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Full-Text Articles in Law
Specific Investment: Explaining Anomalies In Corporate Law, Margaret M. Blair, Lynn A. Stout
Specific Investment: Explaining Anomalies In Corporate Law, Margaret M. Blair, Lynn A. Stout
Cornell Law Faculty Publications
This Article has two goals: to praise Professor Robert Clark as a remarkable corporate scholar, and to explore how his work has helped to advance our understanding of corporations and corporate law. Clark wrote his classic treatise at a time when corporate scholarship was dominated by a principal-agent paradigm that viewed shareholders as the principals or sole residual claimants in public corporations and treated directors as shareholders' agents. This view naturally led contemporary scholars to believe that the chief economic problem of interest in corporate law was the "agency cost" problem of getting corporate directors to do what shareholders wanted …
Bond Covenants And Creditor Protection: Economics And Law, Theory And Practice, Substance And Process, William Wilson Bratton
Bond Covenants And Creditor Protection: Economics And Law, Theory And Practice, Substance And Process, William Wilson Bratton
Articles
This article examines contractual protection of unsecured financial creditors in US credit markets. Borrowers and lenders in the United States contract against a minimal legal background that imposes the burden of protection on the lender. A working, constantly updated, set of contractual protections has emerged in response. But actual use of available contractual technology varies widely, depending on the level of risk and the institutional context. The credit markets sort borrowers according to the degree of the risk of financial distress, imposing substantial constraints only on the borrowers with the most dangerous incentives. At the same time, the contracting practice …
Overvalued Equity And The Case For An Asymmetric Insider Trading Regime, Thom Lambert
Overvalued Equity And The Case For An Asymmetric Insider Trading Regime, Thom Lambert
Faculty Publications
This article argues for an asymmetric insider trading policy under which insider trading that decreases the price of an overvalued stock is generally permitted, but insider trading that increases the price of an undervalued stock is generally prohibited. Concluding that the net investor benefits of price-decreasing insider trading exceed those of price-enhancing insider trading, the article argues that an asymmetric insider trading regime likely represents the bargain that shareholders and corporate managers would strike if they were legally and practically able to negotiate an insider trading policy. Current insider trading doctrine would permit regulators to impose such an asymmetric insider …
Trust Protectors, Agency Costs, And Fiduciary Duty, Stewart E. Sterk
Trust Protectors, Agency Costs, And Fiduciary Duty, Stewart E. Sterk
Articles
First used in conjunction with offshore trusts, trust protectors have begun to appear in domestic trusts as well. In part, the protector appears designed to reduce agency cost problems associated with the trust form. But the emergence of trust protectors raises a new set of agency cost problems: first, do protectors owe any enforceable duties to the trust beneficiaries, or to anyone else; second, how, if at all, do the powers conferred on the trust protector affect the responsibilities of the trustee? Current doctrine has not yet answered these questions. And the answers may differ depending on the purposes for …