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Publication Types
Categories
Holger Spamann, Are Sleepy Punishers Really Harsh Punishers?: Comment (Harvard Law Sch. John M. Olin Ctr. Discussion Paper No. 898, Feb. 16, 2017).
Categories:
Criminal Law & Procedure
,
Government & Politics
Sub-Categories:
Sentencing & Punishment
,
Judges & Jurisprudence
Type: Other
Abstract
This comment points out four severe reservations regarding Cho et al.’s (PS 2017) finding that U.S. federal judges punish more harshly on “sleepy Mondays,” the Mondays after the start of Daylights Savings Time. First, Cho et al.’s finding pertains to only one of at least two dimensions of harshness, and the opposite result obtains in the second dimension. Second, even within the first dimension, Cho et al.’s result is statistically significant only because of a variable transformation and sample restrictions that are neither transparent in the article nor theoretically sound. Third, reanalysis of the data with superior methods reveals no significant “sleepy Monday” effect in the years 1992-2003. Fourth, sentences were on average shorter on “sleepy Mondays” out of sample, namely in 2004-2016.
Spamann, Holger & Lars Kloehn, Justice is Less Blind, and Less Legalistic, Than We Thought: Evidence from an Experiment with Real Judges, J. Legal Stud. 255 (2016).
Categories:
Disciplinary Perspectives & Law
,
Government & Politics
Sub-Categories:
Empirical Legal Studies
,
Judges & Jurisprudence
Type: Article
Abstract
We experimentally investigate the determinants of judicial decisions in a setting resembling real-world judicial decision-making. U.S. federal judges (N=32) spend 55 minutes judging a real appeals case from an international tribunal, with minor modifications to accommodate the experimental treatments. The fictitious briefs focus on one easily understandable issue of law. Our 2×2 between-subject factorial design crosses a weak precedent and legally irrelevant defendant characteristics. In a survey, law professors predicted that the precedent would have a stronger effect than the defendant characteristics. In actuality, the precedent has no detectable effect on the judges’ decisions, whereas the two defendants’ affirmance rates differ by 45% (p<.01). Judges’ written reasons, on the other hand, do not mention defendant characteristics at all, focusing instead on the precedent and other legalistic and policy considerations.
Holger Spamann, Can Simple Mechanism Design Results be Used to Implement the Proportionality Standard in Discovery?: Comment, 172 J. Institutional & Theoretical Econ. 227 (2016).
Categories:
Civil Practice & Procedure
,
Disciplinary Perspectives & Law
Sub-Categories:
Litigation & Settlement
,
Practice & Procedure
,
Law & Economics
Type: Article
Abstract
In this comment on Gelbach (JITE 2016), I make two points. First, I support Gelbach’s application of mechanism design (MD) to legal design because it takes information requirements and other constraints seriously. MD derives the best rule under the stated constraints. This rigorously confirms the existing rule’s optimality, reveals a superior alternative, or, if the MD solution appears unrealistic, uncovers additional constraints that any real solution must satisfy. Second, I consider implementing the social optimum, rather than the private optimum. In Gelbach’s discovery example, even a court with limited information can objectively implement some social goals; for other social goals, the court can at least do the best it can according to its subjective beliefs.
Holger Spamann, The US Crime Puzzle: A Comparative Perspective on US Crime & Punishment, 18 Am. L. & Econ. Rev. 33 (2016) (the replication code and data are available at http://tinyurl.com/nv758yj).
Categories:
Criminal Law & Procedure
,
Disciplinary Perspectives & Law
,
International, Foreign & Comparative Law
Sub-Categories:
Sentencing & Punishment
,
Empirical Legal Studies
,
Comparative Law
Type: Article
Abstract
I generate out-of-sample predictions of US crime and incarceration rates from cross-country regressions. Predictors suggested in the literature explain a large part of the international variation, but fail to explain the US. The US incarceration rate is four times higher than predicted, while US crime rates are at best slightly below the prediction. An explanation of this US crime puzzle requires a low crime-punishment elasticity at US levels of punishment, and/or an extraordinarily high US latent crime rate. I derive joint bounds for the two. Drawing on additional country-specific information, I argue that the most plausible explanation combines both elements.
Holger Spamann, Monetary Liability for Breach of the Duty of Care? 8 J. Legal Analysis 337 (2016).
Categories:
Corporate Law & Securities
,
Civil Practice & Procedure
Sub-Categories:
Fiduciaries
,
Corporate Governance
,
Torts - Business
Type: Article
Abstract
This article clarifies why optimal corporate governance generally excludes monetary liability for breach of directors’ and managers’ fiduciary duty of care. In principle, payments predicated on third-party investigations of directors’ and managers’ business decisions could usefully supplement payments predicated on stock prices or accounting figures in the provision of performance incentives, including risk-taking incentives. Consequently, the reason not to use liability incentives is not absolute but a cost-benefit trade-off: Litigation is expensive, while the benefits from refining incentives are limited. The analysis rationalizes many existing exceptions from non-liability but also leads to novel recommendations, particularly for entities other than public corporations.
James Naughton & Holger Spamann, Fixing Public Sector Finances: The Accounting and Reporting Lever, 62 UCLA L. Rev. 574 (2015).
Categories:
Government & Politics
,
Corporate Law & Securities
Sub-Categories:
Securities Law & Regulation
,
State & Local Government
,
Government Accountability
Type: Article
Abstract
The finances of many states, cities, and other localities are in dire straits. In this Article, we argue that partial responsibility for this situation lies with the outdated and ineffective financial reporting regime for public entities. Ineffective reporting has obscured and continues to obscure the extent of municipal financial problems, thus delaying or even preventing corrective actions. Worse, ineffective reporting has created incentives for accounting gimmicks that have directly contributed to the dramatic decline of public sector finances. Fixing the reporting regime is thus a necessary first step toward fiscal recovery. We provide concrete examples of advisable changes in accounting rules and advocate for institutional changes, particularly Securities and Exchange Commission involvement, that we hope will lead to better public accounting rules generally.
Holger Spamann, Empirical Comparative Law, 11 Ann. Rev. L. & Soc. Sci. 131 (2015).
Categories:
Disciplinary Perspectives & Law
,
International, Foreign & Comparative Law
Sub-Categories:
Empirical Legal Studies
,
Comparative Law
Type: Book
Abstract
I review the empirical comparative law literature with an emphasis on quantitative work. After situating the field and surveying its main applications to date, I turn to methodological issues. I discuss at length the obstacles to causal inference from comparative data, and caution against inappropriate use of instrumental variables and other techniques. Even if comparative data cannot identify any single causal theory, however, they are extremely important in narrowing down the set of plausible theories. I report progress in measurement design and suggest improvements in data analysis and interpretation using techniques from other fields, particularly growth econometrics.
James Naughton & Holger Spamann, Deficiencies in Accounting and Financial Reporting of State and Municipal Governments, 85 CPA J., June 2015, at 16.
Categories:
Government & Politics
,
Banking & Finance
Sub-Categories:
Finance
,
State & Local Government
Type: Article
Abstract
Detroit's bankruptcy highlighted what savvy observers have been warning about for years: The finances of many states, cities, and other localities are in dire straits. The authors believe that this financial calamity is partly attributable to the outdated and ineffective financial reporting regime for public entities, and that fixing this regime is a necessary first step toward fiscal recovery. The current regime omits foreseeable long-term consequences from reported financial numbers. This omission blinds citizens, and perhaps even politicians, to the long-term repercussions of policy choices. It may even prompt politicians to choose economically suboptimal measures precisely because it allows them to misrepresent their financial performance to voters.
Holger Spamann, Derivatives Trading and Negative Voting (Harvard Law, Econ., & Bus. Discussion Paper No. 730, 2014).
Categories:
Corporate Law & Securities
Sub-Categories:
Corporate Bankruptcy & Reorganization
,
Securities Law & Regulation
,
Corporate Law
Type: Article
Abstract
This paper exposits a model of parallel trading of corporate securities (shares, bonds) and derivatives (TRS, CDS) in which a large trader can sometimes profitably acquire securities with their corporate control rights for the sole purpose of reducing the corporation's value and gaining on a net short position created through off-setting derivatives. At other times, the large trader profitably takes a net long position. The large trader requires no private information beyond its own trades. The problem is most likely to manifest when derivatives trade on an exchange and transactions give blocking powers to small minorities, particularly out-of-bankruptcy restructurings and freezeouts.
Daniel Klerman, Paul G. Mahoney, Holger Spamann & Mark I. Weinstein, Legal Origin or Colonial History?, 3 J. Legal Analysis 379 (2011) (The data and code associated with this article may be found at http://spamann.net/ASSETS/KMSW_LO_v_CO_data_and_code.zip).
Categories:
International, Foreign & Comparative Law
,
Disciplinary Perspectives & Law
,
Legal Profession
Sub-Categories:
Empirical Legal Studies
,
Law & Economics
,
Comparative Law
,
Legal History
Type: Article
Abstract
Economists have documented pervasive correlations between legal origins, modern regulation, and economic outcomes around the world. Where legal origin is exogenous, however, it is almost perfectly correlated with another set of potentially relevant background variables: the colonial policies of the European powers that spread the “origin” legal systems through the world. We attempt to disentangle these factors by exploiting the imperfect overlap of colonizer and legal origin, and looking at possible channels, such as the structure of the legal system, through which these factors might influence contemporary economic outcomes. We find strong evidence in favor of non-legal colonial explanations for economic growth. For other dependent variables, the results are mixed.
Holger Spamann, Legal Origin, Civil Procedure, and the Quality of Contract Enforcement, 166 J. Inst. & Theoretical Econ. 149 (2010).
Categories:
Disciplinary Perspectives & Law
,
Civil Practice & Procedure
,
International, Foreign & Comparative Law
Sub-Categories:
Practice & Procedure
,
Empirical Legal Studies
,
Law & Economics
,
Comparative Law
,
Civil Law
Type: Article
Abstract
This paper empirically compares civil procedure in common-law and civil-law countries. Using World-Bank and hand-collected data, and unlike earlier studies that used predecessor data sets, this paper find no systematic differences between common- and civil-law countries in the complexity, formalism, duration, or cost of procedure in courts of first instance. The paper further finds that by a subjective measure, contract enforceability in common-law countries is higher than in French, but lower than in German and Scandinavian, civil-law countries. Given civil procedure's central role for the common-civil-law distinction, these findings challenge the distinction's economic relevance.
Holger Spamann, The "Antidirector Rights Index" Revisited, 23 Rev. Fin. Stud. 467 (2010) (The documentation, data, and code are available at http://bit.ly/mdfmwM or http://bit.ly/mnIp1r).
Categories:
Corporate Law & Securities
,
Disciplinary Perspectives & Law
,
International, Foreign & Comparative Law
,
Banking & Finance
Sub-Categories:
Financial Markets & Institutions
,
Shareholders
,
Corporate Governance
,
Empirical Legal Studies
,
Law & Economics
,
Comparative Law
Type: Article
Abstract
The “antidirector rights index” has been used as a measure of shareholder protection in over a hundred articles since it was introduced by La Porta et al. (“Law and Finance.” 1998, Journal of Political Economy 106:1113–55). A thorough reexamination of the legal data, however, leads to corrections for thirty-three of the forty-six countries analyzed. The correlation between corrected and original values is only 0.53. Consequently, many empirical results established using the original index may not be replicable with corrected values. In particular, the corrected index fails to support three widely influential claims: that shareholder protection is higher in common than in civil law countries; that shareholder protection predicts stock market size or ownership dispersion; and that weak corporate governance explains the extent of exchange rate depreciation during the Asian financial crisis of 1997–1998.
Lucian A. Bebchuk & Holger Spamann, Regulating Bankers’ Pay, 98 Geo. L.J. 247 (2010).
Categories:
Banking & Finance
Sub-Categories:
Financial Markets & Institutions
,
Banking
,
Financial Reform
Type: Article
Abstract
This paper seeks to make three contributions to understanding how banks’ executive pay has produced incentives for excessive risk-taking and how such pay should be reformed. First, although there is now wide recognition that pay packages focused excessively on short-term results, we analyze a separate and critical distortion that has received little attention. Equity-based awards, coupled with the capital structure of banks, tie executives’ compensation to a highly levered bet on the value of banks’ assets. Because bank executives expect to share in any gains that might flow to common shareholders, but are insulated from losses that the realization of risks could impose on preferred shareholders, bondholders, depositors, and taxpayers, executives have incentives to give insufficient weight to the downside of risky strategies. Second, we show that corporate governance reforms aimed at aligning the design of executive pay arrangements with the interests of banks’ common shareholders - such as advisory shareholder votes on compensation arrangements, use of restricted stock awards, and increased director oversight and independence -cannot eliminate the identified problem. In fact, the interests of common shareholders could be served by more risk-taking than is socially desirable. Accordingly, while such measures could eliminate risk-taking that is excessive even from shareholders’ point of view, they cannot be expected to prevent risk-taking that serves shareholders but is socially excessive. Third, we develop a case for using regulation of banks’ executive pay as an important element of financial regulation. We provide a normative foundation for such pay regulation, analyze how regulators should monitor and regulate bankers’ pay, and show how pay regulation can complement and reinforce the traditional forms of financial regulation.
Lucian A. Bebchuk, Alma Cohen & Holger Spamann, The Wages of Failure: Executive Compensation at Bear Stearns and Lehman 2000-2008, 27 Yale J. on Reg. 257 (2010).
Categories:
Banking & Finance
,
Corporate Law & Securities
,
Government & Politics
Sub-Categories:
Banking
,
Commercial Law
,
Finance
,
Financial Markets & Institutions
,
Shareholders
,
Corporate Law
,
Administrative Law & Agencies
Type: Article
Abstract
The standard narrative of the meltdown of Bear Stearns and Lehman Brothers assumes that the wealth of the top executives at these firms was largely wiped out along with their firms. In the ongoing debate about regulatory responses to the financial crisis, commentators have used this assumed fact as a basis for dismissing both the role of compensation structures in inducing risk-taking and the potential value of reforming such structures. This Article provides a case study of compensation at Bear Stearns and Lehman Brothers during 2000-2008 and concludes that this assumed fact is incorrect. We find that the top-five-executive teams at these firms cashed out large amounts of performance-based compensation during this period. From 2000-2008, they were able to cash out large amounts of bonus compensation that were not clawed back when the firms collapsed, and to pocket large amounts from selling shares. Overall, we estimate that the top executive teams of Bear Stearns and Lehman Brothers derived cash flows of about $1.4 billion and $1 billion, respectively, from cash bonuses and equity sales during 2000-2008. These cash flows substantially exceeded the value of the executives' initial holdings at the beginning of the period, and the executives' net payoffs for the period were thus decidedly positive. The divergence between how the top executives and their shareholders fared implies that it is not possible to rule out, as standard narratives suggest, that the executives' pay arrangements provided them with excessive risk-taking incentives. We discuss the implications of our analysis for understanding the possible role that pay arrangements have played in the run-up to the financial crisis and how they should be reformed going forward.
Holger Spamann, Large Sample, Quantitative Research Designs for Comparative Law?, 57 Am. J. Comp. L. 797 (2009).
Categories:
Disciplinary Perspectives & Law
,
International, Foreign & Comparative Law
Sub-Categories:
Empirical Legal Studies
,
Comparative Law
Type: Article
Abstract
A substantial body of comparative legal scholarship considers statements applicable to large, conceptually infinite numbers of countries. Such statements gain in credibility if they are supported by evidence from large samples of countries. Processing such vast evidence requires quantitative methods. Designing the requisite numerical measures of law is not straightforward, but an important insight from statistics suggests that this problem can be overcome by appropriate research design. While in practice considering more countries comes at the expense of less information per country, on balance large sample, quantitative research designs promise to yield interesting insights for comparative law.
Holger Spamann, Contemporary Legal Transplants - Legal Families and the Diffusion of (Corporate) Law, 2009 B.Y.U.L. Rev. 1813.
Categories:
Corporate Law & Securities
,
Disciplinary Perspectives & Law
,
Legal Profession
,
International, Foreign & Comparative Law
Sub-Categories:
Corporate Law
,
Securities Law & Regulation
,
Empirical Legal Studies
,
Developing & Emerging Nations
,
Comparative Law
,
Legal History
Type: Article
Abstract
This paper empirically documents the continued importance of the legal families (common law and civil law) for the diffusion of formal legal materials from the core to the periphery, and some possible channels of diffusion, in post-colonial times. This raises the possibility that substantive differences between countries of different families around the world, such as those documented in the legal origins literature, continue to be the result of separate diffusion processes rather than of intrinsic differences between common and civil law. Using the example of corporate and securities law, this paper documents the frequent and often exclusive use of legal materials and models from the respective legal family’s core countries in treatises and law reform projects in thirty-two peripheral and semi-peripheral countries. Most authors of these treatises and projects were trained in the respective core countries. Data on the activities of national legal development and cooperation organizations, trade and investment flows, and student migration confirm the close legal family ties and provide some evidence of possible channels through which materials may continue to diffuse within their legal families after decolonization. The diffusion of formal legal materials need not imply that the substantive development of law is affected by foreign influences, at least not in ways that induce substantive differences between periphery countries of different legal families. Various theories from comparative law, sociology, political science, and economics provide reasons, however, why the content of law in the periphery might continue to be influenced by core country models of the same legal family, as the evidence of formal diffusion suggests they are. Such diffusion theories fit the available data better than other theories put forward in the literature.
Holger Spamann, The Myth of 'Rebalancing' Retaliation in WTO Dispute Settlement Practice, 9 J. Int'l Econ. L. 31 (2006).
Categories:
Civil Practice & Procedure
,
International, Foreign & Comparative Law
Sub-Categories:
Dispute Resolution
,
Negotiation & Alternative Dispute Resolution
,
International Trade
,
International Law
Type: Article
Abstract
It is generally assumed that trade retaliation under the WTO performs some kind of ‘rebalancing’ by allowing the injured Member to suspend ‘concessions and obligations’ vis-à-vis the violating Member of a level equivalent to the level of ‘nullification and impairment’ suffered by the injured Member. This article argues that this perception is misguided. The article first questions if a sensible comparator exists with which equivalence for purposes of ‘rebalancing’ could be evaluated. It then argues that WTO arbitration decisions do not even succeed in their limited goal of providing for retaliation that will affect trade in the same amount as the WTO-inconsistent measure at issue. One reason is the use of an asymmetric and underspecified trade effects comparator. The other reason is very significant miscalculation of the trade effects of the violation, as shown by detailed legal-economic analysis of all relevant arbitration decisions. The decisions concerning countermeasures against prohibited export subsidies do not make any attempt at ‘rebalancing’ in the first place. The article considers political explanations of arbitration decisions. It concludes with some suggestions for improvement.
Holger Spamann, Standard of Review for World Trade Organization Panels in Trade Remedy Cases: A Critical Analysis, 38 J. World Trade 509 (2004).
Categories:
International, Foreign & Comparative Law
,
Civil Practice & Procedure
Sub-Categories:
Negotiation & Alternative Dispute Resolution
,
Dispute Resolution
,
Remedies
,
International Trade
,
Trade Regulation
Type: Article