Faculty Bibliography

This paper is the third chapter of the third edition of The Anatomy of Corporate Law: A Comparative and Functional Approach, by Reinier Kraakman, John Armour, Paul Davies, Luca Enriques, Henry Hansmann, Gerard Hertig, Klaus Hopt, Hideki Kanda Mariana Pargendler, Georg Ringe, and Edward Rock (Oxford University Press, 2017). The book as a whole provides a functional analysis of corporate (or company) law in Europe, the U.S., and Japan. Its organization reflects the structure of corporate law across all jurisdictions, while individual chapters explore the diversity of jurisdictional approaches to the common problems of corporate law. In its third edition, the book has been significantly revised and expanded. Chapter 3 examines legal strategies employed in representative “core jurisdictions” to mitigate manager-shareholder conflicts. Agency problems arise from two of the core features of the corporate form: investor ownership, which often results in ultimate control being held by shareholders far removed from the firm’s day-to-day operations; and delegated management, which opens up the possibility for opportunistic behavior. This chapter describes how legal strategies outlined in Chapter 2 of the book are utilized to solve the trade-offs resulting from the interaction of investor ownership with delegated management. It describes the use of appointment rights, by which shareholders retain the right to appoint and remove directors. Next, it focuses on core decision rights and how their effectiveness is related to the problem of shareholder coordination costs. It then considers reward strategies and independent directors as a popular trusteeship strategy, while also highlighting differences in and commonalities in the regulation of executive compensation. The chapter briefly reviews legal rules and standards and disclosure as additional tools, before reflecting upon why some divergence in the basic corporate governance structure persists across our sample jurisdictions.

For most people, control has some intrinsic value; people care about maintaining it and will pay something to do so. Whenever a private or public institution blocks choices or interferes with agency, some people will rebel, even if exercising control would not result in material benefits or might produce material harms. On the other hand, people sometimes want to relinquish control, because exercising agency is burdensome or costly. This essay explores when rational and boundedly rational people will prefer to maintain or exercise control and when they will prefer to delegate it.

In 1976, the First National Bank of Boston, Gillette, and three other Massachusetts companies announced their plan to oppose a referendum authorizing a graduated income tax. State officials responded that Massachusetts law prohibited this type of corporate political expenditure. The U.S. Supreme Court intervened, declaring that Massachusetts could not prohibit speech based solely on the “corporate identity of the speaker.” The Court reasoned that shareholders through “corporate democracy” were better positioned than states to regulate companies’ political engagement. In the wake of this decision, the Boston City Council—a municipal corporation—announced its plan to spend its corporate dollars in support of a 1978 tax referendum. That same election, Massachusetts Citizens for Life—a nonprofit corporation—financed newsletters promoting anti-abortion candidates. State and federal officials again blocked these corporate political expenditures. This time, however, the Supreme Court protected only the nonprofit, observing that a “voluntary political association” did not “suddenly present the danger of corruption merely by assuming the corporate form.” These Supreme Court decisions armed business and nonprofit corporations with a powerful new weapon—the First Amendment—that future lawyers wielded against advertising bans, labor contracts, healthcare requirements, and, of course, campaign finance laws. At the same time, the decisions left the City of Boston unable to support referenda that the Bank of Boston was free to oppose. This paper will situate this “First Amendment libertarianism” in the political, legal, and social context of 1970s Boston, a city gripped by racial crisis and dependent on business corporations, especially the Bank of Boston, for financial survival. This context helps explain why courts, lawyers, and executives expected that shareholders could responsibly oversee governments better than governments could oversee shareholders—or themselves.

Intercountry adoption is about compassion, not politics.

Do consumers benefit from mandatory labels? How much? These questions are difficult to answer, because assessment of the costs and benefits of labels presents serious challenges. In the United States, federal agencies have: (1) claimed that quantification is essentially impossible; (2) engaged in “breakeven analysis”; (3) projected various endpoints, such as health benefits or purely economic savings; and (4) relied on private willingness-to-pay for the relevant information. All of these approaches run into serious normative, conceptual, and empirical objections. Approach (3) will exaggerate what consumers gain, because many people suffer welfare losses when they see labels, whether or not they end up making different choices. (Part of that loss is captured in one reaction to mandatory calorie labels: “They ruined popcorn!”) In principle, approach (4) is usually best, but people may lack the information that would permit them to say how much they would pay for (more) information, and sometimes tastes and values shift over time, which means that willingness to pay may fail to capture welfare effects. These points raise fundamental conceptual, normative, and empirical questions about welfarist approaches to public policy.

A recent wave of literature, partly motivated by presidential campaign tax reform plans, analyzes tax expenditure limitation proposals. These reforms are often advanced not only, or even primarily, because they reduce distortions caused by favoritism for some types of expenditures over others. Largely they are urged for a number of other reasons: on distributive grounds, because the resulting broader base enables lower marginal tax rates and hence less distortion of labor effort and other margins, and to raise revenue without requiring higher marginal tax rates. It is generally recognized that the particular results on these dimensions are heavily dependent on what sorts of rate adjustments are used to return the proceeds to taxpayers. Often, revenue neutrality is assumed. This essay advances a complementary, distribution-neutral perspective on the analysis of tax expenditure limitations. Distribution-neutral implementation provides an illuminating benchmark against which to understand prior analysts’ large number of results and, more importantly, clarifies the analysis, particularly of the distribution-distortion tradeoff. The central lessons contradict the common belief that one can have less distortion of labor supply through lower marginal tax rates while also maintaining or enhancing progressivity.

Terry v. Ohio expanded police authority by creating a new legal category—the stop based on reasonable suspicion, an easier standard to meet than an arrest based on probable cause. The formal line between those two categories, however, has turned out to be blurry. In practice, stops morph easily into arrests even without new evidence, an elision that Terry doctrine does not contemplate. The implications are significant for the enormous misdemeanor arena where legal rules generally lack traction, and Terry stops are common. Once those stops become arrests, they typically convert smoothly into criminal charges, which easily become convictions. Terry stops thus influence eventual outcomes far more than they should given their lightweight evidentiary basis. This slippery slope undermines the integrity of basic distinctions between policing and prosecution throughout the petty offense process, an unprincipled state of affairs exacerbated by the original Terry compromise.

The article focuses on the alternatives to the state action doctrine in the era of privatization, mandatory arbitration, and the internet for serving human needs. Topics discussed include increased use of the internet and digital communications; increased privatization of traditionally public services; and importance of the line between governmental and nongovernmental activities.

This law school casebook was developed by a team of professors at Harvard Law School to introduce students with little or no quantitative background to the basic analytical techniques that attorneys need to master to represent their clients effectively. This casebook presents clear explanations of decision analysis, games and information, contracting, accounting, finance, microeconomics, economic analysis of the law, fundamentals of statistics, and multiple regression analysis. References and examples have been thoroughly updated for this 3rd edition, and exposition of a number of key topics has been reworked to reflect insights gained from teaching these topics using the 1st edition to many hundreds of Harvard Law students over the past decade.

American capital punishment is at a crossroads. Capital sentencing and executions have declined markedly. Several states have recently abolished the death penalty and others have imposed moratoria on executions. Despite extensive constitutional doctrines regulating state capital practices, state capital systems are still fraught with arbitrariness, inaccuracy, and unfairness. Many of the problems facing American capital punishment are intractable and likely unamenable to significant improvement or reform. This chapter describes the obstacles to reform and the case for moratorium or repeal. It then offers three concrete proposals for retentionist jurisdictions, focusing on improving capital representation, centralizing prosecutorial charging decisions, and limiting the application of the death penalty against persons with serious mental illness.

The article discusses issues related to migration and international human rights such as several challenges associated with climate change displacement, ranging from the scale of the problem to questions of causation and responsibility to the need to produce frameworks that can address issues on acute, immediate impacts, such as hurricanes, and long-term, gradual effects, such as slow-onset desertification. It also discusses refugee protection and humanitarian efforts.

This paper examines the use of collective sanctions in classical Athens. Collective sanctions have been interpreted in two very different ways: for some they reflect a distinctively primitive conception of collective guilt and responsibility; for others collective sanctions are an instrumental method of promoting deterrence. The paper argues that the Athenians understood collective sanctions primarily in instrumental terms. While the long pedigree of collective sanctions in Greek literature and culture made these punishments less morally repugnant to the Athenians than they are to moderns, the relatively rare uses of collective sanctions in classical Athens do not support a cultural account. At the same time, modern functional accounts only explain a small subset of Athenian collective punishments. Most functional accounts describe ancient collective liability as a form of indirect, delegated deterrence which encourages group members to monitor, prevent, and punish individual wrongdoers within the group. I argue that while this model applies to one form of collective punishment in Athens — group punishment of boards of magistrates — in most cases Athenian collective sanctions were aimed at direct, rather than indirect, deterrence.

This article considers the development and efficacy of maritime confidence-building measures (CBMs) to ensure safe and secure navigation in the region, and to reduce tension and prevent conflict. The 1982 United Nations Convention on the Law of the Sea (LOSC) and the 1972 International Regulations for Preventing Collisions at Sea (COLREG) are multilateral agreements that set forth legally binding obligations of all states. The 2014 Code for Unplanned Encounters at Sea (CUES) provides greater fidelity for duties of safe interaction at sea, but it is nonbinding. The two major powers signed in 2014 and 2015 a legally nonbinding Memorandum of Understanding (MOU) on the Rules of Behaviour for Safety of Air and Maritime Encounters. This article concludes that the nonbinding instruments are unlikely to enhance navigational safety or security, and in some respects, may even undermine it.

This paper estimates the effect of Chapter 13 bankruptcy protection on post-filing financial outcomes using a new dataset linking bankruptcy filings to credit bureau records. Our empirical strategy uses the leniency of randomly-assigned judges as an instrument for Chapter 13 protection. Over the first five post-filing years, we find that Chapter 13 protection decreases an index measuring adverse financial events such as civil judgments and repossessions by 0.316 standard deviations, increases the probability of being a homeowner by 13.2 percentage points, and increases credit scores by 14.9 points. Chapter 13 protection has little impact on open unsecured debt, but decreases the amount of debt in collections by $1,315.

“Big data” has become the ubiquitous watchword of this decade. Predictive analytics, which is something we want to do with big data -- to use of electronic algorithms to forecast future events in real time. Predictive analytics is interfacing with the law in a myriad of settings: how votes are counted and voter rolls revised, the targeting of taxpayers for auditing, the selection of travelers for more intensive searching, pharmacovigilance, the creation of new drugs and diagnostics, etc. In this paper, written for the symposium “Future Proofing the Law,” we want to engage in a bit of legal arbitrage; that is, we want to examine which insights from legal analysis of predictive analytics in better-trodden ground — predictive policing — can be useful for understanding relatively newer ground for legal scholars — the use of predictive analytics in health care. To the degree lessons can be learned from this dialogue, we think they go in both directions.

When an agency fails to engage in quantitative cost-benefit analysis, has it acted arbitrarily and hence in violation of the Administrative Procedure Act? At first glance, the question answers itself: Congress sometimes requires that form of analysis, but if it has not done so, then agencies have discretion to proceed as they see fit. But as recent decisions suggest, the underlying issues are far more complicated than they seem. The central reason is that for all its limitations, cost-benefit analysis is the best available method for testing whether regulations increase social welfare. Whenever a statute authorizes an agency to consider costs and benefits, its failure to quantify them, and to weigh them against each other, requires a non-arbitrary justification. Potential justifications include the technical difficulty of quantifying costs and benefits; the relevance of values such as equity, dignity, and fair distribution; and the existence of welfare effects that are not captured by monetized costs and benefits. These justifications will often be sufficient. But in some cases, they are not, and agencies should be found to have acted arbitrarily in failing to quantify costs and benefits and to show that the benefits justify the costs.

In the last decades, many political theorists have explored the idea of “deliberative democracy.” The basic claim is that well-functioning democracies combine accountability with a commitment to reflection, information acquisition, multiple perspectives, and reason-giving. Does that claim illuminate actual practices? Much of the time, the executive branch in the United States combines both democracy and deliberation, not least because it places a high premium on reason-giving and the acquisition of necessary information. It also contains a high degree of internal diversity, encouraging debate and disagreement, not least through the public comment process. These claims are illustrated with concrete, if somewhat stylized, discussions of how the executive branch often operates.

This chapter demystifies Carl Schmitt by interpreting his main insights through the lens of modern social sciences,. There is a large literature in political science on the political foundations of democracy, constitutionalism, and the rule of law. This literature emphasizes that legal rules, by themselves, cannot create a political equilibrium, which always depends on the expectation of political actors that other actors will contribute to preserving the constitutional regime rather than subverting it. This insight allows us to interpret Schmitt’s distinction between legality and legitimacy more concretely than in extant work. There is also a large literature in law and economics on ex ante rules versus ex post standards. Schmitt’s theory of the exception can be understood as an argument that governance through ex post standards, rather than ex ante rules, is inevitable and even desirable where political, economic, or military conditions change rapidly.

The current framework governing emergency lending – including reforms to Federal Reserve lending enacted after the recent crisis – are inadequate and not credible. We propose reforms that would establish a credible framework of rules to constrain and guide emergency lending by the Federal Reserve and by fiscal authorities during a future financial crisis. Our proposed framework follows five overarching rules, informed by history, empirical evidence and theory, which would serve as the foundation on which detailed legislation should be constructed. Adequate assistance to financial institutions would be provided in systemic crises but would be limited in its form, and by the process that would govern its provision. Our framework would serve as a basis for establishing effective rules that would be credible, and that would properly balance the moral-hazard costs of emergency lending against the gains from avoiding systemic collapse of the financial system.

"After 20 years, the return of a classic! The 10th edition of Weinstein, Abrams, Brewer and Medwed, Evidence—Cases and Materials (the authors of the previous edition were Weinstein, Mansfield, Abrams and Berger)—to be published in time for classes beginning in the Fall 2017 semester. This book enables teaching of the rules of evidence, with an in-depth understanding achieved by no other casebook. The authors extensively cover rationales for the rules and how they fit into our system of resolving civil disputes as well as handling criminal justice issues in both jury and non-jury contexts. Many books focus on teaching the rules only in a trial practice mode. In this era of fewer trials, the book’s philosophic underpinning is that the best way to teach Evidence is to provide students with a full and in-depth understanding of each rule so as to prepare them to deal with any possible variation on the issues that can arise at the stages of fact-gathering and investigation, or deposition and discovery, or at the stages of trial, or on appeal. The new edition, while as comprehensive and rich in analysis and supporting materials as previous editions, also contains new explanatory material designed to further students’ understanding of the issues. This edition blends the new with the old, representing the latest installment of a casebook with a lineage that dates back to the nineteenth century. The tenth edition retains much of the historical evolution of evidence law from its common law origins through the emergence of the Federal Rules of Evidence and analogous state approaches. In addition, this comprehensive casebook covers new developments in scientific evidence, and applies new insights from fields such as logic and probability." -- Foundation Press

This Article focuses on my work in Illinois to use the Voting Rights Act (VRA) to improve minority representation at the local level, but the themes and findings are applicable across the country because many states have growing minority populations in the suburbs just outside of large city centers. These minority populations tend to be much less segregated than the minority communities in the cities, and so it is more difficult to use Section 2 of the VRA (“Section 2”) to ensure both descriptive and substantive representation. I recommend the use of fair representation systems like ranked choice and cumulative voting (with multi-member districts) to improve minority representation in these decreasingly segregated areas. I introduce three case studies from Illinois to highlight the numerous burdens facing those that seek to reform their local government redistricting systems. I finish with some thoughts on how litigation and legislative advocacy may be used to promote fair representation systems in local government.

It can be paternalistic to force people to choose. Often people do not wish to choose, but both private and public institutions ask or force them to do so, thus overriding their wishes. As a result, people’s autonomy may be badly compromised and their welfare may be greatly reduced. These points have implications for a range of issues in law and policy, suggesting that those who favor active choosing, and insist on it, may well be overriding people’s preferences and values, and thus running afoul of John Stuart Mill’s Harm Principle (for better or for worse). People have limited mental bandwidth, and forcing choices can impose a hedonic or cognitive tax. Sometimes that tax is high.

In law – and in many other social activities, including music, art, and literature – reasonable people can and do argue over the best conception of interpretation. Intended meaning is unquestionably one candidate, but there are others. To choose among plausible accounts of what interpretation entails, judges and lawyers need to think about the world and to look outward, rather than to pretend that definitions can solve the problem. They need to ask which approach would make our constitutional order better rather than worse.

Despite predictions of their demise in the aftermath of the collapse of socialist economies in Eastern Europe, state-owned enterprises (SOEs) are very much alive in the global economy. The relevance of listed SOEs— firms subject to government ownership, but with a portion of their shares traded on public stock markets— has persisted and even increased around the world, as policymakers have encouraged the partial floating of SOE shares either as a first step toward, or as an alternative to, privatization. In this Article, we evaluate the governance challenges associated with mixed ownership of enterprise, and examine a variety of national approaches to the governance of listed SOEs, with a view to framing a robust policy discussion in many countries where SOE reform is a topic of major significance. We describe the evolution and current status of the institutional framework applicable to listed SOEs in eight different jurisdictions which reflect a variety of economic, legal, and political environments: France, the United States, Norway, Colombia, Brazil, Japan, Singapore, and China. We leverage the lessons from this comparative analysis by critiquing the policy prescriptions of international agencies such as the OECD and framing our own policy suggestions.

People are frequently exposed to competing evidence about climate change. We examined how new information alters people’s beliefs. We find that people who doubt that man-made climate change is occurring, and who do not favor an international agreement to reduce greenhouse gas emissions, show a form of asymmetrical updating: They change their beliefs in response to unexpected good news (suggesting that average temperature rise is likely to be less than previously thought) and fail to change their beliefs in response to unexpected bad news (suggesting that average temperature rise is likely to be greater than previously thought). By contrast, people who strongly believe that man-made climate change is occurring, and who favor an international agreement, show the opposite asymmetry: They change their beliefs far more in response to unexpected bad news (suggesting that average temperature rise is likely to be greater than previously thought) than in response to unexpected good news (suggesting that average temperature rise is likely to be smaller than previously thought). The results suggest that exposure to varied scientific evidence about climate change may increase polarization within a population due to asymmetrical updating. We explore the implications of our findings for how people will update their beliefs upon receiving new evidence about climate change, and also for other beliefs relevant to politics and law.

The completion of the project of the International Law Commission (ILC) on "the expulsion of aliens" marked an important stage in the development of international law relating to migration. The resulting Draft Articles on the Expulsion of Aliens reflect the joint effort of the ILC's distinguished experts on public international law, from all regions of the world, to enunciate principles that regulate states' exercise of a power that is frequently abused. The product of this multi-year effort deserves the attention and engagement of other experts in the field. of international migration, regardless of the cold reception it has initially received from states. The international law regarding expulsion of aliens is influenced by centuries-old interstate rules on responsibility for injury to another state's nationals as well as modern rules of human rights law, which I will construe here as including refugee law. The Draft Articles may someday serve as the basis for a multilateral treaty regulating the expulsion of aliens, and in the meantime they offer themselves as a reference for identifying states' international responsibilities within the scope of the topic. The introductory "general commentary" and the commentary on draft article point out that the Draft Articles involve both codification of existing international law and exercises in progressive development of international law-twin aspects of the ILC's mandate The goal of this Essay is to examine the Draft Articles from the human rights perspective. One should ask, to what extent do the Draft Articles measure up to existing human rights standards, to what extent do they fall short of those standards, and to what extent do they progress beyond the status quo in human rights law? This short Essay cannot be comprehensive, but it will explore what appear to me as the most important discrepancies that are not discussed by other essays in this symposium.

This article discusses the racial injustice faced by Native Americans, with whom land titles in the United States originated with. The author argues it is vital to interpret the Supreme Court cases of the 19th century that correctly defined Indian title, and to honor the property rights of Indian title just as we do the "fee simple of the whites".

Institutional corruption is typically viewed as a subset of corruption that is legal and systemic. There has been a surge of scholarship on institutional corruption in recent years, brought on in large part by a definition put forth by Lessig (2009b; 2013). Scholars have examined institutional corruption in various domains, such as Congress, the Department of Defense, and the pharmaceutical industry (Gilga, 2014; Sah & Fugh-Berman, 2013; Thompson, 2013). The growing body of research on institutional corruption has contributed to a much greater understanding of the legal corruption that is widespread in both public and private institutions; it has also raised new questions about institutional corruption. This paper systematically reviews the existing literature on institutional corruption and examines some of these remaining open questions. Specifically, we focus on the topics of institutional purpose, the funder-institution relationship, public trust, and personal responsibility, as they pertain to institutional corruption. Finally, we explore proposed solutions to institutional corruption, namely conflict of interest disclosure, conflict of interest elimination, and blinding.

This chapter describes the principal arguments about intellectual property rights as mechanisms for promoting the public interest, as opposed to particular private interests. Public interest arguments typically feature in balancing accounts of intellectual property rights that evince concern for the distribution of benefits as well as for the production of new works or inventions. Public interest rationales also often feature in justifications both for the rights themselves and for limitations or exceptions to those rights when private control of an intellectual resource would not promote the general welfare. The chapter considers patents, copyright, trademarks, and related rights, including the right of publicity. It concludes by examining various challenges faced by public interest accounts.