Faculty Bibliography
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In July 2020, the European Commission published the “Study on directors’ duties and sustainable corporate governance” by Ernst & Young (EY). The Report purports to find evidence of debilitating short-termism in EU corporate governance and recommends many changes to support sustainable corporate governance. In this paper, we point out deep flaws in the Report’s evidence and analysis. We recently submitted the content of this paper in response to the European Commission’s call for feedback. Parallel issues have arisen in American discourse, although none has reached the incipient lawmaking level that it has in Europe. First, the Report defines the corporate governance problem as one of pernicious short-termism that damages the environment, the climate, and stakeholders. But the Report mistakenly conflates time-horizon problems with externalities and distributional concerns. Cures for one are not cures for the others and a cure for one may well exacerbate the others. Second, the Report’s main evidence for an increase in corporate short-termism is rising gross payouts to shareholders (dividends and stock repurchases). However, the more relevant payout measure to assess corporations’ ability to fund long-term investment is net payouts (gross payouts minus equity issuances), which is much lower and has left plenty of funds available for long-term and short-term investment. Third, when the Report turns to other evidence for short-termism, it selectively picks academic studies that support its views on short-termism, while failing to engage substantial contrary literature. Significant studies fail to detect short-termism and some substantial studies show excessive long-termism. Conceptually, some short-termism is an unfortunate but an inevitable side effect of effective corporate governance and may not be a first-order problem warranting wholesale reform. Finally, the Report touts cures whose effectiveness has little evidentiary support and, for some, there is real evidence that the cures could be counterproductive and costly.
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The Delta Directions Consortium is an interdisciplinary network of individuals, academic institutions, non-profit organizations, and foundations that work together to create positive social change in the multi-state Mississippi Delta Region. Goals include improving public health and promoting socioeconomic development. The Consortium is not an independent non-profit organization but, rather, an alliance of partners committed to collaborative and innovative problem-solving. This document provides a summary of pathways for partners in the Delta Directions Consortium, with emphasis on substantive topics and projects. It should be read as a living document to frame ideas and approaches that will be adapted in response to the needs and interests of core partners and diverse stakeholders.
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This interview was conducted by Intisar Rabb (Editor-in-Chief). This interview is part of the Islamic Law Blog’s Roundtable on Islamic Legal History & Historiography, edited by Intisar Rabb.
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Robert Shiller argues for the power of stories in shaping economics.
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The Senate will retain the constitutional power — and duty — to conduct an impeachment trial of Trump even when he is no longer president.
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As academics, we are used to dealing with exaggerations. We are not used to finding that the story is pure fiction. But that is the nature of the comfort-women-sex-slave story.
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Demand-side policies for mitigating climate change based on behavioral insights are gaining increased attention in research and practice. Here we describe a systematic map that catalogs existing research on behaviorally informed interventions targeting changes in consumer food consumption and food waste behavior. The purpose is to gain an overview of research foci and gaps, providing an evidence base for deeper analysis. In terms of food consumption, we focus on animal protein (meat, fish, dairy, and eggs) and its substitutes. The map follows the standards for evidence synthesis from the Collaboration for Environmental Evidence (CEE) as well as the RepOrting Standards for Systematic Evidence Syntheses (ROSES). We identified 49 articles including 56 separate studies, as well as 18 literature reviews. We find a variety of study designs with a focus on canteen and restaurant studies as well as a steep increase of publications since 2016. We create an interactive evidence atlas that plots these studies across geographical space. Here, we find a concentration of research in the Anglo-Saxon world. Most studies follow multi-intervention designs and focus on actual food consumption behavior, fewer on food waste behavior. We identify knowledge clusters amenable for a systematic review focusing on the effectiveness of these interventions, namely: priming, disclosure, defaults, social norms, micro-environment changes, and ease of use. The systematic map highlights knowledge gaps, where more primary research is needed and evidence cannot support policy; it identifies knowledge clusters, where sufficient studies exist but there is a lack of clarity over effectiveness, and so full synthesis can be conducted rapidly; finally, it reveals patterns in research methods that can highlight best practices and issues with methodology that can support the improvement of primary evidence production and mitigation of research waste. To the best of our knowledge, this is the first systematic study mapping this specific area.
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The House would be fully justified to use this drastic remedy.
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New technology makes it possible to create videos that show a person doing or saying anything the creator wants—and it’s not clear what U.S. law can do about it.
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In the theory of the administrative state, a central thread of debate has involved the effect of increasing economic and social complexity on the form of legal instruments. Drawing upon work by Pound, Schmitt and Dworkin, I show that the first two both assumed that the administrative state would increasingly abandon general rules in favor of ad hoc administrative commands — a development that the early Pound welcomed but that Schmitt feared. Ronald Dworkin, by contrast, predicted that the increasing complexity of the modern state would produce ever-greater reliance on relatively abstract legal principles rather than either rules or ad hoc commands. Dworkin’s prediction has largely been borne out in administrative law, particularly the law of judicial review of agency action. That body of law has developed over time by turning to abstract and general principles of rationality and procedural validity to maintain the public edifice of legality.
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In our lab, 299 real judges from seven major jurisdictions (Argentina, Brazil, China, France, Germany, India, and USA) spend up to fifty-five minutes to judge an international criminal appeals case and determine the appropriate prison sentence. The lab computer (i) logs their use of the documents (briefs, statement of facts, trial judgment, statute, precedent) and (ii) randomly assigns each judge (a) a horizontal precedent disfavoring, favoring, or strongly favoring defendant, (b) a sympathetic or an unsympathetic defendant, and (c) a short, medium, or long sentence anchor. Document use and written reasons differ between countries but not between common and civil law. Precedent effect is barely detectable and estimated to be less, and bounded to be not much greater than, that of legally irrelevant defendant attributes and sentence anchors.
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A conversation between Pablo Arrocha Olabuenaga and Naz Khatoon Modirzadeh on the origins, objectives, and context of the 24 February 2021 'Arria-formula' meeting convened by Mexico.
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Alibaba, the NYSE-traded Chinese ecommerce giant, is currently valued at over $500 billion. But Alibaba’s governance is opaque, obscuring who controls the firm. We show that Jack Ma, who now owns only about 5%, can effectively control Alibaba by controlling an entirely different firm: Ant Group. We demonstrate how control of Ant Group enables Ma to dominate Alibaba’s board. We also explain how this control gives Ma the indirect ability to disable (and perhaps seize) VIE-held licenses critical to Alibaba, providing him with substantial additional leverage. Alibaba is a case study of how corporate control can be created synthetically with little or no equity ownership via a web of employment and contractual arrangements.
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Whether or how a constitution's guarantees respecting basic right and liberties are to take effect in "horizontal" cases, those involving relations among persons and groups outside of government, has been and remains a matter of debate in liberal-democratic societies. The liberal political philosophy of John Rawls has sometimes been charged with a normative tilt against full extension of the guarantees to these "private" relations. I find the opposite to be true. Given Rawls's conception of the constitution as a society's higher-legal framework for assurance of fairness in its basic structure, along with the justificatory function that Rawls assigns to the guarantees in a constitution thus conceived and the idea of these guarantees comprising a unified "scheme of liberties" guaranteed equally to all, it follows that norms of private law allowing construction of basic of liberties of some by acts of others in civil society should be subject to review for proportional justification. But not every liberty-hostile exercise of a protected basic liberty will come under the scope of such review. For those that do not, liberalism must find some other response.
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Employers and governments are interested in the use of serological (antibody) testing to allow people to return to work before there is a vaccine for SARS-CoV-2. We articulate the preconditions needed for the implementation of antibody testing, including the role of the U.S. Food & Drug Administration.
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The current SARS-CoV-2 pandemic has killed thousands across the world. SARS-CoV-2 is the latest but surely not the last such global pandemic we will face. The biomedical response to such pandemics includes treatment, vaccination, and so on. In this paper, though, we argue that it is time to consider an additional strategy: the somatic (non-heritable) enhancement of human immunity. We argue for this approach and consider bioethics objections we believe can be overcome.
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The Trump Administration’s effort to get rid of the Obama Administration’s Deferred Action for Childhood Arrivals program, or DACA, failed before the Supreme Court in Department of Homeland Security v. Regents of the University of California. In this essay—adapted from a presentation given to an American Bar Association section in September 2020—Brian Wolfman reviews DACA, the Supreme Court’s decision, and its administrative-law implications. The failure of the Trump Administration to eliminate DACA may have had significant political consequences, and it surely had immediate and momentous consequences for many of DACA’s hundreds of thousands of beneficiaries. In the aftermath of the Court’s decision, some commentators noted, however, that the Supreme Court’s ruling it is not a major legal landmark—that it involves only the application of settled administrative-law principles. Wolfman largely agrees. Nonetheless, the decision’s administrative-law holdings are interesting, and the Court’s ruling contains several of what Wolfman sees as “extras”—little nuances that may affect the law over time and that should interest administrative-law nerds. This essay reviews those “extras” too.
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The author, a professor at Harvard Law School, argues that concerns about the perils of short-termism—and support for measures that would insulate corporate leaders from the outside pressures that allegedly make them myopic—are long on alarming rhetoric and short on empirical evidence or economic logic. Furthermore, he writes, the threat of hedge fund activism should be expected to discourage managerial slack and underperformance, thus playing an important disciplinary role and incentivizing leaders to enhance shareholder value.
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At the center of a fundamental and heated debate about the purpose that corporations should serve, an increasingly influential “stakeholderism” view advocates giving corporate leaders the discretionary power to serve all stakeholders and not just shareholders. Supporters of stakeholderism argue that its application would address growing concerns about the impact of corporations on society and the environment. By contrast, critics of stakeholderism object that corporate leaders should not be expected to use expanded discretion to benefit stakeholders. This Article presents novel empirical evidence that can contribute to resolving this key debate. During the hostile takeover era of the 1980s, stakeholderist arguments contributed to the adoption of constituency statutes by more than thirty states. These statutes authorize corporate leaders to give weight to stakeholder interests when considering a sale of their company. We study how corporate leaders in fact used the power awarded to them by these statutes in the past two decades. In particular, using hand-collected data, we analyze in detail more than a hundred cases governed by constituency statutes in which corporate leaders negotiated a sale of their company to a private equity buyer. We find that corporate leaders have used their bargaining power to obtain gains for shareholders, executives, and directors. However, despite the risks that private equity acquisitions posed for stakeholders, corporate leaders made very little use of their power to negotiate for stakeholder protections. Furthermore, in cases in which some protections were included, they were practically inconsequential or cosmetic. We conclude that constituency statutes failed to deliver the benefits to stakeholders that they were supposed to produce. Beyond their implications for the long-standing debate on constituency statutes, our findings also provide important lessons for the ongoing debate on stakeholderism. At a minimum, stakeholderists should identify the causes for the failure of constituency statutes and examine whether the adoption of their proposals would not suffer a similar fate. After examining several possible explanations for the failure of constituency statutes, we conclude that the most plausible explanation is that corporate leaders have incentives not to protect stakeholders beyond what would serve shareholder value. The evidence we present indicates that stakeholderism should be expected to fail to deliver, as have constituency statutes. Stakeholderism therefore should not be supported, even by those who deeply care about stakeholders. This paper is part of a larger research project of the Harvard Law School Corporate Governance on stakeholder capitalism and stakeholderism. Another part of this research project is The Illusory Promise of Stakeholder Governance by Lucian A. Bebchuk and Roberto Tallarita.
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It is widely recognized that bankruptcy law can stymie regulatory enforcement and present challenges for governments when regulated businesses file for Chapter 11. It is less-widely understood that bankruptcy law can present governments with opportunities to advance policy goals if they are willing to adopt tactics traditionally associated with activist investors, a strategy we call “government bankruptcy activism.” The bankruptcy filings by Chrysler and General Motors in 2009 are a famous example: the government of the United States used the bankruptcy process to help both auto manufacturers resolve their financial distress while promoting the policy objectives of protecting union workers and addressing climate change. A decade later, the government of California applied its bargaining power in the Pacific Gas & Electric Company’s Chapter 11 case to protect climate policies and the victims of wildfires. These examples illustrate that, by tapping into the bankruptcy system, governments gain access to the exceptional powers that a debtor enjoys under bankruptcy law, which can complement the traditional tools of appropriations and regulation to facilitate and accelerate policy outcomes. This strategy is especially useful in times of urgency and policy paralysis, when government bankruptcy activism can provide a pathway past veto players in the political system. However, making policy through the bankruptcy system presents potential downsides as well, as it may also allow governments to evade democratic accountability and obscure the financial losses that stakeholders are forced to absorb to help fund those policy outcomes.
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Should platforms be held liable for the harms suffered by users? A two-sided platform enables interactions between firms and users. There are two types of firm: harmful and safe. Harmful firms impose larger costs on the users. If firms have deep pockets then platform liability is unnecessary. Holding the firms liable for user harms deters the harmful firms from joining the platform. If firms are judgment proof then platform liability plays an instrumental role in reducing social costs. With platform liability, the platform has an incentive to (1) raise the interaction price to deter harmful firms and (2) invest resources to detect and remove harmful firms from the platform. The residual liability assigned to the platform may be partial instead of full. The optimal level of platform liability depends on whether users are involuntary bystanders or voluntary consumers, and the intensity of platform competition.
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Constitutional theory dating to Montesquieu identified three branches of government, each with a specific function: the legislature enacted general rules, the executive enforced the rules, and the judiciary resolved disputes about the rules’ meaning and application. Every government had to have these branches in some form; that is, the branches were necessary elements in a governance structure. In addition, the branches were exhaustive: that is, taken together they did everything a government could do.
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Deborah Anker, Law of Asylum in the United States (2021 ed.).
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