism is likely to motivate managers’ earnings adjustments. Moreover, when managers make aggressive earnings exclusions in the presence of safeguards that limit opportunistic behavior, investors appear to react even more negatively.","PeriodicalId":140847,"journal":{"name":"ERPN: Corporate Law (Other) (Sub-Topic)","volume":"48 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-02-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131599477","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}
Law is at once increasingly broad and increasingly specialized. Law affects more people more frequently and more deeply than ever before. More federal, state, and local laws, rules, and regulations cover more trades, professions, and industries, control more lands, premises, and activities, and create more liability and risk, than the nation has ever known. At the same time, vast numbers of individuals are losing their jobs, homes, health, finances, families, and futures because of their inability to locate, afford, and deploy timely, appropriate, and well-fitted law services. Lawyers will meet these new needs to preserve and promote a strong middle class, by packaging, pricing, and delivering law services in new ways, in a shift called the commoditization of law. Lawyers must discern the client populations and their objectives, standardize law products and services to meet new needs, efficiently fit those services for individual clients, price those services transparently, and deliver them timely by accessible means. Lawyers who learn these new law practice conventions will have more meaningful and rewarding careers that promote the order, openness, health, welfare, and economy of their communities. These lawyers will use more mobile and powerful technology in more clear, precise, and technical means to convey better-suited law products and services to better-served clients. A lot is at stake, and not only for lawyers.
{"title":"Entrepreneurial Practice: Enterprise Skills for Lawyers Serving Emerging Client Populations","authors":"Nelson P. Miller, Michael F. Dunn, J. Crane","doi":"10.2139/SSRN.2335044","DOIUrl":"https://doi.org/10.2139/SSRN.2335044","url":null,"abstract":"Law is at once increasingly broad and increasingly specialized. Law affects more people more frequently and more deeply than ever before. More federal, state, and local laws, rules, and regulations cover more trades, professions, and industries, control more lands, premises, and activities, and create more liability and risk, than the nation has ever known. At the same time, vast numbers of individuals are losing their jobs, homes, health, finances, families, and futures because of their inability to locate, afford, and deploy timely, appropriate, and well-fitted law services. Lawyers will meet these new needs to preserve and promote a strong middle class, by packaging, pricing, and delivering law services in new ways, in a shift called the commoditization of law. Lawyers must discern the client populations and their objectives, standardize law products and services to meet new needs, efficiently fit those services for individual clients, price those services transparently, and deliver them timely by accessible means. Lawyers who learn these new law practice conventions will have more meaningful and rewarding careers that promote the order, openness, health, welfare, and economy of their communities. These lawyers will use more mobile and powerful technology in more clear, precise, and technical means to convey better-suited law products and services to better-served clients. A lot is at stake, and not only for lawyers.","PeriodicalId":140847,"journal":{"name":"ERPN: Corporate Law (Other) (Sub-Topic)","volume":"48 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122436793","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 : 2012-10-30DOI: 10.1093/acprof:oso/9780198795650.003.0011
Perry S. Bechky
Salini v. Morocco sparked one of the liveliest controversies in the dynamic field of international investment disputes. Salini held that the word investment in the ICSID Convention, although undefined, has an objective meaning that limits the ability of member states to submit disputes to ICSID arbitration. The Salini debate is central to this field, because it shapes the nature, purpose, and volume of ICSID arbitration – and also determines who gets to decide those matters. In particular, Salini’s decision to include “a contribution to development” within its objective definition of investment transformed development-promotion from a generalized goal of ICSID as an institution into a jurisdictional requirement for each case. This article introduces the concept of a microinvestment dispute, which focuses attention on small investments giving rise to ICSID cases. The microinvestment lens reveals the failings of Salini’s contribution-to-development prong. By conditioning ICSID jurisdiction on an individualized showing of such a contribution, this prong disproportionately burdens microinvestors, inhibiting their access to ICSID despite the fact that the drafters of the ICSID Convention specifically rejected a minimum-size requirement. In so doing, the development prong also limits ICSID’s value to those who need it most. In the name of promoting development, Salini may well undercut it. In addition, this article also offers a 'third way' alternative to both Salini’s objectivity and pure subjectivity. This alternative – bounded deference – draws on the principles of autonomy, consent, and good faith to strike a better balance between states and arbitral tribunals.
{"title":"Microinvestment Disputes","authors":"Perry S. Bechky","doi":"10.1093/acprof:oso/9780198795650.003.0011","DOIUrl":"https://doi.org/10.1093/acprof:oso/9780198795650.003.0011","url":null,"abstract":"Salini v. Morocco sparked one of the liveliest controversies in the dynamic field of international investment disputes. Salini held that the word investment in the ICSID Convention, although undefined, has an objective meaning that limits the ability of member states to submit disputes to ICSID arbitration. The Salini debate is central to this field, because it shapes the nature, purpose, and volume of ICSID arbitration – and also determines who gets to decide those matters. In particular, Salini’s decision to include “a contribution to development” within its objective definition of investment transformed development-promotion from a generalized goal of ICSID as an institution into a jurisdictional requirement for each case. This article introduces the concept of a microinvestment dispute, which focuses attention on small investments giving rise to ICSID cases. The microinvestment lens reveals the failings of Salini’s contribution-to-development prong. By conditioning ICSID jurisdiction on an individualized showing of such a contribution, this prong disproportionately burdens microinvestors, inhibiting their access to ICSID despite the fact that the drafters of the ICSID Convention specifically rejected a minimum-size requirement. In so doing, the development prong also limits ICSID’s value to those who need it most. In the name of promoting development, Salini may well undercut it. In addition, this article also offers a 'third way' alternative to both Salini’s objectivity and pure subjectivity. This alternative – bounded deference – draws on the principles of autonomy, consent, and good faith to strike a better balance between states and arbitral tribunals.","PeriodicalId":140847,"journal":{"name":"ERPN: Corporate Law (Other) (Sub-Topic)","volume":"15 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-10-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114725859","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}
We detect a significant presence of social ties between the CEO and audit committee members and our results suggest that these informal ties play a material role in audit-committee oversight. In particular, we find a substantially stronger, positive relation between abnormal (i.e., discretionary) accruals and the extent of an audit committee’s connection to the CEO when we consider social ties in addition to the conventional ties. Moreover, we find that an audit committee’s social affiliation is associated with an increased discontinuity in the earnings distribution surrounding earnings targets. Together, our findings suggest that informal ties play a material role in facilitating creative accounting practices.
{"title":"Social Ties and Earnings Management","authors":"Byoung-Hyoun Hwang, Seoyoung Kim","doi":"10.2139/ssrn.1215962","DOIUrl":"https://doi.org/10.2139/ssrn.1215962","url":null,"abstract":"We detect a significant presence of social ties between the CEO and audit committee members and our results suggest that these informal ties play a material role in audit-committee oversight. In particular, we find a substantially stronger, positive relation between abnormal (i.e., discretionary) accruals and the extent of an audit committee’s connection to the CEO when we consider social ties in addition to the conventional ties. Moreover, we find that an audit committee’s social affiliation is associated with an increased discontinuity in the earnings distribution surrounding earnings targets. Together, our findings suggest that informal ties play a material role in facilitating creative accounting practices.","PeriodicalId":140847,"journal":{"name":"ERPN: Corporate Law (Other) (Sub-Topic)","volume":"36 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-02-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126473763","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}
Professor Daniel F. Spulber presents a theory of the firm based on the ability to separate the objectives of the firm from those of its owners. He introduces a separation criterion which defines a firm as a transaction institution such that the consumption objectives of the institution's owners can be separated from the objectives of the institution itself. The separation criterion provides a bright line distinction between firms and other types of transaction institutions. Firms under this criterion include profit-maximizing sole proprietorships, corporations, and limited-liability partnerships. Institutions that are not classified as firms include contracts, clubs, workers' cooperatives, buyers' cooperatives, merchants associations, basic partnerships, government enterprises, and government sponsored enterprises. The separation theory of the firm yields insights into corporate law that extend and complement the standard contractarian approach. The separation theory of the firm places emphasis on shareholder property rights and corporate governance.
Daniel F. Spulber教授提出了一种基于区分企业目标和所有者目标的能力的企业理论。他引入了一个分离标准，将企业定义为一个交易机构，这样机构所有者的消费目标就可以与机构本身的目标分离开来。分离标准在公司和其他类型的交易机构之间提供了一条清晰的界限。符合这一标准的公司包括利润最大化的独资企业、公司和有限责任合伙企业。不属于企业的机构包括合同、俱乐部、工人合作社、买方合作社、商人协会、基本合伙企业、政府企业和政府资助企业。公司分离理论产生了对公司法的深刻见解，扩展和补充了标准契约论方法。公司分离理论强调股东产权和公司治理。
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