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2009

Business Law, Public Responsibility, and Ethics

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Articles 1 - 23 of 23

Full-Text Articles in Law

A Free And Undemocratic Press?, Stephen J. A. Ward Nov 2009

A Free And Undemocratic Press?, Stephen J. A. Ward

Center for the Study of Ethics in Society Papers

Papers presented for the Center for the Study of Ethics in Society Western Michigan University.


Codes Of Fair Competition: The National Industrial Recovery Act, 1933-1935 And The Women's Ready-To-Wear Apparel Industry, Sara B. Marcketti Oct 2009

Codes Of Fair Competition: The National Industrial Recovery Act, 1933-1935 And The Women's Ready-To-Wear Apparel Industry, Sara B. Marcketti

Apparel, Events and Hospitality Management Conference Proceedings and Presentations

This paper examines the ethical, economic, and social considerations regarding what constituted "fair competition" during the NIRA and analyzes the role of industry members, workers, and consumers in these arguments.


Multiple Communities And Controlling Corruption, Philip M. Nichols Oct 2009

Multiple Communities And Controlling Corruption, Philip M. Nichols

Legal Studies and Business Ethics Papers

Corruption presents an assurance problem to businesses: all businesses are best off if none act corruptly but in the event that corruption occurs are better off if they act corruptly than if they do not, and because there is no assurance that other actors are not cheating a business does not know how to act. The usual solution to an assurance problem – criminal sanctions imposed on cheaters – does not work in a corrupt system. Integrative Social Contract Theory suggests a solution to the assurance problem. Application of Integrative Social Contract Theory to corruption demonstrates that in the case of corruption ...


Bankruptcy Phobia, David A. Skeel Jr. Jul 2009

Bankruptcy Phobia, David A. Skeel Jr.

Faculty Scholarship at Penn Law

As the recent economic crisis has unfolded, bankruptcy has offered possible solutions at several key junctures. The first of these solutions, often referred to as mortgage modification, was geared toward homeowners who faced the loss of their homes in the months—now several years—since the start of the subprime crisis On the corporate side, Chapter 11 was an obvious alternative when large nonbank financial institutions like Bear Stearns and AIG stumbled in 2008. But regulators repeatedly balked, and the one exception to the avoidance of bankruptcy at all costs—Lehman Brothers—was anomalous. This aversion to bankruptcy, which seems ...


Taxing Under The Influence? : Corruption And U.S. State Beer Taxes, Per G. Fredriksson, Stephan Gohmann, Khawaja Mamun May 2009

Taxing Under The Influence? : Corruption And U.S. State Beer Taxes, Per G. Fredriksson, Stephan Gohmann, Khawaja Mamun

WCBT Faculty Publications

This article examines the effect of state level corruption on state beer taxes in the United States. Our lobby group model predicts that corruption reduces the beer tax, but this effect is conditional on the level of alcohol-related vehicle deaths. Using a panel of state level data from 1982 to 2001, we find that increased corruption is associated with lower state beer tax rates. The magnitude of the effect, however, declines with increases in alcohol-related traffic deaths. Our findings suggest that future empirical work estimating the effect of alcohol taxes on alcohol-related traffic fatalities should treat alcohol taxes as endogenous.


Bankruptcy Or Bailouts?, Kenneth M. Ayotte, David A. Skeel Jr. Mar 2009

Bankruptcy Or Bailouts?, Kenneth M. Ayotte, David A. Skeel Jr.

Faculty Scholarship at Penn Law

The usual reaction if one mentions bankruptcy as a mechanism for addressing a financial institution’s default is incredulity. Those who favor the rescue of troubled financial institutions, and even those who prefer that their assets be promptly sold to a healthier institution, treat bankruptcy as anathema. Everyone seems to agree that nothing good can come from bankruptcy. Indeed, the Chapter 11 filing by Lehman Brothers has been singled out by many the primary cause of the severe economic and financial contraction that followed, and proof that bankruptcy is disorderly and ineffective. As a result, ad-hoc rescue lending to avoid ...


The Effects Of Tort Reform On Medical Malpractice Insurers' Ultimate Losses, Patricia Born, W. Kip Viscusi, Tom Baker Mar 2009

The Effects Of Tort Reform On Medical Malpractice Insurers' Ultimate Losses, Patricia Born, W. Kip Viscusi, Tom Baker

Health Care Management Papers

Whereas the literature evaluating the effect of tort reforms has focused on the impact of reforms on insurers' reported incurred losses, this article examines the ultimate effects of reforms using the developed losses from a comprehensive sample of insurers writing medical malpractice insurance from 1984 to 2003. Noneconomic damages caps are particularly influential in reducing medical malpractice losses and increasing insurer profitability. The long‐run effects of these reforms are greater than insurers' expected effects; for example, 5‐ and 7‐year developed loss ratios are below the initially reported incurred loss ratios for those years following the enactment of noneconomic ...


Contracting In The Presence Of Judicial Agency, Philip Bond Jan 2009

Contracting In The Presence Of Judicial Agency, Philip Bond

Finance Papers

While a key function of contracts is to provide incentives, the incentives of judges to enforce the terms of a contract have rarely been examined. This paper develops a simple model of judicial agency in which judges are corrupt and can be bribed by contracting parties. Higher-powered contracts expose contracting parties to more frequent and more severe corruption, which in turn lessens the incentives actually provided by the contract. Consequently the model predicts that individuals will commonly refrain from writing high-powered contracts, even when such contracts would be valuable absent judicial agency. I show that similar implications can also be ...


What Happens In Vegas Doesn't Always Stay In Vegas: Nevada Corporations Enjoy A Disproportionate Share Of Sec Trading Suspensions, Anthony J. Cataldo Ii, Peter F. Oehlers, Robert C. Scanlon Jan 2009

What Happens In Vegas Doesn't Always Stay In Vegas: Nevada Corporations Enjoy A Disproportionate Share Of Sec Trading Suspensions, Anthony J. Cataldo Ii, Peter F. Oehlers, Robert C. Scanlon

Accounting Faculty Publications

No abstract provided.


The Regulation Of Sovereign Wealth Funds: The Virtues Of Going Slow, Amanda Rose, Richard A. Epstein Jan 2009

The Regulation Of Sovereign Wealth Funds: The Virtues Of Going Slow, Amanda Rose, Richard A. Epstein

Vanderbilt Law School Faculty Publications

Any symposium on private-equity firms and the going private phenomenon would be incomplete without discussion of Sovereign Wealth Funds (SWFs). These government owned investment vehicles have and will continue to play an important role in the going private phenomenon. SWFs have not only helped fuel that phenomenon through their participation as limited partners in private-equity funds and hedge funds, but their massive capital infusions into ailing financial institutions and private-equity firms in the wake of the subprime mortgage crisis may, in a very real sense, save it. It is not hyperbolic to suggest that the future of private equity - including ...


The Case Against Exempting Smaller Reporting Companies From Sarbanes-Oxley Section 404: Why Market-Based Solutions Are Likely To Harm Ordinary Investors, John Orcutt Jan 2009

The Case Against Exempting Smaller Reporting Companies From Sarbanes-Oxley Section 404: Why Market-Based Solutions Are Likely To Harm Ordinary Investors, John Orcutt

Law Faculty Scholarship

Section 404 is arguably the most controversial provision of Sarbanes-Oxley (“SOX”). The controversy focuses on whether Section 404’s substantial compliance costs exceed the statute’s benefits, with no consensus on Section 404’s cost-effectiveness. If Section 404 turns out to be cost-ineffective, the companies that are most threatened are smaller companies, as cost-ineffective regulations tend to disproportionately harm smaller companies. This Article considers whether Congress and the SEC should exempt smaller reporting companies from Section 404 compliance, as that would allow for a market-based resolution to the uncertain value of Section 404 for smaller reporting companies. Smaller reporting companies ...


Bankruptcy Boundary Games, David A. Skeel Jr. Jan 2009

Bankruptcy Boundary Games, David A. Skeel Jr.

Faculty Scholarship at Penn Law

For the past several decades, Congress has steadily expanded the exclusion of securities market operations from core bankruptcy protections. This Article focuses on three of the most important of these issues: the exclusion of brokerage firms from Chapter 11; the protection of settlement payments from avoidance as preferences or fraudulent conveyances; and the exemption of derivatives from the automatic stay and other basic bankruptcy provisions. In Parts I, II and III of the Article, I consider each of the issues in turn, showing that each has had serious unintended consequences. Both Drexel Burnham and Lehman Brothers evaded the brokerage exclusion ...


Top Cop Or Regulatory Flop? The Sec At 75, Jill E. Fisch Jan 2009

Top Cop Or Regulatory Flop? The Sec At 75, Jill E. Fisch

Faculty Scholarship at Penn Law

In their forthcoming article, Redesigning the SEC: Does the Treasury Have a Better Idea?, Professors John C. Coffee, Jr., and Hillary Sale offer compelling reasons to rethink the SEC’s role. This article extends that analysis, evaluating the SEC’s responsibility for the current financial crisis and its potential future role in regulation of the capital markets. In particular, the article identifies critical failures in the SEC’s performance in its core competencies of enforcement, financial transparency, and investor protection. The article argues that these failures are not the result, as suggested by the Treasury Department Blueprint, of a balkanized ...


Passive Discrimination: When Does It Make Sense To Pay Too Little?, Jonah B. Gelbach, Jonathan Klick, Lesley Wexler Jan 2009

Passive Discrimination: When Does It Make Sense To Pay Too Little?, Jonah B. Gelbach, Jonathan Klick, Lesley Wexler

Faculty Scholarship at Penn Law

Economists have long recognized employers’ ability to construct benefits packages to induce workers to sort themselves into and out of jobs. For instance, to encourage applications from individuals with a highly valued but largely unobservable characteristic, such as patience, employers might offer benefits that patient individuals are likely to value more than other individuals. By offering a compensation package with highly valued benefits but a relatively low wage, employers will attract workers with the favored characteristic and discourage other individuals from applying for or accepting the job. While economic theory generally views this kind of self-selection in value neutral terms ...


Shareholder Bylaws And The Delaware Corporation, Christopher M. Bruner Jan 2009

Shareholder Bylaws And The Delaware Corporation, Christopher M. Bruner

Scholarly Works

Much like hostile tender offers in the 1980s and 1990s, shareholder bylaws purporting to limit board authority in key areas of corporate governance are, once again, forcing Delaware's courts to grapple with the fundamental nature of the corporate form.

In this (short) essay written for a roundtable discussion at the 2009 Annual Meeting of the Southeastern Association of Law Schools, I discuss CA, Inc. v. AFSCME Employees Pension Plan - the 2008 opinion in which the Delaware Supreme Court began to define the nature and scope of the shareholders' bylaw authority. In CA, Inc. the court held that a proposed ...


Federalism, Variation, And State Regulation Of Franchise Termination, Jonathan Klick, Bruce Kobayashi, Larry Ribstein Jan 2009

Federalism, Variation, And State Regulation Of Franchise Termination, Jonathan Klick, Bruce Kobayashi, Larry Ribstein

Faculty Scholarship at Penn Law

This article discusses and expands on our recent work examining the effects of franchise-termination laws. In a prior article, we examined empirically the effect of franchise-termination laws on the level of franchise activity. Our analysis improved upon the prior literature in two major ways. First, our work exploited two new sources of panel data to provide new empirical evidence on the effect of franchise termination laws. Second, our analysis examined variation in states’ restrictions on the ability of franchisors and franchisees to contract around a particular state’s regulation. We found that the effects of termination laws on the overall ...


Competing Narratives In Corporate Bankruptcy: Debtor In Control Vs. No Time To Spare, David A. Skeel Jr. Jan 2009

Competing Narratives In Corporate Bankruptcy: Debtor In Control Vs. No Time To Spare, David A. Skeel Jr.

Faculty Scholarship at Penn Law

When a company like Chrysler or United Airlines files for bankruptcy, it offers narrative explaining the way out of its predicament. In support of its claim that the business is worth saving, the company may argue that it simply needs time to renegotiate its obligations with its creditors. Alternatively, it may say that asset values are deteriorating rapidly and it is imperative that the bankruptcy court immediately approve a sale of the company, or some other rapid disposition. These two possibilities correspond to the principal resolution narratives in current Chapter 11 bankruptcy practice, which I refer to as Debtor in ...


Confronting The Circularity Problem In Private Securities Litigation, Jill E. Fisch Jan 2009

Confronting The Circularity Problem In Private Securities Litigation, Jill E. Fisch

Faculty Scholarship at Penn Law

Many critics argue that private securities litigation fails effectively either to deter corporate misconduct or to compensate defrauded investors. In particular, commentators reason that damages reflect socially inefficient transfer payments—the so-called circularity problem. Fox and Mitchell address the circularity problem by identifying new reasons why private litigation is an effective deterrent, focusing on the role of disclosure in improving corporate governance. The corporate governance rationale for securities regulation is more powerful than the authors recognize. By collecting and using corporate information in their trading decisions, informed investors play a critical role in enhancing market efficiency. This efficiency, in turn ...


Legal And Managerial "Cultures" In Corporate Representation, Geoffrey C. Hazard Jr. Jan 2009

Legal And Managerial "Cultures" In Corporate Representation, Geoffrey C. Hazard Jr.

Faculty Scholarship at Penn Law

No abstract provided.


The Moral Problem In Insider Trading, Alan Strudler Jan 2009

The Moral Problem In Insider Trading, Alan Strudler

Legal Studies and Business Ethics Papers

This article identifies the moral wrongness of insider trading. It examines the leading arguments for treating insider trading as morally wrong and suggests that these arguments are unpersuasive because they either rely on dubious empirical premises or assume normative premises that are equivalent to their conclusions. It concludes that it is the unconscientious dealings involved in insider trading that is the most persuasive moral basis for wrongfulness of insider trading.


Treatment Differences And Political Realities In The Gaap-Ifrs Debate, William W. Bratton, Lawrence A. Cunningham Jan 2009

Treatment Differences And Political Realities In The Gaap-Ifrs Debate, William W. Bratton, Lawrence A. Cunningham

Faculty Scholarship at Penn Law

No abstract provided.


Unentrapped, William W. Bratton Jan 2009

Unentrapped, William W. Bratton

Faculty Scholarship at Penn Law

No abstract provided.


Consumer Protection In An Era Of Globalization, Cary Coglianese, Adam M. Finkel, David T. Zaring Jan 2009

Consumer Protection In An Era Of Globalization, Cary Coglianese, Adam M. Finkel, David T. Zaring

Faculty Scholarship at Penn Law

With expanding global trade, the challenge of protecting consumers from unsafe food, pharmaceuticals, and consumer products has grown increasingly salient, necessitating the development of new policy ideas and analysis. This chapter introduces the book, Import Safety: Regulatory Governance in the Global Economy, a multidisciplinary project analyzing import safety problems and an array of innovative solutions to these problems. The challenge of protecting the public from unsafe imports arises from the sheer volume of global trade as well as the complexity of products being traded and the vast number of inputs each product contains. It is further compounded by the fact ...