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Intermediaries Revisited: Is Efficient Certification Consistent With Profit Maximization?, Jonathan M. Barnett
Intermediaries Revisited: Is Efficient Certification Consistent With Profit Maximization?, Jonathan M. Barnett
Jonathan M Barnett
Private certification mechanisms are a key component of the regulatory infrastructure in the financial sector and other commercial settings. It is generally assumed that certification intermediaries have profit-based incentives to deliver accurate information to the certified market. But this view does not account for repeated failures in certification markets. Those failures can be explained by an inherent defect in the incentive structure of certification intermediaries: entry barriers both support and undermine the consistent supply of accurate information to the certified market. Certification markets tend to converge on a handful of providers protected by switching costs, product opacity and reputational noise. …
Certification Drag: The Opinion Puzzle And Other Transactional Curiosities, Jonathan Barnett
Certification Drag: The Opinion Puzzle And Other Transactional Curiosities, Jonathan Barnett
Jonathan M Barnett
The law-and-economics literature typically depicts certification intermediaries, such as law firms, auditors, underwriters, investment banks and rating agencies, as socially valuable market participants who ameliorate informational asymmetries that would otherwise distort pricing or transaction structures. This standard view is incomplete. Using the example of the “closing opinion”, a third-party legal opinion commonly delivered at the consummation of a variety of business transactions, I argue that intermediaries, even when operating under substantially competitive conditions and in sophisticated market settings, may supply widely consumed certification products that fail to mitigate informational asymmetries while increasing transaction costs. Based on the highly qualified language …
Bad Briefs, Bad Law, Bad Markets: Documenting The Poor Quality Of Plaintiffs’ Briefs, Its Impact On The Law, And The Market Failure It Reflects, Scott A. Moss
Scott A Moss
For a major field, employment discrimination suffers surprisingly low-quality plaintiff’s lawyering. This Article details a study of several hundred summary judgment briefs, finding as follows: (1) the vast majority of plaintiffs’ briefs omit available caselaw rebutting key defense arguments, many falling far below basic professional standards with incoherent writing or no meaningful research; (2) low-quality briefs lose at over double the rate of good briefs; and (3) bad briefs skew caselaw evolution, because even controlling for won/loss rate, bad plaintiffs’ briefs far more often yield decisions crediting debatable defenses. These findings are puzzling; in a major legal service market, how …
The Law Of Corporate Purpose, David Yosifon
The Law Of Corporate Purpose, David Yosifon
David G. Yosifon
Delaware corporate law requires corporate directors to manage firms for the benefit of shareholders, and not for any other constituency. Delaware jurists have been clear about this in their case law, and they are not coy about it in extra-judicial settings, such as speeches directed at law students and practicing members of the corporate bar. Nevertheless, the reader of leading corporate law scholarship is continually exposed to the scholarly assertion that the law is ambiguous or ambivalent on this point, or even that case law affirmatively empowers directors to pursue non-shareholder interests. It is shocking, and troubling, for corporate law …