Law and Economics Commons^™

Facebook, The Jobs Act, And Abolishing Ipos, Adam C. Pritchard

Law & Economics Working Papers

The market for initial public offerings (IPOs) — the first sale of private firms’ stock to the public — is notorious for its swings from peaks to valleys. This paper argues that these swings reflect serious flaws in the IPO scheme, and that U.S. capital markets should move toward a more stable alternative. Specifically, this paper argues for a two-tier market system in which new stock issuers initially participate in a less-regulated private capital market of accredited investors and then, if they choose, they can move to a more regulated, broader public market. Likewise, firms currently participating in the public …

"Perpetual Trusts: The Walking Dead" And "Congress Should Effectively Curb Gst Exemption For Perpetual Trusts.", Calvin H. Johnson, Lawrence W. Waggoner

Law & Economics Working Papers

In separate but complementary letters to the editor of Tax Notes, Calvin Johnson (University of Texas School of Law) and Lawrence Waggoner (University of Michigan Law School) respond to an article by Dennis Belcher and seven other practicing attorneys that defend the GST exemption for perpetual trusts. In Federal Tax Rules Should Not Be Used to Limit Trust Duration, 126 Tax Notes 832 (Aug 13, 2012), the attorneys argue that the duration of a trust is a state law issue. Their article is actually a response to a Shelf Project article: Lawrence W. Waggoner, Effectively Curbing the GST Exemption for …

Revisiting 'Truth In Securities Revisited': Abolishing Ipos And Harnessing Private Markets In The Public Good, Adam C. Pritchard

Law & Economics Working Papers

This essay explores the line between private and public markets. I propose a two-tier market system to replace initial public offerings. The lower tier would be a private market restricted to accredited investors; the top tier would be a public market with unlimited access. The transition between the two markets would be based on issuer choice and market capitalization, followed by a seasoning period of disclosure and trading in the public market before the issuer would be allowed to make a public offering. I argue that such system would promote not only efficient capital formation, but also investor protection.

Has Insider Trading Become More Rampant In The United States? Evidence From Takeovers, Laura N. Beny, Nejat Seyhun

Law & Economics Working Papers

No abstract provided.

International Taxation And Competitiveness: Introduction And Overview, Reuven S. Avi-Yonah, Nicola Sartori

Law & Economics Working Papers

The debate about whether to abolish deferral or to adopt territoriality has been going on ever since the Kennedy Administration first proposed ending deferral in 1961. The problem is that neither side has factual support for their argument about whether the U.S. tax system, including Subpart F, as currently enacted or with any of the proposed reforms, in fact negatively impacts the tax burden of US-based MNEs. Even the concept of competitiveness itself is unclear. Despite numerous claims, there has been no rigorous attempt that we are aware of to determine whether MNEs based in our major trading partners in …

Outsourcing Regulation: How Insurance Reduces Moral Hazard, Kyle D. Logue, Omri Ben-Shahar

Law & Economics Working Papers

This article explores the potential value of insurance as a substitute for government regulation of safety. Successful regulation of behavior requires information in setting standards, licensing conduct, verifying outcomes, and assessing remedies. In some areas, the private insurance sector has technological advantages in collecting and administering the information relevant to setting standards, and could outperform the government in creating incentives for optimal behavior. The paper explores several areas in which regulation and other government-oriented forms of control are replaced by private insurance schemes. The role of the law diminishes to the administration of simple rules of absolute liability or of …

The Effect Of Economic Integration With China On The Future Of American Corporate Law, Joseph Vining

Law & Economics Working Papers

China's development into a world economic power and its continuing integration with the United States economy raise the question whether China's own history and the socialist context of its domestic corporate law may affect the meaning of business terms in use both internationally and in American domestic corporate law. Of particular interest is the question whether China's entry and impact may blunt the late-twentieth century effort in the United States to change the legal sense of the purpose of an American business corporation.

The Relation Between Firm-Level Corporate Governance And Market Value: A Study Of India, Bala Balasubramanian, Bernard S. Black, Vikramaditya Khanna

Law & Economics Working Papers

Relatively little is known about the corporate governance practice of firms in emerging markets. We provide a detailed overview of the practices of publicly traded firms in India, and identify areas where governance practices are relatively strong or weak, relative to developed countries. We also examine whether there is a cross-sectional relationship between measures of governance and measures of firm performance and find evidence of a positive relationship for an overall governance index and for an index covering shareholder rights. The association is stronger for more profitable firms and firms with stronger growth opportunities.

The Failure Of Mandated Disclosure, Omri Ben-Shahar, Carl E. Schneider

Law & Economics Working Papers

This article explores the spectacular prevalence, and failure, of the single most common technique for protecting personal autonomy in modern society: mandated disclosure. The article has four sections:

(1) A comprehensive summary of the recurring use of mandated disclosures, in many forms and circumstances, in the areas of consumer and borrower protection, patient informed consent, contract formation, and constitutional rights;

(2) A survey of the empirical literature documenting the failure of the mandated disclosure regime in informing people and in improving their decisions;

(3) An account of the multitude of reasons mandated disclosures fail, focusing on the political dynamics underlying …