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Full-Text Articles in Law
Beyond Liability: Rewarding Effective Gatekeepers, Lawrence A. Cunningham
Beyond Liability: Rewarding Effective Gatekeepers, Lawrence A. Cunningham
GW Law Faculty Publications & Other Works
This Article adds to the emerging literature on rewards to promote effective capital market gatekeeping. Capital market gatekeeping theory traditionally relies heavily on threats of legal liability for failure to perform legally mandated functions (along with a presumed constraint imposed by reputation effects). The ineffectiveness of many gatekeepers in the past decade revealed limitations of the liability strategy and yet reforms continue to emphasize legal duties and liability for gatekeepers. This emphasis also has the negative side-effect of discouraging gatekeepers from willingness to perform desired functions - such as to detect for fraud. Using rewards can induce gatekeepers to perform …
Carrots For Vetogates: Incentive Systems To Promote Capital Market Gatekeeper Effectiveness, Lawrence A. Cunningham
Carrots For Vetogates: Incentive Systems To Promote Capital Market Gatekeeper Effectiveness, Lawrence A. Cunningham
GW Law Faculty Publications & Other Works
This Article contributes a novel idea to the literature on capital market gatekeepers: positive incentive systems for gatekeepers to perform functions not required of them in exchange for rewards if they perform the functions successfully. Capital market gatekeeping theory relies upon the reputations that gatekeepers are assumed to command and protect backstopped by negative threats of legal liability for failure to perform legally mandated functions. The ineffectiveness of many gatekeepers during the late 1990s and early 2000s revealed practical limitations of the reputational constraint and the reforms that responded to the failures continue to emphasize the legal duties and legal …