In Organizational Misconduct: Beyond the Principal-Agent Model, Professor Krawiec argues that organizations have perverse incentives to implement ineffective compliance programs, and supports this argument with a survey of empirical research. Based on her argument she urges that organizations be held strictly liable to corporate crimes (in terms of both guilt and punishment), regardless of the implementation of a compliance program by the accused organization. Assuming arguendo that criminal law's current treatment of compliance programs gives organizations an incentive to design inefficient programs, this Article posits that corporate crime may be better deterred if criminal law embraces, rather than remains agnostic to, compliance programs. First, Krawiec's policy suggestion overstates the impact of the legal sanction on corporate behavior. The legal sanction is only one of several sanctions imposed for organizational misconduct. The public relations effect of misconduct may harm organizations more than any legal sanction, giving them an incentive to implement compliance programs that assure the public of the organization's compliance with the law. Second, Krawiec does not consider utility that is derived from reducing the public's subjective perception of the likelihood of misconduct. This placebo effect that exists whether a compliance program is objectively effective or not, may increase utility by offsetting behavioral biases that cause the public to overestimate the probability of organizational misconduct.
{"title":"In Defense of Imperfect Compliance Programs","authors":"Amitai Aviram","doi":"10.2139/ssrn.572887","DOIUrl":"https://doi.org/10.2139/ssrn.572887","url":null,"abstract":"In Organizational Misconduct: Beyond the Principal-Agent Model, Professor Krawiec argues that organizations have perverse incentives to implement ineffective compliance programs, and supports this argument with a survey of empirical research. Based on her argument she urges that organizations be held strictly liable to corporate crimes (in terms of both guilt and punishment), regardless of the implementation of a compliance program by the accused organization. Assuming arguendo that criminal law's current treatment of compliance programs gives organizations an incentive to design inefficient programs, this Article posits that corporate crime may be better deterred if criminal law embraces, rather than remains agnostic to, compliance programs. First, Krawiec's policy suggestion overstates the impact of the legal sanction on corporate behavior. The legal sanction is only one of several sanctions imposed for organizational misconduct. The public relations effect of misconduct may harm organizations more than any legal sanction, giving them an incentive to implement compliance programs that assure the public of the organization's compliance with the law. Second, Krawiec does not consider utility that is derived from reducing the public's subjective perception of the likelihood of misconduct. This placebo effect that exists whether a compliance program is objectively effective or not, may increase utility by offsetting behavioral biases that cause the public to overestimate the probability of organizational misconduct.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131670622","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 collapse of Enron and WorldCom has focused considerable attention upon the company director as a 'gatekeeper' for good corporate governance. They are presently subject to ever increasing scrutiny and much of the recent reforms around the world have adopted a regulatory philosophy premised on keeping company directors on the 'straight and narrow' by compelling them to 'Do X', 'Do Y' or 'Do Z'. This approach presumes that legislators and regulators have the inherent ability to subject business decisions to systematic analysis and fails to recognize that such decisions often involve intangible and intuitive insights. This article seeks to balance the scales in favor of directors by offering them safe harbor through the enactment of a statutory business judgment rule for decisions that are made without any conflicts of interest and with full knowledge and appreciation of the material facts. In doing so, it will allow directors to get back to the basics of business within a capitalist framework namely, to promote entrepreneurism through the facilitation of legitimate business decisions and risk taking.
{"title":"Balancing the Scales: A Statutory Business Judgment Rule for Hong Kong?","authors":"Douglas M. Branson, Chee Keong Low","doi":"10.2139/SSRN.557236","DOIUrl":"https://doi.org/10.2139/SSRN.557236","url":null,"abstract":"The collapse of Enron and WorldCom has focused considerable attention upon the company director as a 'gatekeeper' for good corporate governance. They are presently subject to ever increasing scrutiny and much of the recent reforms around the world have adopted a regulatory philosophy premised on keeping company directors on the 'straight and narrow' by compelling them to 'Do X', 'Do Y' or 'Do Z'. This approach presumes that legislators and regulators have the inherent ability to subject business decisions to systematic analysis and fails to recognize that such decisions often involve intangible and intuitive insights. This article seeks to balance the scales in favor of directors by offering them safe harbor through the enactment of a statutory business judgment rule for decisions that are made without any conflicts of interest and with full knowledge and appreciation of the material facts. In doing so, it will allow directors to get back to the basics of business within a capitalist framework namely, to promote entrepreneurism through the facilitation of legitimate business decisions and risk taking.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-06-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114463974","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 author investigates the determinants of foreign aid quality. He shows that design effects are a crucial component of quality. He thus establishes that donors have an impact on the quality of the foreign assistance they provide. The author also shows both theoretically and empirically that the quality of aid is endogenous to the relationship between the donor agency and the recipient government. Highly capable and accountable governments accept only well-designed projects, whereas governments with low accountability may accept poor quality projects either because they are unable to assess the worth of the projects or they will benefit personally.
{"title":"The Quality of Foreign Aid: Country Selectivity or Donors Incentives?","authors":"Waly Wane","doi":"10.1596/1813-9450-3325","DOIUrl":"https://doi.org/10.1596/1813-9450-3325","url":null,"abstract":"The author investigates the determinants of foreign aid quality. He shows that design effects are a crucial component of quality. He thus establishes that donors have an impact on the quality of the foreign assistance they provide. The author also shows both theoretically and empirically that the quality of aid is endogenous to the relationship between the donor agency and the recipient government. Highly capable and accountable governments accept only well-designed projects, whereas governments with low accountability may accept poor quality projects either because they are unable to assess the worth of the projects or they will benefit personally.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"81 6","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-05-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120858689","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 this Article, I seek to understand why the United States and United Kingdom take such different approaches to the taxation of corporate income. Generally, the U.S. has taxed corporate income twice and the U.K. only once. In the last several years, however, both countries have undertaken major reforms of their respective corporate tax systems designed to change these traditional approaches. Far from being an isolated turn of events, this pattern of corporate tax reform behavior typifies Anglo-American corporate taxation over the last century. While both countries started with an integrated approach, they diverged in the 1930s and have been moving toward and away from each other in successive periods of reform ever since. Why did the U.S. and U.K. - two countries with similarly developed economies and corporate cultures - originally diverge in their approaches to corporate income taxation and why have they continued to vacillate on this issue over time? This Article concludes that it is a result of a divergence in firm dividend policies in the two countries. While firms in both countries maintained liberal dividend policies during the nineteenth century, U.S. firms began to retain more earnings after the turn-of-the-century and this necessitated a change in the method of taxing corporate income. In subsequent years, both countries have undergone major corporate tax reforms during periods of concern about the direction of firm dividend policies in their respective countries. I suggest that this has important implications for predictions about the future of corporate income tax design.
{"title":"The Dividend Divide in Anglo-American Corporate Taxation","authors":"Steven A. Bank","doi":"10.2139/SSRN.516143","DOIUrl":"https://doi.org/10.2139/SSRN.516143","url":null,"abstract":"In this Article, I seek to understand why the United States and United Kingdom take such different approaches to the taxation of corporate income. Generally, the U.S. has taxed corporate income twice and the U.K. only once. In the last several years, however, both countries have undertaken major reforms of their respective corporate tax systems designed to change these traditional approaches. Far from being an isolated turn of events, this pattern of corporate tax reform behavior typifies Anglo-American corporate taxation over the last century. While both countries started with an integrated approach, they diverged in the 1930s and have been moving toward and away from each other in successive periods of reform ever since. Why did the U.S. and U.K. - two countries with similarly developed economies and corporate cultures - originally diverge in their approaches to corporate income taxation and why have they continued to vacillate on this issue over time? This Article concludes that it is a result of a divergence in firm dividend policies in the two countries. While firms in both countries maintained liberal dividend policies during the nineteenth century, U.S. firms began to retain more earnings after the turn-of-the-century and this necessitated a change in the method of taxing corporate income. In subsequent years, both countries have undergone major corporate tax reforms during periods of concern about the direction of firm dividend policies in their respective countries. I suggest that this has important implications for predictions about the future of corporate income tax design.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"23 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-03-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133615841","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 Maximands of Corporate Governance: A Theory of Values and Cognitive Style Amir N. Licht * ABSTRACT This paper considers the raison d’etre of corporations as it is reflected in the maximands of corporate governance. The debate over stockholders’ versus stakeholders’ interests as such maximands has been raging for decades. Advances in economic theory have not only failed to resolve this debate but have established that the problem is graver than what many may have estimated. This paper turns this debate on its head: Instead of asking What or Whose interests should corporations maximize, the real question is Why is this debate taking place at all? Aiming to extend current economic analyses of the maximands issue, this paper puts forward a new theory about the factors that determine these maximands. Recent advances in psychological research point to value emphases at the individual and societal levels and to the need for cognitive closure as such factors. The theory proposes the notion of value complexity as an organizing element that may associate certain value emphases with cognitive style. Overall, this theory provides explanations for various sticky points in the stockholder-stakeholder debate in the United States and in international settings, identifies gaps in other theoretical accounts, and generates testable hypotheses for empirical research. Extant evidence supports this theory. This version: October 2004 JEL codes: K22, Z13 * Boalt Hall School of Law, University of California at Berkeley (visiting); Interdisciplinary Center Herzliya, Israel. alicht@idc.ac.il. For helpful comments I would like to thank Luca Enriques, Joe McCahery, Uriel Procaccia, Lilach Sagiv, Jordan Siegel, and Philip Tetlock.
{"title":"The Maximands of Corporate Governance: A Theory of Values and Cognitive Style","authors":"A. Licht","doi":"10.2139/SSRN.469801","DOIUrl":"https://doi.org/10.2139/SSRN.469801","url":null,"abstract":"The Maximands of Corporate Governance: A Theory of Values and Cognitive Style Amir N. Licht * ABSTRACT This paper considers the raison d’etre of corporations as it is reflected in the maximands of corporate governance. The debate over stockholders’ versus stakeholders’ interests as such maximands has been raging for decades. Advances in economic theory have not only failed to resolve this debate but have established that the problem is graver than what many may have estimated. This paper turns this debate on its head: Instead of asking What or Whose interests should corporations maximize, the real question is Why is this debate taking place at all? Aiming to extend current economic analyses of the maximands issue, this paper puts forward a new theory about the factors that determine these maximands. Recent advances in psychological research point to value emphases at the individual and societal levels and to the need for cognitive closure as such factors. The theory proposes the notion of value complexity as an organizing element that may associate certain value emphases with cognitive style. Overall, this theory provides explanations for various sticky points in the stockholder-stakeholder debate in the United States and in international settings, identifies gaps in other theoretical accounts, and generates testable hypotheses for empirical research. Extant evidence supports this theory. This version: October 2004 JEL codes: K22, Z13 * Boalt Hall School of Law, University of California at Berkeley (visiting); Interdisciplinary Center Herzliya, Israel. alicht@idc.ac.il. For helpful comments I would like to thank Luca Enriques, Joe McCahery, Uriel Procaccia, Lilach Sagiv, Jordan Siegel, and Philip Tetlock.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"210 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133439901","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}
Agents may propose bad projects because they unwittingly rely on defective prior knowledge. Concern about these honest mistakes encourages principals to examine track records of the agents' use of the same prior knowledge. But, such track records cannot exist for novel projects (or routine projects proposed under novel circumstances). Therefore agents may fail to obtain outside financing. This argument helps explain why highly novel ventures that are initially self-financed can subsequently attract outside financing without any decrease in standard 'incentive' or moral hazard problems. It also provides new insights about the differences in the novelty and other attributes of projects financed by individual 'angel' investors, venture capital partnerships and large public companies.
{"title":"Taking Care: How Concerns About Prior Knowledge Affect the Financing of Novel Projects","authors":"A. Bhide","doi":"10.2139/ssrn.281687","DOIUrl":"https://doi.org/10.2139/ssrn.281687","url":null,"abstract":"Agents may propose bad projects because they unwittingly rely on defective prior knowledge. Concern about these honest mistakes encourages principals to examine track records of the agents' use of the same prior knowledge. But, such track records cannot exist for novel projects (or routine projects proposed under novel circumstances). Therefore agents may fail to obtain outside financing. This argument helps explain why highly novel ventures that are initially self-financed can subsequently attract outside financing without any decrease in standard 'incentive' or moral hazard problems. It also provides new insights about the differences in the novelty and other attributes of projects financed by individual 'angel' investors, venture capital partnerships and large public companies.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"38 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-10-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133847455","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}
Like much of life, corporate governance is about control. One of the most interesting and controversial subjects in corporate law concerns the market for corporate control - the buying and selling of companies. Should boards have the authority to fend off hostile takeover attempts, including the right to "just say no," or should target shareholders have the right to decide whether or not to sell the company to a willing buyer, overriding the board's objections? After nearly twenty years of doctrinal developments since the landmark Unocal case, the Delaware Supreme Court and the Delaware Chancery Court continue to struggle with the proper role of directors and shareholders in responding to a bid for the company. Lawyers, investment bankers, corporate executives, directors, shareholders, and legal scholars also remain unclear about the extent to which directors can impede the decision of shareholders to sell to a bidder. The Delaware Supreme Court's most recent takeover decision, Omnicare, Inc. v. NCS Healthcare, Inc., seems to confuse things only more. This Article offers a model of Delaware takeover law that explains how the leading Delaware Supreme Court takeover cases fit together. Instead of looking at takeover law through the lens of fiduciary duty, this Article's "control-based" approach to Delaware takeover law relies on the theory of the firm, as well as positive corporate law, to understand how control is allocated between the board and shareholders. At bottom, there are separate spheres of board (managerial) control and shareholder (residual) control. The takeover decision occurs at the intersection where board and shareholder control meet and in fact overlaps both spheres. One might think that shareholders have an absolute right to sell to a bidder, since alienability is a characteristic feature of ownership. However, the fact that a shareholder quite literally owns her shares is not enough to resolve the debate over defensive tactics, because the sale of the company can significantly impact the target's corporate strategy, over which the board exercises authority. According to the "control-based" model of takeover law, the extent to which target directors can adopt defensive tactics depends on whether the takeover attempt primarily implicates board control or shareholder control - in other words, on whether the bid raises matters of corporate policy and strategy sufficient to justify the board in blocking shareholders from selling. This general framework is then applied to explain how the leading Delaware takeover cases fit together and sheds light on two particularly important questions: first, what triggers Revlon; and second, can target boards "just say no"? The paper concludes with a blueprint for the future development of Delaware takeover law in a way that would ultimately lead to more shareholder choice and limits on defensive tactics.
{"title":"The Firm and the Nature of Control: Toward a Theory of Takeover Law","authors":"Troy A. Paredes","doi":"10.2139/SSRN.507762","DOIUrl":"https://doi.org/10.2139/SSRN.507762","url":null,"abstract":"Like much of life, corporate governance is about control. One of the most interesting and controversial subjects in corporate law concerns the market for corporate control - the buying and selling of companies. Should boards have the authority to fend off hostile takeover attempts, including the right to \"just say no,\" or should target shareholders have the right to decide whether or not to sell the company to a willing buyer, overriding the board's objections? After nearly twenty years of doctrinal developments since the landmark Unocal case, the Delaware Supreme Court and the Delaware Chancery Court continue to struggle with the proper role of directors and shareholders in responding to a bid for the company. Lawyers, investment bankers, corporate executives, directors, shareholders, and legal scholars also remain unclear about the extent to which directors can impede the decision of shareholders to sell to a bidder. The Delaware Supreme Court's most recent takeover decision, Omnicare, Inc. v. NCS Healthcare, Inc., seems to confuse things only more. This Article offers a model of Delaware takeover law that explains how the leading Delaware Supreme Court takeover cases fit together. Instead of looking at takeover law through the lens of fiduciary duty, this Article's \"control-based\" approach to Delaware takeover law relies on the theory of the firm, as well as positive corporate law, to understand how control is allocated between the board and shareholders. At bottom, there are separate spheres of board (managerial) control and shareholder (residual) control. The takeover decision occurs at the intersection where board and shareholder control meet and in fact overlaps both spheres. One might think that shareholders have an absolute right to sell to a bidder, since alienability is a characteristic feature of ownership. However, the fact that a shareholder quite literally owns her shares is not enough to resolve the debate over defensive tactics, because the sale of the company can significantly impact the target's corporate strategy, over which the board exercises authority. According to the \"control-based\" model of takeover law, the extent to which target directors can adopt defensive tactics depends on whether the takeover attempt primarily implicates board control or shareholder control - in other words, on whether the bid raises matters of corporate policy and strategy sufficient to justify the board in blocking shareholders from selling. This general framework is then applied to explain how the leading Delaware takeover cases fit together and sheds light on two particularly important questions: first, what triggers Revlon; and second, can target boards \"just say no\"? The paper concludes with a blueprint for the future development of Delaware takeover law in a way that would ultimately lead to more shareholder choice and limits on defensive tactics.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"186 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-10-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121527233","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 Article provides an economic analysis of optimal negligence liability for physicians and Managed Care Organizations explicitly modeling the role of physician expertise and MCO authority. We find that even when patients anticipate the risks imposed on them, physicians and MCOs do not take optimal care absent sanctions. Markets and contracts do not provide optimal incentives because market prices are determined at the moment of contracting, but physician expertise and MCO authority depend on non-contractable actions taken post-contract. Negligence liability can induce optimal care if damage rules are optimal. Optimality requires that MCOs be held liable for both their own negligent treatment coverage decisions and for negligence by affiliated physicians. Moreover, we find that MCOs should be liable even when they do not exert direct control over physicians. Finally, we show that it may be optimal to preclude physicians or MCOs from obtaining liability waivers from patients, even when patients are fully-informed and waive only when it is in their interests to do so at that moment.
{"title":"Malpractice Liability for Physicians and Managed Care Organizations","authors":"Jennifer H. Arlen, W. Macleod","doi":"10.2139/ssrn.453543","DOIUrl":"https://doi.org/10.2139/ssrn.453543","url":null,"abstract":"This Article provides an economic analysis of optimal negligence liability for physicians and Managed Care Organizations explicitly modeling the role of physician expertise and MCO authority. We find that even when patients anticipate the risks imposed on them, physicians and MCOs do not take optimal care absent sanctions. Markets and contracts do not provide optimal incentives because market prices are determined at the moment of contracting, but physician expertise and MCO authority depend on non-contractable actions taken post-contract. Negligence liability can induce optimal care if damage rules are optimal. Optimality requires that MCOs be held liable for both their own negligent treatment coverage decisions and for negligence by affiliated physicians. Moreover, we find that MCOs should be liable even when they do not exert direct control over physicians. Finally, we show that it may be optimal to preclude physicians or MCOs from obtaining liability waivers from patients, even when patients are fully-informed and waive only when it is in their interests to do so at that moment.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"13 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-10-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122375253","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 the aftermath of Enron and other corporate failures in the post-bubble economy, the menu of possible regulatory responses included federal regulation, state corporate law, or governance by self-regulatory organizations such as the stock exchanges. This commentary sets out the response of each actor in the first year after Enron and examines why state law chose to stand pat during this period. Part II examines a related problem posed by Enron - did it push the envelope in the use of separate entities as much as it appeared to do in accounting treatment? It compares Enron's use of SPEs to more familiar uses of separate entities in piercing the corporate veil contexts and concludes that the traditional corporate remedies of piercing, bankruptcy, or personal liability are likely to be less effective than disclosure is addressing future abuses of the type that arose in Enron.
{"title":"Corporate Governance after Enron: The First Year","authors":"R. Thompson","doi":"10.2139/SSRN.429622","DOIUrl":"https://doi.org/10.2139/SSRN.429622","url":null,"abstract":"In the aftermath of Enron and other corporate failures in the post-bubble economy, the menu of possible regulatory responses included federal regulation, state corporate law, or governance by self-regulatory organizations such as the stock exchanges. This commentary sets out the response of each actor in the first year after Enron and examines why state law chose to stand pat during this period. Part II examines a related problem posed by Enron - did it push the envelope in the use of separate entities as much as it appeared to do in accounting treatment? It compares Enron's use of SPEs to more familiar uses of separate entities in piercing the corporate veil contexts and concludes that the traditional corporate remedies of piercing, bankruptcy, or personal liability are likely to be less effective than disclosure is addressing future abuses of the type that arose in Enron.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"37 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-08-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133725378","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 examine the relation between corporate governance and ownership structure, focusing on the role of institutional investors. In many countries, institutional investors have become dominant players in the financial markets. We discuss the theoretical basis for, history of, and empirical evidence on institutional investor involvement in shareholder monitoring. We examine cross-country differences in ownership structures and the implications of these differences for institutional investor involvement in corporate governance. Although there may be some convergence in governance practices across countries over time, the endogenous nature of the interrelation among governance factors suggests that variation in governance structures will persist.
{"title":"Corporate Governance, Corporate Ownership, and the Role of Institutional Investors: A Global Perspective","authors":"Stuart L. Gillan, L. Starks","doi":"10.2139/ssrn.439500","DOIUrl":"https://doi.org/10.2139/ssrn.439500","url":null,"abstract":"We examine the relation between corporate governance and ownership structure, focusing on the role of institutional investors. In many countries, institutional investors have become dominant players in the financial markets. We discuss the theoretical basis for, history of, and empirical evidence on institutional investor involvement in shareholder monitoring. We examine cross-country differences in ownership structures and the implications of these differences for institutional investor involvement in corporate governance. Although there may be some convergence in governance practices across countries over time, the endogenous nature of the interrelation among governance factors suggests that variation in governance structures will persist.","PeriodicalId":423843,"journal":{"name":"Corporate Law: Corporate Governance Law","volume":"43 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116124389","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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