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Full-Text Articles in Law
Rewarding Outside Directors, Assaf Hamdani, Reinier Kraakman
Rewarding Outside Directors, Assaf Hamdani, Reinier Kraakman
Michigan Law Review
While they often rely on the threat of penalties to produce deterrence, legal systems rarely use the promise of rewards. In this Article, we consider the use of rewards to motivate director vigilance. Measures to enhance director liability are commonly perceived to be too costly. We, however demonstrate that properly designed reward regimes could match the behavioral incentives offered by negligence-based liability regimes but with significantly lower costs. We further argue that the market itself cannot implement such a regime in the form of equity compensation for directors. We conclude by providing preliminary sketches of two alternative reward regimes. While …
Settler's Remorse, Floyd Abrams
Settler's Remorse, Floyd Abrams
Michigan Law Review
Who can quarrel with the notion that settling civil cases is generally a good thing? Litigation is expensive, time-consuming, preoccupying, and often personally destructive. Our courts are overburdened and, in any event, imperfect decision-making entities. It may even be true that, more often than not, "the absolute result of a trial is not as high a quality of justice as is the freely negotiated, give a little, take a little settlement." But not every case should be settled. Many are worthless. The settlement of others could too easily lead to a torrent of unwarranted litigation. Sometimes, as Professor Owen Fiss …
Voter Identification, Spencer Overton
Voter Identification, Spencer Overton
Michigan Law Review
In the wake of closely contested elections, calls for laws that require voters to present photo identification as a condition to cast a ballot have become pervasive. Advocates tend to rely on two rhetorical devices: (1) anecdotes about a couple of elections tainted by voter fraud; and (2) "common sense" arguments that voters should produce photo identification because identification is required to board airplanes, buy alcohol, and engage in other activities. This Article explains the analytical shortcomings of anecdote, analogy, and intuition, and applies a cost-benefit approach generally overlooked in election law scholarship. Rather than rushing to impose a photo-identification …
Fixing 404, Joseph A. Grundfest, Steven E. Bochner
Fixing 404, Joseph A. Grundfest, Steven E. Bochner
Michigan Law Review
Although debate persists as to whether the costs of Sarbanes-Oxley's Section 404 regulations exceed their benefits, there is broad consensus that the rules have been inefficiently implemented. Substantive and procedural factors contribute to the rules' inefficiency. From a substantive perspective, the terms "material weakness" and "significant deficiency" are central to the implementing regulations and are easily interpreted to legitimize audits of controls that have only a remote probability of causing an inconsequential effect on the issuer's financial statements. As a quantitative matter the literature suggests that a control with a remote probability of causing an inconsequential effect has an expected …