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The Influence Of Law And Economics On Law And Accounting: Two Steps Forward, One Step Back, Lawrence A. Cunningham
The Influence Of Law And Economics On Law And Accounting: Two Steps Forward, One Step Back, Lawrence A. Cunningham
GW Law Faculty Publications & Other Works
Theory can have profound effects on practice, some intended and desirable, others unintended and undesirable. That's the story of the influence the field of law and economics has had on the domain of law and accounting. That influence comes primarily from agency theory and modern finance theory, specifically through the efficient capital market hypothesis and capital asset pricing model. Those theories have forged considerable change in federal securities regulation, accounting standard setting, state corporation law, and financial auditing. Affected areas include the nature of disclosure, the measure of financial concepts, the limits of shareholder protection, and the scope of auditor …
The Future Of Reputation: Gossip, Rumor, And Privacy On The Internet, Daniel J. Solove
The Future Of Reputation: Gossip, Rumor, And Privacy On The Internet, Daniel J. Solove
GW Law Faculty Publications & Other Works
YouTube. Facebook. MySpace. Wikipedia. Google. These are among the many new ways people are communicating and obtaining information. In THE FUTURE OF REPUTATION: GOSSIP, RUMOR, AND PRIVACY ON THE INTERNET (Yale University Press, October 2007), Professor Daniel J. Solove warns that this new world demands new thinking about the nature of privacy.
Teeming with chatrooms, online discussion groups, and blogs, the Internet offers previously unimagined opportunities for personal expression and communication. But there's a dark side to the story. A trail of information fragments about us is forever preserved on the Internet, instantly available in a Google search. A permanent …
Beyond Liability: Rewarding Effective Gatekeepers, Lawrence A. Cunningham
Beyond Liability: Rewarding Effective Gatekeepers, Lawrence A. Cunningham
GW Law Faculty Publications & Other Works
This Article adds to the emerging literature on rewards to promote effective capital market gatekeeping. Capital market gatekeeping theory traditionally relies heavily on threats of legal liability for failure to perform legally mandated functions (along with a presumed constraint imposed by reputation effects). The ineffectiveness of many gatekeepers in the past decade revealed limitations of the liability strategy and yet reforms continue to emphasize legal duties and liability for gatekeepers. This emphasis also has the negative side-effect of discouraging gatekeepers from willingness to perform desired functions - such as to detect for fraud. Using rewards can induce gatekeepers to perform …
Carrots For Vetogates: Incentive Systems To Promote Capital Market Gatekeeper Effectiveness, Lawrence A. Cunningham
Carrots For Vetogates: Incentive Systems To Promote Capital Market Gatekeeper Effectiveness, Lawrence A. Cunningham
GW Law Faculty Publications & Other Works
This Article contributes a novel idea to the literature on capital market gatekeepers: positive incentive systems for gatekeepers to perform functions not required of them in exchange for rewards if they perform the functions successfully. Capital market gatekeeping theory relies upon the reputations that gatekeepers are assumed to command and protect backstopped by negative threats of legal liability for failure to perform legally mandated functions. The ineffectiveness of many gatekeepers during the late 1990s and early 2000s revealed practical limitations of the reputational constraint and the reforms that responded to the failures continue to emphasize the legal duties and legal …
Too Big To Fail: Moral Hazard In Auditing And The Need To Restructure The Industry Before It Unravels, Lawrence A. Cunningham
Too Big To Fail: Moral Hazard In Auditing And The Need To Restructure The Industry Before It Unravels, Lawrence A. Cunningham
GW Law Faculty Publications & Other Works
Large audit firms may believe that they are too big to fail. Arthur Andersen's 2002 criminal indictment reduced their number from five to four, and the government decided in 2005 to avoid indicting KPMG for crimes it admitted committing. If audit firms interpret the government's reluctance to indict as signaling aversion to tough action against them, moral hazard arises. This offsets auditing improvements mandated by the Sarbanes-Oxley Act of 2002 that are designed to strengthen auditors' reputations with managers for thoroughness and improve financial statement reliability. Neutralizing this moral hazard requires a credible alternative industry structure so that when a …