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Full-Text Articles in Law
Uncorporated Professionals, John Romley, Eric L. Talley
Uncorporated Professionals, John Romley, Eric L. Talley
Faculty Scholarship
Professional service providers who wish to organize as multi-person firms have historically been limited to the partnership form. Such organizational forms trade the benefit of risk diversification off against the costs of diluted incentives and liability exposure in choosing their optimal size. More recently, states have permitted limited-liability entities that combine the simplicity, flexibility and tax advantages of a partnership with the liability shield of a corporation. We develop a game theoretic model of professional-firm organization that integrates the provision of incentives in a multi-person firm with the choice of business form. We then test the model's predictions with a …
Market Design With Endogenous Preferences, Aviad Heifetz, Ella Segev, Eric L. Talley
Market Design With Endogenous Preferences, Aviad Heifetz, Ella Segev, Eric L. Talley
Faculty Scholarship
This paper explores the interdependence between market structure and an important class of extra-rational cognitive biases. Starting with a familiar bilateral monopoly framework, we characterize the endogenous emergence of preference distortions during bargaining which cause negotiators to perceive their private valuations differently than they would outside the adversarial negotiation context. Using this model, we then demonstrate how a number of external interventions in the structure and/or organization of market interactions (occurring before trade, after trade, or during negotiations themselves) can profoundly alter the nature of these dispositions. Our results demonstrate that many such interventions frequently (though not always) share qualitatively …
Choice As Regulatory Reform: The Case Of Japanese Corporate Governance, Ronald J. Gilson, Curtis J. Milhaupt
Choice As Regulatory Reform: The Case Of Japanese Corporate Governance, Ronald J. Gilson, Curtis J. Milhaupt
Faculty Scholarship
The fact of a small number of hostile takeover bids in Japan the recent past, together with technical amendments of the Civil Code that would allow a poison pill-like security, raises the question of how a poison pill would operate in Japan should it be widely deployed. This paper reviews the U.S. experience with the pill to the end of identifying what institutions operated to prevent the poison pill from fully enabling the target board to block a hostile takeover. It then considers whether similar ameliorating institutions are available in Japan, and concludes that with the exception of the court …
Corporate Governance, Executive Compensation And Securities Litigation, Eric L. Talley, Gudrun Johnsen
Corporate Governance, Executive Compensation And Securities Litigation, Eric L. Talley, Gudrun Johnsen
Faculty Scholarship
It is generally accepted that good corporate governance, executive compensation and the threat of litigation are all important mechanisms for incentivizing managers of public corporations. While there are significant and robust literatures analyzing each of these policy instruments in isolation, their mutual relationship and interaction has received somewhat less attention. Such neglect is mildly surprising in light of a strong intuition that the three devices are structurally related to one another (either as complements or substitutes). In this paper, we construct an agency cost model of the firm in which corporate governance protections, executive compensation levels, and litigation incentives are …