Social and Behavioral Sciences Commons^™

Gandhi’S Prophecy: Corporate Violence And A Mindful Law For Bhopal, Nehal A. Patel

Nehal A. Patel

AbstractOver thirty years have passed since the Bhopal chemical disaster began,and in that time scholars of corporate social responsibility (CSR) havediscussed and debated several frameworks for improving corporate responseto social and environmental problems. However, CSR discourse rarelydelves into the fundamental architecture of legal thought that oftenbuttresses corporate dominance in the global economy. Moreover, CSRdiscourse does little to challenge the ontological and epistemologicalassumptions that form the foundation for modern economics and the role ofcorporations in the world.I explore methods of transforming CSR by employing the thought ofMohandas Gandhi. I pay particular attention to Gandhi’s critique ofindustrialization and principle of swadeshi (self-sufficiency) …

Puzzles In Controlling Shareholder Regimes And China: Shareholder Primacy And (Quasi) Monopoly, Sang Yop Kang

Sang Yop Kang

Professor Mark Roe explained that the shareholder wealth maximization norm (“the norm”) is not fit for a country with a (quasi) monopoly, because the norm encourages managers to maximize monopoly rents, to the detriment of the national economy. This Article provides new findings and counter-intuitive arguments as to the tension created by the norm and (quasi) monopoly by exploring three key corporate governance concepts that Roe did not examine—(1) “controlling minority structure” (CMS), where dominant shareholders hold a fractional ownership in their controlled-corporations, (2) “tunneling” (i.e., illicit transfer of corporate wealth to controlling shareholders), and (3) Chinese state-owned enterprises (SOEs). …

An Approach To The Regulation Of Spanish Banking Foundations, Miguel Martínez

Miguel Martínez

The purpose of this paper is to analyze the legal framework governing banking foundations as they have been regulated by Spanish Act 26/2013, of December 27th, on savings banks and banking foundations. Title 2 of this regulation addresses a construct that is groundbreaking for the Spanish legal system, still of paramount importance for the entire financial system insofar as these foundations become the leading players behind certain banking institutions given the high interest that foundations hold in the share capital of such institutions.

Avenues To Foreign Investment In China’S Shipping Industry—Have Lease Financing Arrangements And The Free Trade Zones Opened Markets For Foreign Non-Bank Investment?, Rick Beaumont

Rick Beaumont

No abstract provided.

The Moral Undercurrent Beneath The Regulatory Regime Of Investor Protection, Huhnkie Lee

Huhnkie Lee

No abstract provided.

Law, Fugitive Capital, And Karl Polanyi's The Great Transformation, Walter J. Kendall Lll

Walter J. Kendall lll

No abstract provided.

Optimized Theft: Why Some Controlling Shareholders “Generously” Expropriate From Minority Shareholders, Sang Yop Kang

Sang Yop Kang

Although controlling shareholder agency problems have been well studied so far, many questions still remain unanswered. In particular, an important puzzle in a bad-law jurisdiction is: why some controlling shareholders (“roving controllers”) loot the entire corporate assets at once, and why others (“stationary controllers”) siphon a part of corporate assets on a continuous basis. To solve this conundrum, this Article provides analytical frameworks exploring the behaviors and motivations of controlling shareholders. To begin with, I reinterpret Olson’s political theory of “banditry” in the context of corporate governance in developing countries. Based on a new taxonomy of controlling shareholders (“roving controllers” …

Legal And Institutional Remedies For Middle East States Wishing To Develop And Increase Foreign Direct Investment, Griffin Weaver

Griffin Weaver

The cost to overhaul a legal system is astronomical. For example, before and after the fall of the Soviet Union in the 1980’s several states received billions of dollars in loans to help change their “legal systems” and make them more western friendly. A couple of these states were West Germany and Japan, which received roughly 1.5 billion and 2.4 billion USD in loans. Considering most of this money was given in the 1950’s, the value today is probably three times or more those amounts. Without this aid both states would have been unable to make the changes to their …

The Imf’S Reassessment Of Capital Controls After The 2008 Financial Crisis: Heresy Or Orthodoxy?, Philip J. Macfarlane

Philip J. MacFarlane

While the IMF allows countries to limit the flow of capital through the use of capital controls, it has since the 1980s discouraged this practice and instead promoted capital account liberalization as a means for developing countries to attract the foreign investment needed for economic growth. The 2008 financial crisis, however, prompted the IMF to reconsider this view and increasingly support the use of capital controls for countries that were vulnerable to the effects of volatile capital flows. In 2012, the IMF changed its official position on the use of capital controls from permitted but discouraged to accepted in certain …

Money From Syar’Iah Perspective, Anowar Zahid

Anowar Zahid

In history, paper money systems have always wound up with collapse and economic chaos. Today, the usage of fiat currency, a form of paper money and the correlate bank money has brought about wide spread hardships and sufferings upon many sectors of society and communities. Following in depth syari’ah analysis, the only conclusion that is possible is that fiat currency and bank money are illegal. They are, in reality, introduced through manipulative collaborations between governments and bank cartels, as they defy the long established sanction against riba’ (usury), operate at the advantage of a selected group in society to the …

Against Regulatory Displacement: An Institutional Analysis Of Financial Crises, Jonathan C. Lipson

Jonathan C. Lipson

This paper uses “institutional analysis”—the study of the relative capacities of markets, courts, and regulators—to make three claims about financial crises.

First, financial crises are increasingly a problem of “regulatory displacement.” Through the ad hoc rescues of 2008 and the Dodd-Frank reforms of 2010, regulators displace market and judicial processes that ordinarily prevent financial distress from becoming financial crises. Because regulators are vulnerable to capture by large financial services firms, however, they cannot address the pathologies that create crises: market concentration and complexity. Indeed, regulators may inadvertently aggravate these conditions through resolution tactics that consolidate firms, and the volume and …

The Law And Economics Of Microfinance, Katherine Helen Mary Hunt

Katherine Helen Mary Hunt

Financial inclusion may be jargon which appeals to international donors and academics, but the strategic implementation in developing countries is often based on international du jour priorities, such as microfinance. The topic of microfinance is highly debated in the academic literature, although little empirical work has been published. Further, no literature to date has considered microfinance from a law and economics perspective. This paper seeks to contribute to the gap in the literature by considering how microfinance has evolved to address the credit market failure, and how microfinance regulation should be designed to promote long term financial inclusion via financially …

The New Leadership Paradigm In Today’S Financial System: Foreign And Domestic Banking, Valencia Tamir Johnson Dr

Valencia T Johnson

This article discusses the important of new leadership paradigm in today’s financial system and the importance the growth of foreign banking and investment in the United States and abroad. The article provides approaches that would inspire and develop effective leadership within financial organizations (foreign and domestic banking activities among investments, competitiveness, and improving the financial industry).

Controlling Shareholders: Benevolent “King” Or Ruthless “Pirate”, Sang Yop Kang

Sang Yop Kang

Unfair self-dealing and expropriation of minority shareholders by a controlling shareholder are common business practices in developing countries (“bad-law countries”). Although controlling shareholder agency problems have been well studied so far, there are many questions unanswered in relation to behaviors and motivations of controlling shareholders. For example, a puzzle is that some controlling shareholders in bad-law countries voluntarily extract minority shareholders less than other controlling shareholders. Applying Mancur Olson’s framework of political theory of “banditry” to the context of corporate governance, this Article proposes that there are at least two categories of controlling shareholders. “Roving controllers” are dominant shareholders with …

Present At The Creation: Reflections On The Early Years Of The National Association Of Corporate Directors, Lawrence J. Trautman

Lawrence J. Trautman Sr.

Effective corporate governance is critical to the productive operation of the global economy and preservation of our way of life. Excellent governance execution is also required to achieve economic growth and robust job creation in any country. In the United States, the premier director membership organization is the National Association of Corporate Directors (NACD). Now over 36 years old, NACD plays a major role in fostering excellence in corporate governance in the United States and beyond. Over the past thirty-six years NACD has grown from a mere realization of the importance of corporate governance to become the only national membership …

Transaction Cost-Benefit Analysis, With Applications To Financial Regulation, D. Bruce Johnsen

D. Bruce Johnsen

As Coase convincingly showed, transaction costs inhibit the ability of market participants to achieve first-best outcomes. This paper proposes a novel and relatively simple alternative to traditional cost-benefit analysis when regulated parties face sufficiently low transaction costs that they can bargain directly or rely on competitive markets to set efficient terms of trade. In these settings, the only informational burdens financial market regulators need bear to assess corrective rules is to identify the relevant parties, the “good” they hope to exchange, and the transaction costs that inhibit them from maximizing joint gains from trade. A rule is justified only if …

The Stock Market Reaction To Class Action Filings Post Pslra, Mark S. Klock

Mark S Klock

Using a substantially larger sample than has been used before, and a sample that includes the Great Financial Crisis and its ensuing recession, I investigate the stock market reaction to securities class action filings following the enactment of the Private Securities Litigation Reform Act through the first quarter of 2012. I find that on average, even after adjusting for market downturns, there is a statistically significant negative abnormal return at the time of filing. There is also a statistically significant negative abnormal return during the weeks preceding the filing indicating that the market partially, but not fully, anticipates these filings. …

Dodd-Frank Act And Remittances To Post-Conflict Countries: The Law Of Unintended Consequences Strikes Again, Raymond Natter

Raymond Natter

The Dodd-Frank Act established a new Federal framework for the regulation of international remittance payments that originate in the U.S. However, the statute and implementing regulations may have the unintended consequence of disrupting the flow of remittance funds to post-conflict nations.

Neoliberalism And The Law: How Historical Materialism Can Illuminate Recent Governmental And Judicial Decision Making, Justin Schwartz

Justin Schwartz

Neoliberalism can be understood as the deregulation of the economy from political control by deliberate action or inaction of the state. As such it is both constituted by the law and deeply affects it. I show how the methods of historical materialism can illuminate this phenomenon in all three branches of the the U.S. government. Considering the example the global financial crisis of 2007-08 that began with the housing bubble developing from trade in unregulated and overvalued mortgage backed securities, I show how the repeal of the Glass-Steagall Act, which established a firewall between commercial and investment banking, allowed this …

Global Adversarial Legalism: The Private Regulation Of Fdi As A Species Of Global Administrative Law, Ariel Meyerstein

Ariel Meyerstein, JD, PhD

This article explores the theoretical paradigm I refer to as “global adversarial legalism,” building on Robert Kagan’s description of the American legal system. Adversarial legalism has also been explained as a governance strategy deployed by the relatively weak central governance institutions of the European Union as a means of spreading EU law. It usefully captures the fragmented political authority and relatively weak hierarchical control of the global governance, or lack thereof, of foreign direct investment.

One facet of this global adversarial legalism, already much debated, is the concern that investment arbitration tribunals exercise an overly broad and perhaps illegitimate form …

Rise Of The Intercontinentalexchange And Implications Of Its Merger With Nyse Euronext, Latoya C. Brown

Latoya C. Brown, Esq.

This paper examines the impending merger between the IntercontinentalExchange (ICE) and NYSE Euronext against the backdrop of the current structure of the global financial services industry. The paper concludes that the merger embodies what the financial services industry is becoming and captures the model that will allow exchanges to remain competitive in today’s marketplace: mega-exchanges with broader asset classes and electronic platforms. As technology and globalization threaten their vitality, exchanges will need to continue reinventing and adapting. Increasingly over the last decade they have done so by merging and by moving, at least a part of, their operations on screen. …

U.S. Appellate Court Ruling Deals Fatal Blow To Argentina Brady Bond Debt Swap, Mark J. Calaguas

Mark J Calaguas

No abstract provided.

Credit Derivative Destruction And Mortgage-Backed Mayhem: The End Of An Era Of Deregulation, Matt S. Klapper

Matt S Klapper

Abstract: The absence of regulation in mortgage-backed securities and over-the-counter credit derivatives markets was instrumental in fomenting the worst financial crisis since the Great Depression—referred to in this paper as the Great Panic. The antecedents of the Great Panic of 2008 are numerous. Rather than provide an exhaustive compendium of the causes of the Great Panic, the primary focus of this essay is on mortgage-backed securities, credit derivatives and the absence of regulatory oversight. This paper argues for greater transparency in these opaque securities markets as a means of reducing systemic risk and improving regulatory oversight. Mortgage-backed securities (MBS), particularly …

Chinese Reverse Mergers, Accounting Regimes, And The Rule Of Law In China, Benjamin A. Templin

Benjamin A. Templin

In 2010, federal regulators and politicians became increasingly concerned over the accounting practices of Chinese companies that trade on U.S. stock exchanges. In particular, the Securities and Exchange Commission (“SEC”) targeted companies that went public through a process called the reverse merger. The instances of fraud became so widespread, regulators and commentators coined the term Chinese Reverse Merger (“CRM”) in order to describe a sector where investors assume the risk of accounting irregularities. Although CRMs must comply with international accounting standards, a weak rule of law in China has resulted in poor implementation and enforcement of its accounting regime. U.S. …

Capture In Financial Regulation" Can We Channel It Toward The Common Good?, Lawrence G. Baxter

Lawrence G. Baxter

“Regulatory capture” is central to regulatory analysis yet is a troublesome concept. It is difficult to prove and sometimes seems refuted by outcomes unfavorable to powerful interests. Nevertheless, the process of bank regulation and supervision fosters a closeness between regulator and regulated that would seem to be conducive to “capture” or at least to fostering undue sympathy by regulators for the companies they oversee. The influence of very large financial institutions has also become so great that financial regulation appears to have become excessively distorted in favor of these entities and to the detriment of many other legitimate interests, including …

Fannie Mae And Freddie Mac: Creatures Of Regulatory Privilege, David J. Reiss

David J Reiss

This book chapter addresses the appropriate role of Fannie Mae and Freddie Mac, the government-chartered, privately owned mortgage finance companies, in the United States housing finance sector. The federal government recently placed Fannie and Freddie in conservatorship. These two massive companies are profit-driven, but as government-sponsored enterprises they also have a government-mandated mission to provide liquidity and stability to the United States mortgage market and to achieve certain affordable housing goals. How the two companies should exit their conservatorship has implications that reach throughout the global financial markets and are of key importance to the future of American housing finance …

The Effects Of Devaluation Of The Tenge Upon The Kazakhstan Economy, John Ja Burke

John JA Burke

This article examines the probable effect of the February 2009 devaluation of the Tenge on the Kazakhstan economy. Conventional wisdom holds that currency devaluation increases exports, protects domestic production, and preserves foreign exchange currency reserves. While the latter states the obvious, the causal relation between currency devaluation and increased export revenue and increased domestic production, though logically valid, requires the passage of time to measure. In the context of Kazakhstan, the question of devaluation and its effects also must be examined within the “Dutch Disease” model, as Kazakhstan is an oil dependent country. History teaches that devaluing the Tenge is …