Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 30 of 36
Full-Text Articles in Law
Cleaning Corporate Governance, Jens Frankenreiter, Cathy Hwang, Yaron Nili, Eric L. Talley
Cleaning Corporate Governance, Jens Frankenreiter, Cathy Hwang, Yaron Nili, Eric L. Talley
Faculty Scholarship
Although empirical scholarship dominates the field of law and finance, much of it shares a common vulnerability: an abiding faith in the accuracy and integrity of a small, specialized collection of corporate governance data. In this paper, we unveil a novel collection of three decades’ worth of corporate charters for thousands of public companies, which shows that this faith is misplaced.
We make three principal contributions to the literature. First, we label our corpus for a variety of firm- and state-level governance features. Doing so reveals significant infirmities within the most well-known corporate governance datasets, including an error rate exceeding …
Financial Inclusion, Access To Credit, And Sustainable Finance, John Linarelli, Stephen L. Schwarcz, Ignacio Tirado
Financial Inclusion, Access To Credit, And Sustainable Finance, John Linarelli, Stephen L. Schwarcz, Ignacio Tirado
Scholarly Works
No abstract provided.
Preparing Legal Frameworks For Environmental Disasters: Practical Considerations For Host States, Brooke Guven, Perrine Toledano, Lise Johnson
Preparing Legal Frameworks For Environmental Disasters: Practical Considerations For Host States, Brooke Guven, Perrine Toledano, Lise Johnson
Columbia Center on Sustainable Investment Staff Publications
Projects in the extractives sector carry risks of lasting, and sometimes irreversible, damage to the environment. Nonetheless, these projects are important for accelerating the economic development of host countries. Governments seeking to mitigate the adverse effects of foreign investment often face pushback from investors that are unwilling to change their practices in order to avert environmental disaster. This report sets forth certain steps that host-governments can take during the pre-investment, operation, and enforcement phases of extractives projects to provide financial and other protection in the context of environmental disasters associated with private sector investments.
Upon comparative review of five Case …
Driver For Contactless Payments, Ronald J. Mann
Driver For Contactless Payments, Ronald J. Mann
Faculty Scholarship
As a consumer, my primary experience with cash before the virus was standing in checkout lines observing the sluggish pace of cash transactions in front of me. Like so many things in our lives, the advent of the virus has changed the situation markedly. From the earliest days of infection, it has been far more unsettling to observe cash transactions knowing that the virus persists on paper and metal surfaces for days.
The dynamic that has driven the choices merchants offer in face-to-face retail transactions will change as well. Driven by the private exigencies of the retail environment, the last …
Petition For Rulemaking On Short And Distort, John C. Coffee Jr., Joshua Mitts, James D. Cox, Peter Molk, Edward Greene, Randall S. Thomas, Meyer-Eisenberg, Robert B. Thompson, Colleen Honigsberg, Andrew Verstein, Donald C. Langevoort, Charles K. Whitehead
Petition For Rulemaking On Short And Distort, John C. Coffee Jr., Joshua Mitts, James D. Cox, Peter Molk, Edward Greene, Randall S. Thomas, Meyer-Eisenberg, Robert B. Thompson, Colleen Honigsberg, Andrew Verstein, Donald C. Langevoort, Charles K. Whitehead
Faculty Scholarship
Today, some hedge funds attack public companies for the sole purpose of inducing a short-lived panic which they can exploit for profit. This sort of market manipulation harms average investors who entrust financial markets with their retirement savings. While short selling serves a critical function in the capital markets, some short sellers disseminate negative opinion about a company, inducing a panic and sharp decline in the stock price, and rapidly close that position for a profit prior to the price partially or fully rebounding. We urge the SEC to enact two rules which will discourage manipulative short selling. The petition …
For Coöperation And The Abolition Of Capital, Or, How To Get Beyond Our Extractive Punitive Society And Achieve A Just Society, Bernard E. Harcourt
For Coöperation And The Abolition Of Capital, Or, How To Get Beyond Our Extractive Punitive Society And Achieve A Just Society, Bernard E. Harcourt
Faculty Scholarship
In hindsight, the term "capitalism" was always a misnomer, coined paradoxically by its critics in the nineteenth century. The term misleadingly suggests that the existence of capital produces a unique economic system or that capital itself is governed by economic laws. But that's an illusion. In truth, we do not live today in a system in which capital dictates our economic circumstances. Instead, we live under the tyranny of what I would call "tournament dirigisme": a type of state-directed gladiator sport where our political leaders bestow spoils on the wealthy, privileged elite.
We need to displace this tournament dirigisme with …
Why The Fed Should Issue A Policy Framework For Credit Policy, Kathryn Judge
Why The Fed Should Issue A Policy Framework For Credit Policy, Kathryn Judge
Faculty Scholarship
The Federal Reserve has long used policy frameworks to both explain and inform its policymaking. These policy frameworks typically explain what the Fed is seeking to achieve in a given domain and how it plans to achieve its desired aims. Two prominent examples are the Fed’s use of Bagehot’s dictum when acting as a lender of last resort and its monetary policy framework issued in 2012 and revised in 2020. In both instances, the framework provides a foundation for informed debate among Fed policymakers, Congress, and the public, enhancing both efficacy and accountability. Since the onset of the Covid crisis, …
Executive Underreach, In Pandemics And Otherwise, David E. Pozen, Kim Lane Scheppele
Executive Underreach, In Pandemics And Otherwise, David E. Pozen, Kim Lane Scheppele
Faculty Scholarship
Legal scholars are familiar with the problem of executive overreach, especially in emergencies. But sometimes, instead of being too audacious or extreme, a national executive's attempts to address a true threat prove far too limited and insubstantial. In this Essay, we seek to define and clarify the phenomenon of executive underreach, with special reference to the COVID-19 crisis; to outline ways in which such underreach may compromise constitutional governance and the international legal order; and to suggest a partial remedy.
Aligning Investment Treaties With Sustainable Development Goals, Lise Johnson, Lisa E. Sachs, Nathan Lobel
Aligning Investment Treaties With Sustainable Development Goals, Lise Johnson, Lisa E. Sachs, Nathan Lobel
Columbia Center on Sustainable Investment Staff Publications
Policy makers and other stakeholders are currently asking fundamental questions about whether and to what extent international investment agreements (IIAs) are consistent with and are helping to advance sustainable development objectives at home and abroad.
A 2019 paper from CCSI examines the alignment of IIAs with the 2030 Sustainable Development Agenda, arguing that while FDI will play an important role in advancing development outcomes, existing treaties must be reformed and future IIAs reimagined in order to achieve deep alignment with the sustainable development goals.
The paper proposes that IIAs should be designed and evaluated with respect to their ability to …
Price And Prejudice: An Empirical Test Of Financial Incentives, Altruism, And Racial Bias, Kristen Underhill
Price And Prejudice: An Empirical Test Of Financial Incentives, Altruism, And Racial Bias, Kristen Underhill
Faculty Scholarship
Many argue that paying people for good behavior can crowd out beneficial motivations like altruism. But little is known about how financial incentives interact with harmful motivations like racial bias. Two randomized vignette studies test how financial incentives affect bias. The first experiment varies the race of a hypothetical patient in need of a kidney transplant (black or white), an incentive ($18,500 or none), and addition of a message appealing to altruism. Incentives encouraged donation but introduced a significant bias favoring white patients. The second experiment assesses willingness to donate to a patient (black or white) without an incentive and …
Non-State Community Virtual Currencies, Benjamin Geva, Dorit Geva
Non-State Community Virtual Currencies, Benjamin Geva, Dorit Geva
Articles & Book Chapters
Community currencies are means of payment issued other than by the State, for voluntary use side by side with State-issued (that is, national) currency, either in a particular geographical area or by a group of users. This chapter deals with them as their media have been transforming from paper to digital. Discussing legal aspects of digital community currencies as monetary objects, this chapter combines an analysis general to the law of community currencies, as applied to community currencies regardless of the media in which they are embodied, with an analysis of the general law governing digital currencies as applied to …
The Separation Of Platforms And Commerce, Lina M. Khan
The Separation Of Platforms And Commerce, Lina M. Khan
Faculty Scholarship
A handful of digital platforms mediate a growing share of online commerce and communications. By structuring access to markets, these firms function as gatekeepers for billions of dollars in economic activity. One feature dominant digital platforms share is that they have integrated across business lines such that they both operate a platform and market their own goods and services on it. This structure places dominant platforms in direct competition with some of the businesses that depend on them, creating a conflict of interest that platforms can exploit to further entrench their dominance, thwart competition, and stifle innovation.
This Article argues …
The Other Securities Regulator: A Case Study In Regulatory Damage, Anita Krug
The Other Securities Regulator: A Case Study In Regulatory Damage, Anita Krug
All Faculty Scholarship
Although the Securities and Exchange Commission is the primary securities regulator in the United States, the Department of Labor also engages in “securities regulation.” It does so by virtue of its authority to administer the Employee Retirement Income Security Act (ERISA), the statute that governs the investment of retirement assets. In 2016, the DOL used its securities regulatory authority to adopt a rule that, for the first time, designates securities brokers who provide investment advice to retirement investors as fiduciaries subject to ERISA’s stringent transaction prohibitions. The new rule’s objective is salutary, to be sure. However, this Article shows that, …
Finance In The Courtroom: Appraising Its Growing Pains, Eric L. Talley
Finance In The Courtroom: Appraising Its Growing Pains, Eric L. Talley
Faculty Scholarship
This short essay provides an overview of the current state of finance in corporate law, emphasizing its role in a series of pending appraisal cases at the Delaware Supreme Court.
Uncertain Futures In Evolving Financial Markets, Anita Krug
Uncertain Futures In Evolving Financial Markets, Anita Krug
All Faculty Scholarship
Today’s publicly offered investment funds, including mutual funds, have ever more diverse investment strategies, as they increasingly invest in financial instruments that, in earlier years, had been the province of only the most sophisticated investors. Although the new landscape of investment possibilities may substantially benefit retail investors, one financial instrument attracting increasing amounts of retail investors’ assets is acutely troublesome: the commodity futures contract. Futures originated as a means for farmers and other producers of agricultural commodities to ensure that their products could be sold at reasonable prices. Early on, the goals of futures regulation centered on one particular risk …
Access To Capital Or Just More Blues? Issuer Decision-Making Post Sec Crowdfunding Regulation, Patricia Hureston Lee
Access To Capital Or Just More Blues? Issuer Decision-Making Post Sec Crowdfunding Regulation, Patricia Hureston Lee
All Faculty Scholarship
Crowdfunding is an alternative for Issuers seeking funds for their businesses. On October 2015, the Securities Exchange Commission (SEC) released final crowdfunding regulations that became effective May 20162 as a charge of the Jobs Act, Title III (the “Crowdfund Act”). Issuers can now secure crowdfunded investments without a securities registration.
This article evaluates investment-based crowdfunding from the perspective of one group that has been neglected from the crowdfunding scholarship — Issuers that seek financing under this new framework. In Section I, the author summarizes the new crowdfund regulations, which create a new financing opportunity vastly different from previous types of …
When Extrinsic Incentives Displace Intrinsic Motivation: Designing Legal Carrots And Sticks To Confront The Challenge Of Motivational Crowding-Out, Kristen Underhill
When Extrinsic Incentives Displace Intrinsic Motivation: Designing Legal Carrots And Sticks To Confront The Challenge Of Motivational Crowding-Out, Kristen Underhill
Faculty Scholarship
The rise of “nudges” has inspired countless efforts to encourage individual choices that maximize personal and collective welfare, with a preference for less restrictive tools such as setting default options or reordering choice sets. As part of this trend, there has been renewed interest in the behavioral impacts of incentives – namely, rewards or penalties for shaping individual choices, including but not limited to financial incentives. Explicit incentives are pervasive in the law, including carrots offered by governments (for example, tax deductions for charitable contributions, rebates for recycling, sentence reductions for prisoners who complete drug rehabilitation programs, and incentives for …
Managing The Public Trust: How To Make Natural Resource Funds Work For Citizens, Andrew Bauer, Perrine Toledano, Malan Rietveld
Managing The Public Trust: How To Make Natural Resource Funds Work For Citizens, Andrew Bauer, Perrine Toledano, Malan Rietveld
Columbia Center on Sustainable Investment Staff Publications
Given their collective size – approximately $3.5 trillion in assets as of end-2013 and growing – and concerns about the motivations of their government owners, much has been written on natural resource funds (NRFs), their investments and global influence. However their impacts on governance and public financial accountability at home have received far less attention.
On the one hand, these funds can be used to serve the public interest, for example by covering budget deficits when resource revenues decline, saving for future generations, or helping to mitigate Dutch Disease through fiscal sterilization. On the other hand, they can undermine public …
Three Proposals For Regulating The Distribution Of Home Equity, Ian Ayres, Joshua Mitts
Three Proposals For Regulating The Distribution Of Home Equity, Ian Ayres, Joshua Mitts
Faculty Scholarship
The Consumer Financial Protection Bureau’s recently-released “qualified mortgage” rules effectively discourage predatory lending but miss an equally important source of systemic risk: low-equity clustering. Specific “volatility-inducing” mortgage terms, when present in a substantial cluster of mortgage contracts, exacerbate macroeconomic risk by increasing the chance that the housing and lending markets will have to absorb a wave of simultaneous defaults after a downturn in housing prices. This Article shows that these terms became prevalent in a substantial proportion of residential mortgages in the years leading up to the home mortgage crisis. In contrast, during the earlier “amortization era” (when mortgagors were …
The Modern Corporation Magnified: Managerial Accountability In Financial Services Holding Companies, Anita Krug
The Modern Corporation Magnified: Managerial Accountability In Financial Services Holding Companies, Anita Krug
All Faculty Scholarship
This Article first recalls the primary contours of Adolf Berle and Gardiner Means’s acclaimed observations regarding the separation of ownership and control in the “modern corporation,” as well as their conclusions about the implications of those observations for the doctrine of shareholder primacy. Second, the Article describes how the activities of FSHCs generally differ from what we think corporations do and, certainly, from what Berle and Means conceived of as the purpose of corporations or, indeed, any business enterprise. Third, this Article articulates how those business activities render more acute the problem of the separation of ownership and control that …
Rethinking U.S. Investment Adviser Regulation, Anita Krug
Rethinking U.S. Investment Adviser Regulation, Anita Krug
All Faculty Scholarship
(Excerpt)Now, in the aftermath of Dodd-Frank's enactment and the SEC's associated bout of rulemaking, one might think that the Advisers Act's regulatory regime is a workable and effective one, equipped to address - and address efficiently - the investor-protection risks that the twenty-first-century investment adviser industry produces. In fact, however, Dodd-Frank did not touch - and, indeed, Dodd-Frank's crafters indicated no awareness of - many of the Advisers Act's longstanding troubles. Additionally, the changes Dodd-Frank brought about have their own considerable deficiencies. As this Article contends, the U.S. investment adviser regulatory regime, now seventy-four years old, is in need of …
Towards A Legal Theory Of Finance, Katharina Pistor
Towards A Legal Theory Of Finance, Katharina Pistor
Faculty Scholarship
This paper develops the building blocks for a legal theory of finance. LTF holds that financial markets are legally constructed and as such occupy an essentially hybrid place between state and market, public and private. At the same time, financial markets exhibit dynamics that frequently put them in direct tension with commitments enshrined in law or contracts. This is the case especially in times of financial crises when the full enforcement of legal commitments would result in the self-destruction of the financial system. This law-finance paradox tends to be resolved by suspending the full force of law where the survival …
The Financial Crisis Inquiry Commission And The Politics Of Governmental Investigations, Michael A. Perino
The Financial Crisis Inquiry Commission And The Politics Of Governmental Investigations, Michael A. Perino
Faculty Publications
In May 2009, Congress passed the Fraud Enforcement and Recovery Act which created the Financial Crisis Inquiry Commission, an independent, bipartisan panel tasked to examine the causes of the current financial and economic crisis in the United States.
Franklin Roosevelt never created an independent commission to investigate Wall Street, but the Pecora hearings, the eponymous investigation of Wall Street wrongdoing run by a former New York prosecutor, captivated the country. For sixteen months in the worst depths of the Great Depression, Ferdinand Pecora paraded a series of elite financiers before the Senate Banking and Currency Committee. In one hearing after …
Recoupment Under Dodd-Frank: Punishing Financial Executives And Perpetuating "Too Big To Fail", Joshua Mitts
Recoupment Under Dodd-Frank: Punishing Financial Executives And Perpetuating "Too Big To Fail", Joshua Mitts
Faculty Scholarship
In July 2011, the Federal Deposit Insurance Corporation (FDIC) promulgated new rules implementing Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act. These rules define a cause of action to recoup compensation paid to senior executives and directors of failed nonbank financial institutions placed into the FDIC's "orderly liquidation authority" receivership. An action for recoupment is based on a negligence theory of liability, but it does not require establishing that an executive's conduct caused the financial institution any harm. The rules presume liability merely for having held executive responsibility prior to the firm entering receivership. The executive …
Memo To The Sec On The Proposed Rule On Disclosure Of Payments By Resource Extraction Issuers, Perrine Toledano
Memo To The Sec On The Proposed Rule On Disclosure Of Payments By Resource Extraction Issuers, Perrine Toledano
Columbia Center on Sustainable Investment Staff Publications
CCSI strongly supports the transparency of contracts and tax flows. CCSI shares the belief of many stakeholders that transparency is essential to leverage extractive industries for sustainable development and is in the mutual interest of all stakeholders. However, some industry players continue to voice the concern that increased transparency would be harmful for their business. Therefore, CCSI is working to also establish the business case for transparency.
In one such case, some industry players have been lobbying against the regulations developed by the Security and Exchange Commission to implement the mandatory disclosure provisions of the Dodd Frank Wall Street Reform …
Economic Crisis And Share Price Unpredictability: Reasons And Implications, Edward G. Fox, Merritt B. Fox, Ronald J. Gilson
Economic Crisis And Share Price Unpredictability: Reasons And Implications, Edward G. Fox, Merritt B. Fox, Ronald J. Gilson
Faculty Scholarship
The volatility of share returns for individual companies increased sharply during the recent financial crisis. The larger part of this increase was due to a dramatic rise – five fold as measured by variance – in idiosyncratic risk. We find that this pattern repeats itself during each major economic reversal going back 85 years. Because idiosyncratic risk is what is involved, this increase cannot be explained by changes in predictions concerning the future course of the economy as a whole.
Our first goal is to explain why difficult economic times, which are defined in terms of market wide phenomena, make …
Ferdinand Pecora: The Hellhound Of Wall Street, Michael A. Perino
Ferdinand Pecora: The Hellhound Of Wall Street, Michael A. Perino
Faculty Publications
Few Americans today know who Ferdinand Pecora was, although he was once a media superstar, a nearly daily fixture in newspapers and radio broadcasts across the country. With the onset of our current economic woes his name has slowly begun to crop up again. In April 2009, House Speaker Nancy Pelosi called for a new "Pecora Commission" to investigate "what happened on Wall Street." The next week, the Senate invoked Pecora's name in voting to create an independent committee to investigate the financial crisis, and in January 2010 the Financial Crisis Inquiry Commission held its first hearings.
Pecora, a diminutive …
Private Fund Adviser Registration Act Hr-3818, Anita Krug
Private Fund Adviser Registration Act Hr-3818, Anita Krug
All Faculty Scholarship
This paper comments on the Obama administration's 2009 proposal for the regulation of hedge fund investment advisers.
Financial Regulatory Reform And Private Funds, Anita Krug
Financial Regulatory Reform And Private Funds, Anita Krug
All Faculty Scholarship
This white paper comments on the Obama administration's June 2009 proposal for the regulation of hedge fund investment advisers.
The Regulatory Response To Madoff, Anita Krug
The Regulatory Response To Madoff, Anita Krug
All Faculty Scholarship
This white paper evaluates investor protection mechanisms in the securities regulatory regime at the time the Madoff fraud was exposed. It considers whether the post-Madoff call for additional regulation of hedge funds and/or their managers - and/or their respective activities - was warranted.