Business Commons^™

Understanding The Global In Global Finance And Regulation, Lawrence G. Baxter

Faculty Scholarship

No abstract provided.

Modern-Day Monitorships, Veronica Root

Faculty Scholarship

When a sexual abuse scandal rocked Penn State, when Apple was found to have engaged in anticompetitive behavior, and when servicers like Bank of America improperly foreclosed upon hundreds of thousands of homeowners, each organization entered into a "Modern-Day Monitorship”. Modern-day monitorships are utilized in an array of contexts to assist in widely varying re­mediation efforts. This is because they provide outsiders with a unique source of information about the efficacy of the tarnished organization's efforts to resolve misconduct. Yet, despite their use in high profile and serious matters of organi­zational wrongdoing, they are not an outgrowth of careful study …

Can Sharing Be Taxed?, Shu-Yi Oei, Diane M. Ring

Faculty Scholarship

In the past few years, we have seen the rise of a new model of production and consumption of goods and services, often referred to as the “sharing economy.” Fueled by startups such as Uber and Airbnb, sharing enables individuals to obtain rides, accommodations, and other goods and services from peers via personal computer or mobile application in exchange for payment. The rise of sharing has raised questions about how it should be regulated, including whether existing laws and regulations can and should be enforced in this new sector or whether new ones are needed.

In this Article, we explore …

Benefit-Cost Analysis And Distributional Weights: An Overview, Matthew D. Adler

Faculty Scholarship

Standard cost-benefit analysis (CBA) is insensitive to distributional concerns. A policy that improves the lives of the rich, and makes the poor yet worse off, will be approved by CBA as long as the policy’s aggregate monetized benefits are positive. Distributional weights offer an apparent solution to this troubling feature of the CBA methodology: adjust costs and benefits with weighting factors that are inversely proportional to the well-being levels (as determined by income and also perhaps non-income attributes such as health) of the affected individuals.

Indeed, an academic literature dating from the 1950s discusses how to specify distributional weights. And …

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.

Keynote Address, Regulating Corporate Governance In The Public Interest: The Case Of Systemic Risk, Steven L. Schwarcz

Faculty Scholarship

There’s long been a debate whether corporate governance law should require some duty to the public. The accepted wisdom is not to require such a duty—that corporate profit maximization provides jobs and other public benefits that exceed any harm. This is especially true, the argument goes, because imposing specific regulatory requirements and making certain actions illegal or tortious can mitigate the harm without unduly impairing corporate wealth production. Whether that is true in other contexts, this paper—delivered as the keynote address at the June 2016 National Business Law Scholars Conference at The University of Chicago Law School—questions if it’s true …

Fiduciary Breach, Once Removed, Deborah A. Demott

Faculty Scholarship

No abstract provided.

Agency Costs In Law-Firm Selection: Are Companies Under-Spending On Counsel?, Elisabeth De Fontenay

Faculty Scholarship

A growing body of literature examines whether corporate clients derive sufficient value from the law firms that they engage. Yet little attention has been paid to whether clients optimally select among law firms in the first place. One entry-point is to identify discrepancies in the quality of counsel selected by different corporate clients for the very same work. Using a large sample of loans, this Article finds that major U.S. public companies select lower-ranked law firms for their financing transactions than do private equity-owned companies, controlling for various deal characteristics. While some of this discrepancy can be attributed to value-maximizing …

Misalignment: Corporate Risk-Taking And Public Duty, Steven L. Schwarcz

Faculty Scholarship

This article argues for a “public governance duty” to help manage excessive risk-taking by systemically important firms. Although governments worldwide, including the United States, have issued an array of regulations to attempt to curb that risk-taking by aligning managerial and investor interests, those regulations implicitly assume that investors would oppose excessively risky business ventures. That leaves a critical misalignment: because much of the harm from a systemically important firm’s failure would be externalized onto the public, including ordinary citizens impacted by an economic collapse, such a firm can engage in risk-taking ventures with positive expected value to its investors but …

Perspectives On Regulating Systemic Risk, Steven L. Schwarcz

Faculty Scholarship

This book chapter, which synthesizes several of the author’s articles, attempts to provide useful perspectives on regulating systemic risk. First, it argues that systemic shocks are inevitable. Accordingly, regulation should be designed not only to try to reduce those shocks but also to protect the financial system against their unavoidable impact. This could be done, the chapter explains, by applying chaos theory to help stabilize the financial system. The chapter then focuses on trying to prevent excessive corporate risk-taking, which is one of the leading triggers of systemic shocks and widely regarded to have been a principal cause of the …

Comment To The Sec In Support Of The Enhanced Disclosure Of Patent And Technology License Information, Colleen V. Chien, Jorge Contreras, Carol Corrado, Stuart Graham, Deepak Hedge, Arti K. Rai, Saurabh Vishnubhakat

Faculty Scholarship

Intangible assets like IP constitute a large share of the value of firms, and the US economy generally. Accurate information on the intellectual property (IP) holdings and transactions of publicly-traded firms facilitates price discovery in the market and reduces transaction costs. While public understanding of the innovation economy has been expanded by a large stream of empirical research using patent data, and more recently trademark information this research is only as good as the accuracy and completeness of the data it builds upon. In contrast with information about patents and trademarks, good information about IP licensing is much less publicly …

Public Sector Personnel Economics: Wages, Promotions, And The Competence-Control Trade-Off, Charles M. Cameron, John De Figueiredo, David E. Lewis

Faculty Scholarship

We model personnel policies in public agencies, examining how wages and promotion standards can partially offset a fundamental contracting problem: the inability of public sector workers to contract on performance, and the inability of political masters to contract on forbearance from meddling. Despite the dual contracting problem, properly constructed personnel policies can encourage intrinsically motivated public sector employees to invest in expertise, seek promotion, remain in the public sector, and develop policy projects. However, doing so requires internal personnel policies that sort "slackers" from "zealots." Personnel policies that accomplish this task are quite different in agencies where acquired expertise has …