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Series

SSRN

Columbia Law School

Law and Economics

2000

Articles 1 - 13 of 13

Full-Text Articles in Law

Sales And Elections As Methods For Transferring Corporate Control, Ronald J. Gilson, Alan Schwartz Jan 2000

Sales And Elections As Methods For Transferring Corporate Control, Ronald J. Gilson, Alan Schwartz

Faculty Scholarship

Under standard accounts of corporate governance, capital markets play a significant role in monitoring management performance and, where appropriate, replacing management whose performance does not measure up. Recent case law in Delaware, however, appears to have altered dramatically the mechanisms through which the market for corporate control must operate. In particular, the interaction of the poison pill and the Delaware Supreme Court's development of the legal standard governing defensive tactics in response to tender offers have resulted in a decided, but as yet unexplained, preference for control changes mediated by means of an election rather than by a market ...


Patterns Of Legal Change: Shareholder And Creditor Rights In Transition Economies, Katharina Pistor Jan 2000

Patterns Of Legal Change: Shareholder And Creditor Rights In Transition Economies, Katharina Pistor

Faculty Scholarship

This paper analyses changes in the legal protection of shareholder and creditor rights in 24 transition economies from 1990 to 1998. It documents differences in the initial conditions and a tendency towards convergence of formal legal rules as the result of extensive legal reforms. Convergence seems to be primarily the result of foreign technical assistance programs as well as of harmonisation requirements for countries wishing to join the European Union. The external supply of legal rules not withstanding, the pattern of legal reforms suggests that law reform has been primarily responsive, or lagging, rather than leading economic development. In comparison ...


The Direction Of Corporate Law: The Scholars' Perspective, John C. Coffee Jr., Richard A. Booth, R. Franklin Balotti, David C. Mcbride, Edward P. Welch Jan 2000

The Direction Of Corporate Law: The Scholars' Perspective, John C. Coffee Jr., Richard A. Booth, R. Franklin Balotti, David C. Mcbride, Edward P. Welch

Faculty Scholarship

MR. BALOTTI: Good afternoon. My name is Frank Balotti and I've been asked to be the moderator for this afternoon's program. And one of the privileges that I get is to introduce the panel and to call them up to speak in some kind of order, I hope. And I hope that you and the audience will participate by asking questions towards the end of our panel and get involved in the discussion which we hope to promote.

The topic for this afternoon's panel is a scholar's approach to corporation law. And we are fortunate to ...


Ratcheting Labor Standards: Regulation For Continuous Improvement In The Global Workplace, Charles F. Sabel, Dara O'Rourke, Archon Fung Jan 2000

Ratcheting Labor Standards: Regulation For Continuous Improvement In The Global Workplace, Charles F. Sabel, Dara O'Rourke, Archon Fung

Faculty Scholarship

It is a brute fact of contemporary globalization – unmistakable as activists and journalists catalog scandal after scandal – that the very transformations making possible higher quality, cheaper products often lead to unacceptable conditions of work: brutal use of child labor, dangerous environments, punishingly long days, starvation wages, discrimination, suppression of expression and association. In all quarters, the question is not whether to address these conditions, but how.

That question, however, admits no easy answers. Globalization itself has freed capital from many of its former constraints – national workplace standards, collective bargaining, and supervisory state agencies and courts – designed to humanize working conditions ...


Unocal Fifteen Years Later (And What We Can Do About It), Ronald J. Gilson Jan 2000

Unocal Fifteen Years Later (And What We Can Do About It), Ronald J. Gilson

Faculty Scholarship

The coincidence of the new millennium and the fifteenth anniversary of the Delaware Supreme Court's announcement of a new approach to takeover law provides an appropriate occasion to step back and evaluate a remarkable experiment in corporate law - the Delaware Supreme Court's development of an intermediate standard for evaluating defensive tactics. I will argue that Unocal has developed into an unexplained and, I think, inexplicable preference that control contests be resolved through elections rather than market transactions. In doing so, I will highlight the remarkable struggle between the Chancery Court and the Supreme Court for Unocal's soul ...


Information Technology And The Increasing Efficacy Of Non-Legal Sanctions In Financing Transactions, Ronald J. Mann Jan 2000

Information Technology And The Increasing Efficacy Of Non-Legal Sanctions In Financing Transactions, Ronald J. Mann

Faculty Scholarship

This paper investigates the effect of advances in information technology on the private institutions that businesses use to resolve information asymmetries in financing transactions. It discusses four separate effects. First, in some cases information technology will permit direct verification of the information, obviating the problem entirely; the paper discusses the example of the substitution of the debit card for the check, which provides an immediate payment that obviates the need for the merchant to consider whether payment will be forthcoming when the check is presented to the bank on which it is drawn. Second, the paper discusses how advances in ...


The Role Of Letters Of Credit In Payment Transactions, Ronald J. Mann Jan 2000

The Role Of Letters Of Credit In Payment Transactions, Ronald J. Mann

Faculty Scholarship

Rules governing letters of credit rest on the premise that they provide a highly certain method of payment to a seller of goods. Thus, the law and the terms of the letter of credit make the obligation of the issuer to provide payment to the seller independent of the purchaser's performance on the underlying contract. Hence, the issuer is obligated to pay the seller upon presentation of specified documents, without regard to the seller's actual compliance with the contract. In practice, however, most drafts on letters of credit in such transactions do not comply with the letter of ...


The Case For Formalism In Relational Contract, Robert E. Scott Jan 2000

The Case For Formalism In Relational Contract, Robert E. Scott

Faculty Scholarship

The central task in developing a plausible normative theory of contract law is to specify the appropriate role of the state in regulating incomplete or relational contracts. Complete contracts (to the extent that they exist in the real world) are rarely, if ever, breached since by definition the pay-offs for every relevant action and the corresponding sanctions for non performance are prescribed in the contract. In the case of incomplete (or relational) contracts, however, parties have incentives to breach by exploiting gaps in the contract. Making the verifiable terms of the contract legally enforceable and regulating incompleteness in a consistent ...


Economic Reasoning And The Framing Of Contract Law: Sale Of An Asset Of Uncertain Value, Victor P. Goldberg Jan 2000

Economic Reasoning And The Framing Of Contract Law: Sale Of An Asset Of Uncertain Value, Victor P. Goldberg

Faculty Scholarship

By analyzing two American contract law decisions, the paper illustrates the usefulness of economic analysis in framing the inquiry. The cases have a common feature, unrecognized by the courts: they both deal with the production and transfer of information regarding the sale of an asset of uncertain value. One involves the combination of an option and a lockup to encourage the buyer to produce information. The other involves contingent compensation to convey the seller's assurance of the quality of the assets. Once this is recognized, the outcomes are straightforward.


Trade Secrets And Mutual Investments, Gillian L. Lester, Eric L. Talley Jan 2000

Trade Secrets And Mutual Investments, Gillian L. Lester, Eric L. Talley

Faculty Scholarship

This paper employs an optimal contracting framework to study the question of how courts should adjudicate disputes over valuable trade secrets (such as customer lists). We focus principally on contexts where trade secrets are formed endogenously, through specific, non-contractible investments that could potentially come from either employers or employees (or both). Within such contexts, we argue, an "optimal" trade secret law diverges in many important respects from existing doctrine. In particular, an optimal doctrine would (1) expressly consider the parties' relative skills at making value enhancing investments rather than the mere existence of a valuable informational asset; (2) tend to ...


The Rise Of Dispersed Ownership: The Role Of Law In The Separation Of Ownership And Control, John C. Coffee Jr. Jan 2000

The Rise Of Dispersed Ownership: The Role Of Law In The Separation Of Ownership And Control, John C. Coffee Jr.

Faculty Scholarship

Deep and liquid securities markets appear to be an exception to a worldwide pattern in which concentrated ownership dominates dispersed ownership. Recent commentary has argued that a dispersed shareholder base is unlikely to develop in civil law countries and transitional economies for a variety of reasons, including (1) the absence of adequate legal protections for minority shareholders, (2) the inability of dispersed shareholders to hold control or pay an equivalent control premium to that which a prospective controlling shareholder will pay, and (3) the political vulnerability of dispersed shareholder ownership in left-leaning "social democracies". Nonetheless, this article finds that significant ...


Discretion In Long-Term Open Quantity Contracts: Reining In Good Faith, Victor P. Goldberg Jan 2000

Discretion In Long-Term Open Quantity Contracts: Reining In Good Faith, Victor P. Goldberg

Faculty Scholarship

The UCC and common law have used "good faith" to interpret long-term, open quantity contracts in a manner which ignores the parties' allocation of discretion. With no theory to guide them, courts have rewritten contracts to say, in effect, that a seller agrees to keep running his factory at a loss in order to generate waste (the waste removal company being the purchaser under the long-term contract) or that a buyer in a long-term requirements contract has promised to never run its facility at full capacity. Commentators have routinely accepted these interpretations without recognizing the peculiar features of this default ...


Sticks And Snakes: Derivatives And Curtailing Aggressive Tax Planning, David M. Schizer Jan 2000

Sticks And Snakes: Derivatives And Curtailing Aggressive Tax Planning, David M. Schizer

Faculty Scholarship

Complex "derivative" financial instruments are often used in aggressive tax planning. In response, the government has implemented mark-to-market type reforms, but only partially. Considered in isolation, these incremental reforms are likely to seem well advised in measuring income more accurately. However, there is an important "second best" cost, emphasized in this Article: the ability of well-advised taxpayers either to avoid the new rule or to turn it to their advantage (here called "defensive" and "offensive" planning options, respectively). This Article uses two case studies to identify how these effects arise and to suggest ways of combating them. The first case ...