Finance Commons^™

Misaligned Interests In Private Equity, Jarrod Shobe

BYU Law Review

This Article examines the unique set of agency costs that arise from the separation of ownership and control in private equity funds. These funds operate without significant regulatory or legislative oversight. Instead, they are governed primarily by contractual arrangements between investors and managers that are poorly understood by legal scholars. This Article looks into the black box of these internal arrangements to provide a broad analysis of whether and how these contracts align or misalign the interests of investors and managers. It turns out that the compensation of managers, which is commonly thought to serve as the most powerful tool …

Taxation – Selection Of Exchange Rate For Translation Purposes -- Where Multiple Exchange Rates Exist For A Foreign Currency And The Underlying Transaction Is Financial In Nature, The Proper Rate For Translation Components Of Taxable Income Is The "Free" Market Rate (Durovic V. Commissioner Of Internal Revenue, 7th Cir. 1976), Tim J. Floyd

Georgia Journal of International & Comparative Law

No abstract provided.

Policy Considerations Related To Further Intervention In The Farm Credit System, Neil E. Harl

Neil E. Harl

The Farm Credit System Is a major participant in extending credit to and brokering losses from the agricultural sector during the current adjustment process. This article focuses on the problems faced by the system as a cooperative lender with relatively little diversity in its loan portfolio. Assistance to the system should be accompanied by organizational and structural changes that address the fundamental reasons for its vulnerability. Conditions suggest three basic choices: (1) preservation of the system in recognizable form, (2) decentralization to the district level, or (3) a shift toward a wholesaling function. One realistic alternative would involve a combination …

An Event Study Of Patent Verdicts And Judicial Leakage, Bryan Engelhardt, Zachary Fernandes

Economics Department Working Papers

To check for the impartiality of the United States judicial system, we investigate whether judicial decisions are leaked prior to their public release. Utilizing an event study methodology, we test for leaked information by analyzing the effect of patent infringement verdicts on the stock prices of the firms involved before and after the public release of the verdict. We find evidence that at least some of the decisions are leaked prior to their public release.

Courts And Sovereigns In The Pari Passu Goldmines, Anna Gelpern

Georgetown Law Faculty Publications and Other Works

U.S. federal court rulings against Argentina since 2012 have turned the pari passu clause in sovereign bond contracts into the most promising debt collection tool against immune governments since the days of gunboat diplomacy. The large literature on pari passu (“equal step” in Latin) assumes that the clause had not been used for enforcement before the late 1990s, and that it was first construed by a Belgian court in a case against Peru in the year 2000. The Belgian decision was criticized for wrongly concluding that pari passu promised ratable payment to all holders of Peru’s external debt. A decade …

A Two-Step Plan For Puerto Rico, Clayton P. Gillette, David A. Skeel Jr.

All Faculty Scholarship

Few still believe that Puerto Rico is capable of meeting all of its financial obligations and continuing to provide basic services. The territory is already in default, and conditions are rapidly deteriorating. Is there a way forward? We think there is. In this short article, we outline a two-part plan for correcting Puerto Rico’s most urgent fiscal and financial problems.

The first step is to create an independent financial control board that has authority over Puerto Rico’s budgets and related issues. Notwithstanding concerns that an externally imposed financial control board (FCB) may interfere with the decision making processes of democratically …

Financial Implications Of The Medicaid Expansion For Academic Medical Centers, Madeleine Oritt

MPA/MPP/MPFM Capstone Projects

On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (ACA), with the goal of reforming the United States health care system and providing insurance for millions of uninsured citizens and residents. One component of the legislation was the expansion of Medicaid eligibility, which would extend to include all individuals “under age 65 whose family income is at or below 138 percent of the federal poverty guidelines ($14,484 for an individual and $29,726 for a family of four in 2011)” (NCSL, 2015). This provision was challenged in the United States Supreme Court, which ruled …

The Knowledge Gap In Workplace Retirement Investing And The Role Of Professional Advisors, Jill E. Fisch, Tess Wilkinson-Ryan, Kristin Firth

All Faculty Scholarship

The dramatic shift from traditional pension plans to participant-directed 401(k) plans has increased the decision-making responsibility of individual investors for their own retirement planning. With this shift comes increasing evidence that investors are making poor decisions in choosing how much to save for retirement and in selecting among their investment options. Studies question the value of efforts to improve these decisions through regulatory reforms or investor education.

This article posits that deficiencies in workplace retirement savings cannot be adequately addressed until the reasons for poor investment decisions are better understood. We report the results of a study designed to simulate …

A Sovereign’S Cost Of Capital: Go Foreign Or Stay Local, Michael Bradley, Irving Arturo De Lira Salvatierra, Mitu Gulati

Faculty Scholarship

A critical question faced by any sovereign seeking to raise funds in the bond market is whether to issue the debt under foreign or local parameters. This choice determines other key characteristics of any bond issue such as which banks, lawyers, and investors will be involved. Most important though, this decision involves a tradeoff between the sovereign retaining discretion in managing the issue and relinquishing control of the issue to third parties to prevent the sovereign from expropriating wealth from bondholders in the future. Based on a sample of 17,349 issuances by 117 sovereigns between 1990 and 2015, we investigate …

Shadow Banking And Regulation In China And Other Developing Countries, Steven L. Schwarcz

Faculty Scholarship

The rapid but largely unregulated growth in shadow banking in developing countries such as China can jeopardize financial stability. This article discusses that growth and argues that a regulatory balance is needed to help protect financial stability while preserving shadow banking as an important channel of alternative funding. The article also analyzes how that regulation could be designed.

The Sovereign-Debt Listing Puzzle, Elisabeth De Fontenay, Josefin Meyer, Mitu Gulati

Faculty Scholarship

The claim that stock exchanges perform certification and monitoring roles in securities offerings is pervasive in the legal and financial literatures. This article tests the validity of this “bonding hypothesis” in the sovereign-bond market—one of the oldest and largest securities markets in the world. Using data on sovereign-bond listings for the entire post-World War II period, we provide the first comprehensive report on sovereigns’ historical listing patterns. We then test whether a sovereign bond issue’s listing jurisdiction affects its yield at issuance, as the bonding hypothesis would predict. We find little evidence of bonding in today’s sovereign-debt market. Instead, we …

Filling The Regulatory Void In The Fx Spot Market: How Traders Rigged The Biggest Market In The World, Colleen Powers

Fordham Urban Law Journal

No abstract provided.

Currency Wars And The Erosion Of Dollar Hegemony, Lan Cao

Lan Cao