Thursday, December 02, 2004

Articole ale profesorilor -continuare la Idei Contemporane

Aaron S. Edlin anunta noi articole in seria working papers a University of Illinois Law and Economics Working Papers. Pentru ca unele dintre ele sint interesante si pentru juristii romanii, "republic" citeva mai jos.

PUBLISHER: The Berkeley Electronic Press EDITOR: Thomas S. Ulen, Swanlund Chair, Director, Illinois Program in Law and Economics

Iata-le mai jos, pentru cei interesati.

Daria Roithmayr, "Locked In Segregation" (October 1, 2004).University of Illinois Legal Working Paper Series.University of Illinois Law and Economics Working Papers.Working Paper 18.
ABSTRACT:In earlier work, I have developed the lock-in model of inequality, which compares persistent racial inequality to persistent market monopoly power. In this article, I explore the implications of applying the lock-in model to the problem of residential segregation. Here, I put forward two central arguments. First, I argue that residential segregation constitutes an example of a locked-in racial monopoly. During the days of Jim Crow, white racial cartels(e.g., homeowners' associations and real estate boards)engaged in anti-competitive conduct to exclude blacks and monopolize access to good neighborhoods. That early neighborhood advantage has now become locked-in via certainself-reinforcing neighborhood effects, namely through public school finance and neighborhood job referral networks. Because the (white) "rich get richer" inneighborhoods with good schools and good job networks,non-whites are relatively less able to move into more expensive white neighborhoods. Second, I argue that anti-discrimination law should shift its focus from individual intent to a lock-in framework. In contrast to the individual intent model, the lock-in model suggests that the definition of discrimination be expanded, to include persistent racial inequality that can be traced historically to earlier "anti-competitive" conduct. This definition, and the lock-in model itself, bring to light the historical, institutional and collective dimensions of racial inequality that the individual intent model suppresses. (n.n --un model de testat la studiul minoritatilor noastre rasiale?)

Christian Kirchner, Richard W. Painter, and Wulf Kaal, "Regulatory Competition in EU Corporate Law After Inspire Art: Unbundling Delaware's Product for Europe" (November 1, 2004). University of Illinois Legal Working Paper Series.University of Illinois Law and Economics Working Papers.Working Paper 17.

ABSTRACT: The decisions of the European Court of Justice in Centrosand then in Inspire Art open up the possibility of regulatory competition in European corporate law. Now that EU Member States have to recognize each other's charters, some Member States could enact and enforce corporate law preferred by shareholders, managers or both, and thus lure corporations away from other Member States with lessattractive corporate law. The European debate after Inspire Art will in some ways resemble the U.S. debate over the"Delaware effect" on corporate law over the past seventy years. Implicit in much of this debate, however, is the assumption, based on the U.S. experience, that regulatory competition in corporate law necessarily means that Member States will offer both their corporate law and their judicial system to managers and investors in other Member States who choose to incorporate abroad. Regulatory competition under this assumption requires the successful provider of corporate law to offer both an attractive statute and specialized courts to interpret that statute in a predictable manner so managers and investors will want to incorporate in that jurisdiction. This article suggests that the European experience with jurisdictional competition, at least in the short term and perhaps for longer, could be different from that in the United States.We make both a positive and a normative statement that the process of regulatory competition in corporate law in Europe will not and should not follow the American example in all aspects. Using a theoretical framework of New Institutional Economics, we relax the assumptions in neoclassical economics of perfect information, perfect rationality and zero transaction costs. We also recognize the impact of path dependence and the importance of a learning process to designing regulatory and adjudication frameworks. Furthermore, we are aware that even optimal solutions to regulatory problems can become unstable and suboptimal over time. Although there are many ways in which, for these and other reasons, the European experience with corporate law could be different from that in theUnited States, we focus in this article on one difference in particular. In the United States, incorporation in Delaware means that corporate law cases are litigated in Delaware. Delaware thus not only provides corporate charters but also its case law, and the user ordinarily must take a bundled product that includes substantive law(statutory and case law) together with adjudication. This bundling of statutory law and adjudication might, however,cause difficulties in Europe. We suggest that Member States are most likely to succeed in the regulatory competition following Centros and Inspire Art if they unbundle the corporate law product and allow buyers of corporate charters to choose the corporate law of the Member State of incorporation but have disputes under that law adjudicated elsewhere, preferably by arbitration panels. A number of factors make it difficult for Member States to offer adjudication to managers and investors in other Member States. These include (i) language barriers (particularly for Member States whose courts do not do business in English), (ii) differences between common law and civil law approaches to adjudication, (iii) procedural differences between courts of Member States that are greater than those between Delaware and other US states, and the fact that these differences discourage lawyers from recommending to their clients incorporation in other Member States, (iv)the cost to a Member State of building specialized judicial expertise in corporate law, (v) incomplete information about real or perceived judicial bias, (vi) uncertainty concerning conflict of laws within the EU, (vii)uncertainty about mutual recognition of judgments withinthe EU, and (viii) the fact that an effective adjudication system will require a learning process and that national judges could be "poor learners" about the complexities of applying national corporate law to managers and investorsin other countries. Designing strategies to overcome these barriers to a Member State entering the market for adjudication in addition to the market for corporate statutes may be a realistic long-term objective. This article suggests, however, that Member States should also explore strategies to offer their corporate statutes without adjudication by national courts and instead facilitate alternative methods of adjudication. Although it is possible to allow disputes under one Member State's corporate law to be decided by the local courts of anotherMember State (probably the "seat" of the corporation), for a variety of reasons we find this to be an unattractive alternative. A more attractive alternative is adjudication by panels of professional arbitrators who specialize in the corporate law of a particular Member State, but who could be citizens of different Member States, and who would apply uniform procedural rules determined by an arbitration association rather than by national courts. This alternative requires that Member States allow corporate charters to provide for arbitration of disputes over corporate internal affairs. While national courts in the Member State of incorporation could do this by routinely enforcing arbitration awards, specific provision for arbitration in corporate statutes is preferable. Then, if a Member State where a corporation has its principal place of business or some other Member State were to try to make the arbitration clause unworkable under its own conflict of laws principles, the Member State of incorporation and private parties could claim, probably successfully, that frustration of the arbitration clause was not in compliance with the right of establishment as interpreted by the ECJ in Inspire

Richard L. Kaplan, "Enron, Pension Policy, and SocialSecurity Privitization" (March 1, 2004). University ofIllinois Legal Working Paper Series. University of IllinoisLaw and Economics Working Papers. Working Paper 16.
ABSTRACT:This article analyzes current U.S. pension law and policy in light of the Enron implosion and considers the implications of this analysis for privatizing Social Security. The article begins by addressing the major shift in retirement funding risk from professionally managed plans to ordinary workers, beginning with the substitution of defined contributions plans for defined benefit plans,and continuing with the growing predominance of 401(k)plans. The article then examines the central problem of the Enron catastrophe: the heavy concentration of 401(k) plans in employer stock. From this context, the article then considers the essential premise of Social Security privatization - namely, that individuals should control their own retirement assets. The article concludes with policy recommendations based on this analysis to prevent the sort of financial devastation that Enron (and others)has brought.

Tom Ginsburg and Glenn Hoetker, "The Unreluctant Litigant?An Empirical Analysis of Japan's Turn to Litigation"(September 8, 2004). University of Illinois Legal WorkingPaper Series. University of Illinois Law and EconomicsWorking Papers. Working Paper 14.
ABSTRACT: This paper describes and analyzes the rapid increase in civil litigation in Japan during the 1990s in light ofexisting theories of Japanese litigiousness. Using a unique dataset of prefecture-level data, it demonstrates that the1990s increase in litigation is best attributed to two mainfactors: the expansion in institutional capacity for litigation traced to procedural reforms and an expansion inthe formerly miniscule bar; and structural changes in the Japanese economy related to the post-bubble slowdown ingrowth. The paper contributes to three literatures. First, it builds on earlier institutionally-oriented research on civil litigation in Japan by Haley and Ramseyer by providing new data and detail about the institutional barriers to litigation. Second, it contributes to the literature on the relationship between economic change and litigation more generally. Finally, it contributes to the empirical and comparative literature on litigation rates by providing evidence about the determinants of litigation in one country.

Richard Kaplan, "Mother of All Conflicts: Auditors andTheir Clients" (June 14, 2004). University of IllinoisLegal Working Paper Series. University of Illinois Law andEconomics Working Papers. Working Paper 13.
ABSTRACT:This Article examines three major problems that contributed to the wave of corporate audit failures that ravaged investors in recent years: (1) auditing firms are too cozy with corporate management to provide a truly independent check on management's abuse of corporate financial reports,(2) auditors have further compromised their independence by offering nonaudit services to audit clients, and (3) audits have failed to uncover colossal frauds and major financial misstatements. After explaining the nature of each of these three problems, the Article considers and evaluates the responses of the Sarbanes-Oxley Act of 2002 - namely,mandatory rotation of partners within the audit firm,restrictions on client hiring of audit firm personnel,prohibition of certain nonaudit services, allowance of other nonaudit services (including tax advice) with prior approval, regulation of accountants by a new oversight board, and formulation of audit standards by an organization not dominated by accountants. The Article concludes that the Sarbanes-Oxley Act represents a largely missed opportunity for serious reform of the auditor-client relationship, adopting half-hearted measures that are unlikely to make a significant difference in the vital function of providing credibility to corporate financial reporting.

Richard L. Kaplan, "Economic Inequality and the Role ofLaw" (February 7, 2004). University of Illinois LegalWorking Paper Series. University of Illinois Law andEconomics Working Papers. Working Paper 11.
ABSTRACT:In Wealth and Democracy, famed commentator and analyst Kevin Phillips provides a political history of American economic life with a specific focus on the wealthy. Heinter weaves the development of American technology with the rise and fall of economic fortunes into a compelling tale with significant implications for the formulation of public policy and the laws that implement such policy. This review begins by examining the major sources ofeconomic inequality and how they have increased the gap between rich and poor in America. The wealth of historical data in the book is considered with particular attention to the past quarter of a century. During this period, after all, economic inequality in the United States grew beyond all previous measures. Some of the key themes developed inthis section include: (1) the corrupting effect of concentrated economic power on the political process, (2)the impact of vast wealth on the formulation of public policy, and (3) the increasingly precarious financial situation of middle-class families. The review then explores the role that legal regimes can play in addressing economic inequality and how Phillips systematically understated their importance - specifically,taxation, health care, and Social Security. With respect to taxation, the review analyzes three major provisions of the 2001 Tax Act: repeal of the estate tax, augmented contributions to tax-favored retirement accounts, andcreation of tax-exempt college savings plans. Regarding health care, the review examines first the increasing phenomenon of workers without health insurance and then the largely invisible but painfully significant problem of long-term care. Finally, this section analyzes how Social Security consciously ameliorates economic inequality and how this feature will be discarded under most privatization proposals. The review concludes that Kevin Phillips has written an important book that should give serious pause to lawmakers involved in a wide range of critical issues facing America today. The increasing economic inequality of recent decades poses a significant challenge to the U.S. legal system an dits democratic processes. As Phillips contends, the status quo is unsustainable and plutocracy is where we are headed, if we are not already there.

Larry E. Ribstein, "Are Partners Fiduciaries?" (September28, 2004). University of Illinois Legal Working PaperSeries. University of Illinois Law and Economics WorkingPapers. Working Paper 10.
ABSTRACT: The proliferation of partnership-type entities raises many questions about how the traditional rules of business entities will be tailored for these new contexts. This includes questions concerning default fiduciary duties in partnership-type firms. In particular, should fiduciary duties apply to manager-owners as well as to managers in firms with passive owners? In contrast to Justice Cardozo's famous dictum in Meinhard v. Salmon, Professor Ribstein concludes that partners, as such, are not fiduciaries because they do not delegate open-ended control to their co-partners. Extending fiduciary relationships beyond thisspecific situation would increase litigation andcontracting costs, decrease the effectiveness of owners'governance rights, and dilute true fiduciaries' legal and extralegal incentives.