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on Law and Economics |
| By: | Virgile Chassagnon (LEFI - Laboratoire d'Economie de la Firme et des Institutions - Université Lumière - Lyon II) |
| Abstract: | This paper intends to depart from a critique of the nexus of contracts theory of the firm endowed with its moral personification to propose some theoretical foundations of the firm as a real entity. Some old legal views of the corporation are mobilized to complete the conceptual vacuity of economic theories. This provides crucial insights for modern complex organizations such as the network-firm. The integrating and unifying role of intra-network power relationships is then emphasized and some law and economics of the network-firm are ultimately proposed to clarify the argument that the network-firm − as the firm stricto sensu − is a singular real entity composed from distinct legal entities. |
| Keywords: | Law and economics, contract theory of the firm, network-firm, legal fiction, real entity |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00374978_v1&r=law |
| By: | Simon Deakin (University of Cambridge); Panicos Demetriades (University of Leicester); Gregory James (University of Leicester) |
| Abstract: | We use a new legal dataset tracking changes in creditor protection law over several decades to study the impact of legal reform on banking system development in India. Cointegration analysis is used to show that the strengthening of creditor rights in relation to the enforcement of security iterests in the 1990s and 2000s led to an increase in bank credit. We show that the change in the law was not endogenous to trends in stock market development and GDP per capita, and that the direction of causation ran from legal reform to banking development, rather than the reverse. |
| Keywords: | creditor rights, legal origin, banking development, India |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:wef:wpaper:0038&r=law |
| By: | Hauret, Laetitia; Langlais, Eric; Sonntag, Carine |
| Abstract: | Our paper addresses the question of the deterrent effect of a monetary sanction associated to a collective rather than an individual liability, when crimes are realized within a hierarchical gang (defined as a criminal organization where the leader is a sleeping partner, and several agents are active partners in the illegal or criminal activity). We develop a model where the active gang members face contradictory incentives to commit a crime. On the one hand, public authorities try to deter each gang member by imposing sanctions; on the second, the leader of the gang try to keep his members enough active in the gang by threatening them of private sanctions. We show that sanctions based on individual liability are inefficient to deter gang’s members since the leader overreacts on the public sanctions. In contrast, we show that a regime of collective liability, allowing the judge to sanction the sleeping partner even if he hasn’t realized any crime himself, can reach enough deterrence of the members of the gang. |
| Keywords: | Gangs deterrence; individual and collective liability; optimal law enforcement |
| JEL: | K0 K42 |
| Date: | 2009–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:14762&r=law |
| By: | Schouten, Michael C. |
| Abstract: | The use of equity derivatives to conceal economic ownership of shares (“hidden ownership”) is increasingly drawing attention from the financial community, as is the exercise of voting power without corresponding economic interest (“empty voting”). Market participants and commentators have called for expansion of ownership disclosure rules, and policymakers on both sides of the Atlantic are now contemplating how to respond. Yet, in order to design appropriate responses it is key to understand why we have ownership disclosure rules in the first place. This understanding currently appears to be lacking, which may explain why we observe divergent approaches between countries. The case for mandatory ownership disclosure has also received remarkably little attention in the literature, which has focused almost exclusively on mandatory issuer disclosure. Perhaps this is because most people assume that ownership disclosure is a good thing. But why is such information important, and to whom? This paper aims to answer these fundamental questions, using the European disclosure regime as an example. First, the paper identifies two main objectives of ownership disclosure: improving market efficiency and corporate governance. Next, the paper explores the various mechanisms through which ownership disclosure performs these tasks. This sets the stage for an analysis of hidden ownership and empty voting that demonstrates why these phenomena are so problematic. |
| Keywords: | ownership disclosure; market efficiency; corporate governance; monitoring; hidden ownership; empty voting; hedge fund activism |
| JEL: | K20 G38 K22 G34 G10 G30 |
| Date: | 2009–03–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:14139&r=law |