Digital Commons Network^™

Preserving The Corporate Superego In A Time Of Activism: An Essay On Ethics And Economics, John C. Coffee Jr.

Faculty Scholarship

This essay focuses on the impact of recent changes in corporate governance on ethical behavior within the public corporation. It argues that a style of corporate behavior – one characterized by a risk tolerant, even reckless, pursuit of short-term profits and a disregard for the interests of non-shareholder constituencies – is attributable in significant part to recent changes in corporate governance, including the rise of hedge fund activism, greater use of incentive compensation, and the appearance of blockholder directors. It then surveys feasible responses intended to strengthen the role of the boards as the corporation’s conscience and superego. Given the …

Politics And Agencies In The Administrative State: The U.S. Case, Peter L. Strauss

Faculty Scholarship

The pending American presidential election, culminating a period of extreme political partisanship in our national government generally, gives point to an essay on politics and agencies in the American regulatory state. In our two-party system, it has often been the case in recent times, including the last six years, that the President comes from one of our two major political parties and one or both houses of Congress are controlled by the other. All American agencies (including, in the American case, the so-called independent regulatory bodies) are associated with the President in the executive branch, yet dependent on the Senate …

Reflections On Seminole Rock: The Past, Present, And Future Of Deference To Agency Regulatory Interpretations, Gillian E. Metzger, Aaron Nielson, Sanne H. Knudsen, Amy J. Wildermuth, Aditya Bamzai, Richard J. Pierce, Cynthia Barmore, William Yeatman, Christopher J. Walker, Kevin M. Stack, Andy Grewal, Steve R. Johnson, F. Andrew Hessick, Jonathan H. Adler, Catherine M. Sharkey, David Feder, Cass R. Sunstein, Adrian Vermeule, Ronald M. Levin, Kevin O. Leske, James Cleith Phillips, Daniel Ortner, William Funk, Kristen E. Hickman, Jeffrey A. Pojanowski, Adam White, Conor Clarke

Faculty Scholarship

Seminole Rock (or Auer) deference has captured the attention of scholars, policymakers, and the judiciary. That is why Notice & Comment, the blog of the Yale Journal on Regulation and the American Bar Association’s Section of Administrative Law & Regulatory Practice, hosted an online symposium from September 12 to September 23, 2016 on the subject. This symposium contains over 20 contributions addressing different aspects of Seminole Rock deference.

Topics include:

• History of Seminole Rock
• Empirical Examinations of Seminole Rock
• Understanding Seminole Rock Within Agencies
• Understanding Seminole Rock as Applied to Tax, Environmental Law, and Criminal Sentencing
• Why Seminole Rock Matters …

G2i Knowledge Brief: A Knowledge Brief Of The Macarthur Foundation Research Network On Law And Neuroscience, David L. Faigman, Anthony Wagner, Richard J. Bonnie, Bj Casey, Andre Davis, Morris B. Hoffman, Owen D. Jones, Read Montague, Stephen J. Morse, Marcus E. Raichle, Jennifer A. Richeson, Elizabeth S. Scott, Laurence Steinberg, Kim Taylor-Thompson, Gideon Yaffe

Faculty Scholarship

Courts are daily confronted with admissibility issues – such as in cases involving neuroscientific testimony – that sometimes involve both the existence of a general phenomenon (i.e., “G”) and the question of whether a particular case represents a specific instance of that general phenomenon (i.e., “i”).

Unfortunately, courts have yet to carefully consider the implications of “G2i” for their admissibility decisions. In some areas, courts limit an expert’s testimony to the general phenomenon. They insist that whether the case at hand is an instance of that phenomenon is exclusively a jury question, and thus not an appropriate subject of expert …

Impact Investing As A Form Of Lobbying And Its Corporate-Governance Effects, Andrzej Rapaczynski

Faculty Scholarship

Impact investment is attractive to many because it seems to combine support for progressive causes with an apparent commitment to the principles of a market economy. In fact, however, a rational impact investor is not simply creating demand for certain types of corporate actions; he/she is attempting to use corporate governance mechanisms to influence fiduciary decisions of the management. The cost of this tactic for the health of the capitalist economy is potentially very considerable. The American capitalist system relies heavily on a relatively fragile corporate governance arrangement in which the agency problems of a modern corporation are minimized by …

Appraising The "Merger Price" Appraisal Rule, Albert H. Choi, Eric L. Talley

Faculty Scholarship

This paper develops an auction design framework to study how best to measure “fair value” in post-merger appraisal proceedings. Our inquiry spotlights an approach recently embraced by some courts benchmarking fair value against the merger price itself. We show that merger price deference effectively nullifies the role that appraisal can potentially play in establishing a de facto reserve price for company auctions, thereby depressing both acquisition prices and target shareholders’ expected welfare relative to both the optimal appraisal policy and a variety of other valuation measures. We also examine conditions under which deference to the merger price can be optimal. …

Antitrust In Zero-Price Markets: Applications, John M. Newman

Articles

"Free" products have exploded in popularity along with widespread Internet adoption-but many of them are not truly free. Customers often trade their attention or personal information to access zero-price products. This exchange dynamic brings zero-price markets within the scope of antitrust law. But despite the critical role that such markets now play in modern economies, the antitrust enterprise has largely failed to account for their unique attributes.

In response, this Article undertakes two primary tasks. The first is to address particular areas of current antitrust doctrine that require revision or reinterpretation in the face of zero prices. Topics addressed include …

Cuba Conundrum: Corporate Governance And Compliance Challenges For U.S. Publicly-Traded Companies, Marcia Narine

Articles

No abstract provided.

Enhancing Conservation Options: An Argument For Statutory Recognition Of Options To Purchase Conservation Easements (Opces), Federico Cheever, Jessica Owley

Articles

Land conservation transactions have been the most active component of the conservation movement in the United States for the past three decades. Conservation organizations have acquired property rights-mostly conservation easements-to protect roughly 40 million acres of land nationwide. However, climate change threatens this vast edifice. Climate change means that the resources that land conservation transactions were intended to protect may not persist on the land protected. Options to purchase conservation easements ("OPCEs") have long played a modest but important role in conservation law practice. In the world climate change is creating, with its substantial uncertainties and shifting windows of opportunity, …

Forging Path For Women's Rights In Customary Law, Tamar Ezer

Articles

No abstract provided.

Family Defense And The Disappearing Problem-Solving Court, Jane M. Spinak

Faculty Scholarship

Problem-solving courts began to flourish in the early 1990s with the creation of criminal drug courts as alternatives to standard criminal court practices. In the drug courts, defendants would receive treatment rather than incarceration and be monitored closely within the court. Family Court Treatment Parts (FCTPs) were developed in the late 1990s in New York State, fully embracing the three key components of the problem-solving drug court model: (1) an activist judge who helps to fashion, and then closely monitor, dispositions; (2) a team of lawyers, social workers, and court personnel who try to identify and then work toward commons …

Does Use Tax Evasion Provide A Competitive Advantage To E-Tailers?, Jeffrey L. Hoopes, Jacob Thornock, Braden M. Williams

Faculty Publications

Many online retail firms (e-tailers) do not collect sales tax from the majority of their customers. This practice provides these firms with a potential competitive advantage over traditional retailers. We examine stock market returns and analysts' sales forecast revisions surrounding federal legislative proposals, such as the Marketplace Fairness Act, that could erode this alleged competitive advantage for e-tailers. Following events that indicated an increased likelihood of federal sales tax legislation, we find negative abnormal stock returns for e-tail firms relative to traditional retail firms. We also find that analysts forecast a future reduction in sales revenue for e-tailers. These findings …

Binary Black Hole Mergers In The First Advanced Ligo Observing Run, B. P. Abbott, R. Abbott, T. D. Abbott, M. R. Abernathy, F. Acernese, Mario C. Diaz, Soma Mukherjee, Volker Quetschke, Malik Rakhmanov, Joseph D. Romano

Physics & Astronomy Faculty Publications

The first observational run of the Advanced LIGO detectors, from September 12, 2015 to January 19, 2016, saw the first detections of gravitational waves from binary black hole mergers. In this paper, we present full results from a search for binary black hole merger signals with total masses up to 100M· and detailed implications from our observations of these systems. Our search, based on general-relativistic models of gravitational-wave signals from binary black hole systems, unambiguously identified two signals, GW150914 and GW151226, with a significance of greater than 5s over the observing period. It also identified a third possible signal, LVT151012, …

Life Satisfaction Moderates The Associations Between Motives And Excessive Social Networking Site Usage, Jin-Liang Wang, James Gaskin, Hai-Zhen Wang, Dong Liu

Faculty Publications

It has been suggested that excessive social networking sites (SNS) users might use SNS as a method of coping with their life problems and that psychosocial well-being variables might interact with users’ motives for using SNS in predicting problematic SNS use. The present research explores whether the association between motives (i.e. self-expression and passing time) and excessive SNS usage is moderated by the user’s life satisfaction. A total of 996 college students were recruited from two colleges in Chongqing China. The participants were divided into excessive and nonexcessive SNS usage groups based on their mean score from the excessive SNS …

More Than Meets The Eye: How Oculometric Behaviors Evolve Over The Course Of Automated Deception Detection Interactions, Jeffrey G. Proudfoot, Jeffrey L. Jenkins, Judee K. Burgoon, Jay F. Nunamaker

Faculty Publications

Eye-tracking technology has exhibited promise for identifying deception in automated screening systems. Prior deception research using eye trackers has focused on the detection and interpretation of brief oculometric variations in response to stimuli (e.g., specific images or interview questions). However, more research is needed to understand how variations in oculometric behaviors evolve over the course of an interaction with a deception detection system. Using latent growth curve modeling, we tested hypotheses explaining how two oculometric behaviors—pupil dilation and eye-gaze fixation patterns—evolve over the course of a system interaction for three groups of participants: deceivers who see relevant stimuli (i.e., stimuli …

To Email Or Not To Email: The Impact Of Media On Psychophysiological Responses And Emotional Content In Utilitarian And Romantic Communication, Taylor M. Wells, Alan R. Dennis

Faculty Publications

Lean asynchronous computer mediated communication is often considered poor for communicating emotion, yet individuals continue to use it for business, personal, and even romantic communication.We used a lab experiment to investigate the influence of media (email and voicemail) and task type (romantic and utilitarian) on both the psychophysiological responses of senders and the content of the resulting messages. Message senders had more arousing physiological responses when sending emails than when leaving voicemails. An interaction exists between media and task such that the content of romantic email messages was more positive than romantic voicemails; while the opposite was true for utilitarian …

The Mediating Effects Of Autonomy, Competence, And Relatedness During Couple Leisure On The Relationship Between Total Couple Leisure Satisfaction And Marital Satisfaction, Miriam Puerta Amato, Neil Lundberg, Peter Ward, Bruce G. Schaalje, Ramon Zabriskie

Faculty Publications

This study tested Self-Determination Theory as a possible explanatory framework to understand the relationship between total couple leisure satisfaction and marital satisfaction. The three psychological needs of autonomy, competence, and relatedness—fundamental components of Self-Determination Theory—were measured through the Fulfillment of Psychological Needs during Couple Leisure (FPNL) scale and were tested as mediators. The analysis of five structural equation models confirmed the relevance of the Self-Determination Theory in explaining the relationship between couple leisure satisfaction and marital satisfaction. Although autonomy and competence were significant mediators, relatedness consistently appeared as the strongest mediator suggesting that the fulfillment of this psychological need is …

A Retrospective Consideration Of Recreational Family Storytelling Among Parents And Their Adult Children, Kelly Gagalis-Hoffman, Ramon Zabriskie, Patti A. Freeman

Faculty Publications

The aim of this study was to determine the purpose and function of recreational family storytelling across the life span from the perspective of parents and their adult children. Twelve individuals were interviewed (six parents paired with one of their adult children). Questions focused on ascertaining the purpose and function of storytelling from the perspectives of parents and children in the same family unit. In these families storytelling created opportunities for family bonding. Storytelling accomplished its purpose of creating family bonds through five functions: being fun, dealing with difficult topics or situations, transferring beliefs and values as well as giving …

Portfolio Spillovers And A Limit To Diversification, Bronson Argyle

Faculty Publications

Securities are exposed to the return shocks of seemingly unrelated securities in common mutual fund portfolios. Shocks to firm returns mechanically affect fund returns that hold these securities, which induce investor-driven flows and rebalancing, resulting in temporary flow-induced price pressure (FIPP) on other firms in common portfolios. Instrumenting to address flow/return endogeneity, a one standard deviation increase in the FIPP corresponds to a 15-60 bps increase in daily abnormal firm returns. This pressure reverses in 5-6 days and is larger for liquid firms and for funds experiencing outflows. Failing to properly estimate this correlation implies that an investor is exposed …

The Ownership And Trading Of Debt Claims In Chapter 11 Restructurings, Victoria Ivashina, Benjamin Iverson, David C. Smith

Faculty Publications

Using a novel data set that covers individual debt claims against 136 bankrupt US companies and includes information on a subset of claims transfers, we provide new empirical insight regarding how a firm’s debt ownership relates to bankruptcy outcomes. Firms with higher debt concentration at the start of the case are more likely to file prearranged bankruptcy plans, to move quickly through the restructuring process, and to emerge successfully as independent going concerns. Moreover, higher ownership concentration within a debt class is associated with higher recovery rates to that class. Trading of claims during bankruptcy concentrates ownership further, but this …

Your Memory Is Working Against You: How Eye Tracking And Memory Explain Habituation To Security Warnings, Bonnie Anderson, Jeffrey L. Jenkins, Anthony Vance, C. Brock Kirwan, David Eargle

Faculty Publications

Securitywarnings are critical to the security of end users and their organizations, often representing the final defense against an attack. Because warnings require users to make a contextual judgment, it is critical that they pay close attention to warnings. However, research shows that users routinely disregard them. A major factor contributing to the ineffectiveness of warnings is habituation, the decreased response to a repeated warning. Although previous research has identified the problem of habituation, the phenomenon has only been observed indirectly through behavioral measures. Therefore, it is unclear how habituation develops in the brain in response to security warnings, and …

When Training Gets Trumped: How Dual-Task Interference Inhibits Security Training, Jeffrey L. Jenkins, Bonnie Anderson, Anthony Osborn Vance, Scott Jensen

Faculty Publications

Security training programs are an important intervention to protect users and organizations against security threats. Unfortunately, users often ignore their training and engage in poor security behaviors. We explain how dual-task interference (DTI) is a primary cause of security training disregard. DTI is a cognitive limitation wherein humans cannot perform more than one task simultaneously without experiencing a deterioration of performance. In our context, we hypothesize how prompting users to perform security behaviors during high-DTI times may derail one’s previous security training, resulting in less secure behaviors.

We test our hypotheses in an experiment that compares users’ adherence to security …

Applying Basic Gamification Techniques To It Compliance Training: Evidence From The Lab And Field, Ryan J. Baxter, D. Kip Holderness, David A. Wood

Faculty Publications

Companies depend on strong internal controls to protect the integrity of accounting information systems. IT security and data privacy training are critical controls to safeguarding company information. However, employees often dislike the training, which can cause a lack of attention to and poor understanding of training concepts, leading to less effective internal controls. To improve the training experience, companies are implementing principles of games into employee training modules; a practice known as gamification. Using a laboratory experiment of data privacy training and a field study involving a publicly-traded bank’s rollout of IT security training, we test whether a training environment …

Compensation Or Feedback: Motivating Performance In Multidimensional Tasks, Margaret H. Christ, Scott A. Emett, William B. Tayler, David A. Wood

Faculty Publications

Employees often perform tasks with multiple dimensions. In this study, we examine how employees' performance on multidimensional tasks differs under different control structures. We conduct two experiments in which we manipulate the presence of compensation controls and the presence of feedback controls on multiple task dimensions. Our findings suggest that when employees are compensated on multiple dimensions they commit to multiple goals and divide their attention among those task dimensions. However, when feedback controls are implemented on one task dimension with compensation controls on another dimension, employees can improve performance on individual dimensions as well as their overall task performance. …

How Do Firms Use Cash Tax Savings: A Cross-Country Analysis, Danielle Higgins Green, Jon Kerr

Faculty Publications

Cash tax avoidance activities can serves as a significant source of additional cash flows for firms; how managers utilize this additional cash source and the resulting consequences is an empirical question. To answer our research question, we examine the association between the spread between a country’s enacted statutory rate for the year and the cash effective tax rate, and two uses of cash – investment and dividend payout – for an international sample of firms. In the cross-section, we find the firms are more likely to invest cash tax savings rather than distribute them in the form of dividends and …

Using Unstructured And Qualitative Disclosures To Explain Accruals, Richard Frankel, Jared Jennings, Joshua A. Lee

Faculty Publications

We examine the usefulness of support vector regressions (SVRs) in assessing the content of unstructured, qualitative disclosures by relating MD&A-based SVR-accrual estimates (MD&Aaccruals) to actual accruals. We find that MD&A accruals explain a statistically and economically significant portion of firm-level accruals and identify more persistent accruals. We find that the explanatory power of MD&A accruals is higher for more readable 10Ks, thereby providing evidence for the construct validity of the readability measures. To highlight the flexibility of the SVR method, we apply it to other dependent variables and disclosures. We find that MD&A-based cash-flow forecasts produced by SVR predict next …

Mitigating Bias Blind Spot Via A Serious Video Game, Elena Bessarabova, Cameron W. Piercy, Shawn King, Cindy Vincent, Norah E. Dunbar, Judee K. Burgoon, Claude H. Miller, Matthew Jensen, Aaron Elkins, David W. Wilson, Scott N. Wilson, Yu-Hao Lee

Faculty Publications

We employed a serious video game to train participants on bias blind spot (BBS), capturing training effects on BBS mitigation and knowledge at three points in time. Experiment 1 (N ¼ 703) compared the effects of hybrid training (a combination of implicit and explicit training) to implicit training; Experiment 2 (N ¼ 620) tested the effects of just-in-time versus delayed feedback; and Experiment 3 (N ¼ 626) examined the effects of singleplayer versus multiplayer learning environments. We also tested differences in game duration (30 vs. 60 min play) and repetition (single vs. repeated play). Overall, the video game decreased BBS …

The Wealth Of Subnations: Geography, Institutions, And Within-Country Development, Todd Mitton

Faculty Publications

I study determinants of economic development in a new dataset covering 1867 subnational regions from 101 countries, focusing on within-country effects of geography and institutions. Several geographic factors have significant explanatory power forwithin-country differences in per-capita GDP, including terrain ruggedness, tropical climate, ocean access, temperature range, storm risk, and natural resources such as oil, diamonds, or iron. Institutions have a significant positive effect on income among subnational regions with greater autonomy, suggesting that strong subnational institutions enhance development when not dominated by national institutions.

The Value Of Connections In Turbulent Times: Evidence From The United States, Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak, Todd Mitton

Faculty Publications

The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a prior connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner’s confirmation might be derailed by tax issues. Personal connections to top executive branch officials can matter greatly even in a country with strong overall institutions, at least during a time of acute financial crisis and heightened policy discretion.

Seeing Harry Potter As An At-Risk Student: Critical Literacy, Cultural Capital, And The Wizarding World, Dawan Coombs, Jon Ostenson, Whitney Sommerville

Faculty Publications

Despite his celebrity status in the wizard community, Harry’s lack of familiarity with its culture, language, social structures, and institutions constantly causes him to question his competence and magical potential. Although most muggle teens will never deal with the challenges Harry confronts as he tries to sort out Quidditch from Slytherin and Hufflepuff on his first visit to Diagon Alley, they can empathize with Harry’s attempts to acculturate into the social, academic, and political norms of a very unfamiliar world. Many students in secondary schools exist on the margins because of disconnects between their own cultures, languages, and social practices …