Faculty Bibliography

This chapter examines the impact of private and public enforcement of securities regulation on the development of capital markets. After a review of the literature, it considers empirical findings related to private and public enforcement as measured by formal indices and resources, with particular emphasis on the link between enforcement intensity and technical measures of financial market performance. It then analyses the impact of cross-border flows of capital, valuation effects, and cross-listing decisions by corporate issuers before turning to a discussion of whether countries that dedicate more resources to regulatory reform behave differently in some areas of market activities. It also explores the enforcement of banking regulation and its relationship to financial stability and concludes by focusing on direct and indirect, resource-based evidence on the efficacy of the US Securities and Exchange Commission’s enforcement actions.

This chapter reviews the benefits and costs of using indices, in particular the G- and E-indices, in empirical corporate governance research. As with corporate governance itself, the widespread use of corporate governance indices have both costs and benefits. The literature has identified a number of concerns with the use of these indices including concerns over measurement error, endogeneity, reverse causation, omitted variables and proper identification of the actual mechanisms by which corporate governance might matter. On the other hand, these indices enjoy several important benefits that explain their continued and widespread use. It concludes that event study methodology and the utilization of legal shocks/regulatory discontinuities for identification will likely play an ever greater role in future research.

The Fourth Amendment is generally seen as a procedural provision blind to a defendant’s conduct in a given case, distinguished on that very ground from the Supreme Court’s frequently moralistic assessment of conduct in its due process privacy caselaw. Yet ever since the Court recentered Fourth Amendment protections around an individual’s reasonable expectations of privacy, it has consistently tied those protections to the nature and, specifically, the social value of the activities involved. As in its substantive due process cases, the Court frequently allots Fourth Amendment privacy interests based on its moral evaluation of private acts, privileging conventional social goods like domesticity, romantic relations, and meaningful emotional bonds. And in some cases—most notably those involving aerial surveillance, home visitors, and drug testing—the Court has adopted an expressly retrospective analysis, tying Fourth Amendment rights to a defendant’s actual conduct at the time of a search. This unrecognized strain of moralism in the Fourth Amendment is a troubling development, unmoored from the Amendment’s text, hostile to its well-documented history, and obstructive of its practical operation in regulating police abuses. Not least, that moralistic approach upends prevailing understandings of privacy, as a refuge from the pressures and expectations of society. Especially in the electronic age, as digital technologies vastly expand the police’s ability to parse categories of private data, the Court must cabin its moralistic turn, restoring a richer view of Fourth Amendment values as encompassing individualistic and unorthodox pursuits. This Article identifies two immediate steps for moving forward: renouncing the Court’s privileging of “intimate” over impersonal conduct and reconsidering the controversial binary-search doctrine gleaned from the Court’s drug-testing cases. More fundamentally, it joins an ongoing debate about the adequacy of the Court’s privacy-based Fourth Amendment framework, suggesting both the importance and the difficulty of restoring a Fourth Amendment attuned to liberal values of individualism and moral autonomy. Finally, this Article addresses what the surprising rise of Fourth Amendment moralism suggests about constitutional privacy rights more broadly. Belying the value of privacy as a sanctuary from social judgment, the Court’s persistently moralistic jurisprudence challenges the extent to which our Constitution has ever protected, and perhaps can ever protect, a robust right of “privacy” as such.

This chapter discusses the multiple roles played by the members of the Human Rights Committee in giving effect to the rights guaranteed by the International Covenant on Civil and Political Rights. It argues that the most important contribution the members make to the human rights project consists in their credible, professional elaboration of those rights, particularly by means of the Committee’s Views and General Comments, as emphasized by the International Court of Justice in the Diallo case. While the Committee members should be open to learning from the insights of other treaty bodies, they should resist urgings toward a simplistic harmonization. The texts and interpretations of other ‘core’ human rights treaties must be used with care in the members’ independent exercise of their own interpretive function.

Merger and acquisition deals are governed by merger clauses which are negotiated between the bidder and target in order to communicate deal terms, specify risk sharing between the parties, and describe dispute management provisions in case of litigation. In a large sample of manually collected U.S. deal contracts involving publicly traded bidders and targets, we construct merger clauses indices based on legal scholars’ ex-ante prediction and examine the relationship between announcement returns and different types of merger clauses. We find that bidder protective clauses correlate with higher bidder returns while target protective clauses and pro-competition clauses correlate with higher target returns. We also find that bidder and target protective indices have larger impacts on announcement abnormal returns for “bad” deals than for “good” deals. Finally, we find that the inclusion of more bidder protective clauses leads to lower deal completion rates while the inclusion of more target protective clauses and pro-competition clauses has no impact on deal completion rates. These results are consistent with the expert lawyer/efficient contracting view of Cain, Macias, and Davidoff Solomon (2014), and Coates (2016), and against merger contracts as boilerplate agreements.

Legal protection for traditional knowledge raises difficult questions at the intersection of innovation policy and knowledge governance, with important implications for Indigenous peoples’ rights. A significant source of tension has been the difficulty in delineating entitlement interests in traditional knowledge consistent with prevailing doctrinal limits to intellectual property rights, such as the public domain. This paper advances the idea that, properly applied, the public domain does not constitute a barrier to the effective protection of traditional knowledge, and that a thoughtfully designed, custom-built public domain for traditional knowledge would align traditional knowledge protection with the overall architecture of the global innovation framework.

Patient-centered outcomes research (PCOR) is becoming increasingly common. However, there is little evidence regarding what novel ethical challenges, if any, are posed by PCOR with relevance to institutional review board (IRB) oversight and human subjects protections. This article reports the results of a national survey of all IRB chairpersons from research-intensive institutions in the United States. Findings address the responsibilities of IRBs and the challenges associated with PCOR review and oversight. IRB chairpersons varied in their judgment of PCOR’s overall value to the scientific enterprise and to research at their institution. Furthermore, 27% of respondents considered patients serving in nontraditional roles to be research subjects even when they are not enrolled in research. There was also variation in the training and safeguards their IRBs require for patient partners. Our results suggest that guidance should be developed around ethical and regulatory issues associated with PCOR oversight.

In the last decade, public enforcement of the laws governing the U.S. financial system has received widespread attention, but neither policymakers, academics nor private institutions have produced a comprehensive overview and assessment of the public enforcement system for the U.S. financial system. This Report, Rationalizing Enforcement of the U.S. Financial System (the “Report”), attempts to do just that. While we make recommendations aimed at improving aspects of the enforcement system, the primary purpose of this Report is to lay out a succinct description for the public, policymakers, and others about how the enforcement system works. The Report is divided into four chapters: Chapter 1: Enhancing the Structure of the U.S. Enforcement System – Improving Coordination and Procedural Fairness; Chapter 2: Rationalizing the Setting of Sanctions; Chapter 3: Ensuring Appropriate Use of Monetary Sanctions; and Chapter 4: Promoting Individual Accountability. Chapter 1 describes the highly-fragmented structure of the U.S. public enforcement system and the potential for overlapping enforcement actions by multiple agencies resulting from the same underlying misconduct. We also describe the lack of laws and policies mandating coordination, with the DOJ’s new anti-“piling on” policy being a recent exception, and separately, the discretion some agencies have to engage in forum shopping by unilaterally selecting the forum in which they bring enforcement actions. The chapter sets forth recommendations to formalize and standardize coordination policies and limit the ability of agencies to engage in forum shopping. Chapter 2 sets forth the laws, rules and policies that guide and constrain the setting of monetary sanctions in enforcement actions. We explain that agencies generally have vast discretion in setting sanctions because statutes and policies provide limited practical constraints. We recommend that agencies develop core principles or guideposts to avoid arbitrary, inconsistent and disproportionate penalties. We then describe the byzantine approach many agencies take to publicly disclosing information about enforcement action outcomes and present our own data analysis on monetary sanctions over a 17-year period. The chapter concludes with recommendations for enhancing transparency of enforcement action outcomes. Chapter 3 describes how monetary sanctions collected in enforcement actions are spent. In particular, the chapter describes the lack of public disclosure and sets forth recommendations to increase transparency and appropriately restrict the use of collected monetary sanctions. Chapter 4 explores the issue of individual accountability. We find that while the government has significant legal and investigative tools to identify and hold culpable individuals and firms accountable, it can face more significant challenges with respect to individuals. We set forth recommendations that we believe will better enable enforcement authorities and firms to work together to identify culpable individuals and build successful cases against them.

Halperin presents another look at choice of entity under the Tax Cuts and Jobs Act. He offers a conceptual approach to fully appreciate the actual rate of tax on corporate and passthrough income, following up on three earlier Tax Notes articles over the past eight years that had a similar goal.

Originalism might be defended on two very different grounds. The first is that it is in some sense mandatory – for example, that it follows from the very idea of interpretation, from having a written Constitution, or from the only legitimate justifications for judicial review. The second is that originalism is best on broadly consequentialist grounds. While the first kind of defense is not convincing, the second cannot be ruled off-limits. In an imaginable world, it is right; in our world, it is usually not. But in the context of impeachment, originalism is indeed best, because there are no helpful precedents or traditions with which to work, and because the original meaning is (at least) pretty good on the merits. These points are brought to bear on recent defenses of originalism; on conflicts between precedents and the original meaning; on conflicts between traditions and original meaning; and on nonoriginalist approaches, used shortly after ratification.

Some information is beneficial; it makes people’s lives go better. Some information is harmful; it makes people’s lives go worse. Some information has no welfare effects at all; people neither gain nor lose from it. Under prevailing executive orders, agencies must investigate the welfare effects of information by reference to cost-benefit analysis. Federal agencies have (1) claimed that quantification of benefits is essentially impossible; (2) engaged in “break-even 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 objections. With respect to (4), people may lack the information that would permit them to say how much they would pay for (more) information; they may not know the welfare effects of information; and their tastes and values may shift over time, in part as a result of information. These points suggest the need to take the willingness-to-pay criterion with many grains of salt, and to learn more about the actual effects of information, and of the behavioral changes produced by information, on people’s experienced well-being.

Responding to Abbe R. Gluck & Richard A. Posner, Statutory Interpretation on the Bench: A Survey of Forty-Two Judges on the Federal Courts of Appeals, 131 Harv. L. Rev. 1298 (2018).

There has been a great deal of discussion of the welfare effects of digital goods, including social media. The discussion bears on both private practice and potential regulation. A national survey, designed to monetize the benefits of a variety of social media platforms (including Facebook, Twitter, Youtube, and Instagram), found a massive disparity between willingness to pay and willingness to accept. The sheer magnitude of this disparity – a “superendowment effect” – suggests that in the context of the willingness to pay question, people are giving protest answers, signaling their intense opposition to being asked to pay for something that they had formerly enjoyed for free. Their answers are expressive, rather than reflective of actual welfare effects. There is also a question whether the willingness to accept measure tells us much about the actual effects of social media on people’s lives and experiences. It may greatly overstate those effects. In this context, there may well be a sharp disparity between conventional economic measures and actual effects on experienced well-being.

This essay seeks to explain why the United States is struggling to deal with the “soft” cyberoperations that have been so prevalent in recent years: cyberespionage and cybertheft, often followed by strategic publication; information operations and propaganda; and relatively low-level cyber disruptions such as denial-of-service and ransomware attacks. The main explanation for the struggle is that constituent elements of U.S. society—a commitment to free speech, privacy, and the rule of law, innovative technology firms, relatively unregulated markets, and deep digital sophistication—create asymmetric weaknesses that foreign adversaries, especially authoritarian ones, can exploit. We do not claim that the disadvantages of digitalization for the United States outweigh the advantages, but we present reasons for pessimism.

At the Philadelphia convention assembled to draft a new Constitution, Alexander Hamilton argued “[e]stablish a weak government and you must at times overleap the bounds. Rome was obliged to create dictators.” Publius then expands upon this argument in several ways in the Federalist. I suggest that Publius identifies a dynamic or mechanism, the “Publius Paradox,” that warrants great attention: Under particular conditions, excessive weakness of government may become excessive strength. If the bonds of constitutionalism are drawn too tightly, they will be thrown off altogether when circumstances warrant. After illustrating and then analysing this “Publius Paradox,” I will turn briefly to its implications, the main one being that constitutional law should be cast as a loosely-fitting garment — particularly the executive component of the constitution and the scope of executive powers. 2018 Chorley Lecture, London School of Economics. Lecture video: https://onedrive.live.com/?authkey=%21AFgS0YbuvpwXhN4&cid=AF47A00F85EB8C77&id=AF47A00F85EB8C77%215252&parId=AF47A00F85EB8C77%213702&o=OneUp

In the past decade, policymakers have increasingly used behaviourally informed policies, including “nudges,” to produce desirable social outcomes. But do people actually endorse those policies? This study reports on nationally representative surveys in five countries (Belgium, Denmark, Germany, South Korea, and the US) carried out in 2018. We investigate whether people in these countries approve of a list of 15 nudges regarding health, the environment, and safety issues. A particular focus is whether trust in public institutions is a potential mediator of approval. The study confirms this correlation. We also find strong majority support of all nudges in the five countries. Our findings in general, and about trust in particular, suggest the importance not only of ensuring that behaviourally informed policies are effective, but also of developing them transparently and openly, and with an opportunity for members of the public to engage and to express their concerns.

If people have freedom of choice, do their lives go better? Under what conditions? By what criteria? Consider three distinct problems. (1) In countless situations, human beings face a serious problem of “navigability”; they do not know how to get to their preferred destination, whether the issue involves health, education, employment, or well-being in general. This problem is especially challenging for people who live under conditions of severe deprivation, but it can be significant for all of us. (2) Many of us face problems of self-control, and our decisions today endanger our own future. What we want, right now, hurts us, next year. (3) In some cases, we would actually be happy or well-off with two or more different outcomes, whether the issue involves our jobs, our diets, our city, or even our friends and partners, and the real question, on which good answers are increasingly available, is what most promotes our welfare. The evaluative problem, in such cases, is especially challenging if a decision would alter people’s identity, values, or character. Private and public institutions -- including small companies, large companies, governments – can help people to have better lives, given (1), (2), and (3). This Essay, the text of the Holberg Lecture 2018, is the basis for a different, thicker, and more elaborate treatment in a book, On Freedom (forthcoming, Princeton University Press, 2019).

Remarks, Lineages of Heterodoxy, Inst. Global Law & Pol’y (IGLP) Conference: Law in Global Political Economy: Heterodoxy Now, Harvard Law School, Cambridge, Mass. (June 2, 2018).

“When we think of constitutional law, we invariably think of the United States Supreme Court and the federal court system. Yet much of our constitutional law is not made at the federal level. In 51 Imperfect Solutions, U.S. Court of Appeals Judge Jeffrey S. Sutton argues that American Constitutional Law should account for the role of the state courts and state constitutions, together with the federal courts and the federal constitution, in protecting individual liberties. The book tells four stories that arise in four different areas of constitutional law: equal protection; criminal procedure; privacy; and free speech and free exercise of religion. Traditional accounts of these bedrock debates about the relationship of the individual to the state focus on decisions of the United States Supreme Court. But these explanations tell just part of the story. The book corrects this omission by looking at each issue-and some others as well-through the lens of many constitutions, not one constitution; of many courts, not one court; and of all American judges, not federal or state judges. Taken together, the stories reveal a remarkably complex, nuanced, ever-changing federalist system, one that ought to make lawyers and litigants pause before reflexively assuming that the United States Supreme Court alone has all of the answers to the most vexing constitutional questions. If there is a central conviction of the book, it's that an underappreciation of state constitutional law has hurt state and federal law and has undermined the appropriate balance between state and federal courts in protecting individual liberty. In trying to correct this imbalance, the book also offers several ideas for reform.” — Oxford Univ. Press

Legal directives – whether laws, regulations, or contractual provisions – can be written along a spectrum of specificity, about which behavioral and legal scholarship present conflicting views. We hypothesized that the combination of specificity and monitoring promotes compliance but harms performance and trust, whereas the combination of specificity and good faith enhances both the informative goal-setting aspects of specificity and people's sense of commitment. To test these hypotheses, we used a 2x2x2 experimental design in which participants were instructed to edit a document with either general or detailed instructions, with a reference to good faith or without it, and with a review of the work or without it. Participants could engage in various levels and kinds of editing, allowing us to distinctly measure both compliance and performance. When participants require information and guidance, as in the case of editing, we found that specificity increases performance relative to the vague standard condition. We discuss the characteristics of the regulatory frameworks in which our findings are especially relevant.

Cho, Barnes, and Guanara (2017) analyzed criminal sentencing by U.S. federal judges in the years 1992 through 2003. Controlling for case covariates, they estimated that “sentences rendered on sleepy Mondays”—Mondays immediately following the start of daylight saving time, when the night from Saturday to Sunday is shortened by 1 hr—“were approximately 5% longer than those rendered on [the immediately preceding and subsequent] Mondays” (p. 243). Cho et al. estimated that so large a difference would arise by chance with a probability of only 0.5% if judges tended to render equal sentences on those three Mondays (i.e., p = .005). Cho et al. interpreted this finding as evidence that sleep-deprived judges punish more harshly than judges who have not been sleep deprived. This Commentary raises three concerns about Cho et al.’s analysis and conclusions. First, Cho et al. reported results from a model that differed from the model described in their article. The latter model is theoretically superior but yields a nonsignificant result. Second, even the model used by Cho et al. yields a much smaller, nonsignificant coefficient if one accounts for judges’ choice whether to impose any prison time at all, as is standard in the sentencing literature. Third, new data from 2004 through 2016 show not even a trace of a sleepy-Monday effect. Table 1 summarizes all four models mentioned thus far (Models 1, 2, 4, and 7) along with several models providing robustness checks (Models 3, 5, 6, and 8), and the remainder of this Commentary discusses these eight models in more detail. At the outset, it is worth noting that Cho et al.’s result depends entirely on their model: As reported in their note 3, a model without their control variables did not yield a statistically significant estimate of a sleepy-Monday effect.

This is Chapter 18 of our Advertising and Marketing Law casebook, a chapter we are publishing only online. It focuses on the regulation of two specific advertising situations: (1) discriminatory advertising, principally in the housing context, and (2) political advertising.

This paper explores the impact of fear on the incomplete take-up of safety net programs in the United States. We exploit changes in deportation fear due to the roll-out and intensity of Secure Communities (SC), an immigration enforcement program that empowers the federal government to check the immigration status of anyone arrested by local police, leading to the forcible removal of approximately 380,000 immigrants. We estimate the spillover effect of SC on the take-up of federal means-tested programs by Hispanic citizens. Though not at personal risk of deportation, Hispanic citizens may fear their participation could expose non-citizens in their network to immigration authorities. We find significant declines in SNAP and ACA enrollment, particularly among mixed-citizenship status households and in areas where deportation fear is highest. The response is muted for Hispanic households residing in sanctuary cities. Our results are most consistent with network effects that perpetuate fear rather than lack of benefit information or stigma.

This Constitution Day speech focuses on how the Constitution has been interpreted both to protect and to undermine the sovereignty of Indian nations. The good news is that both the text of the Constitution and the practice of the United States have recognized Indian nations as sovereigns who pre-existed the creation of the United States and who retain their inherent original sovereignty. The bad news is that the Constitution has often been interpreted by the Supreme Court to deny Indian nations protection for their property rights and their sovereignty. Most Americans are not aware of the history of interactions between the United States and Indian nations and most lawyers and law students never study the ways the Constitution treats Indian nations and their citizens differently from non-Indians. It is important for Americans to better understand the ways that the Constitution protects Indian nations from continued conquest and to understand the ways that the Supreme Court has interpreted the Constitution so as to deny equal rights to Indians and Indian nations. Limiting tribal sovereignty or harming tribal property without tribal consent is an act of conquest. It is an act that cannot be deemed consistent with our democratic values. Conquest is an historical fact that cannot be undone, but we can recognize that conquest was incomplete and that tribal sovereignty persists alongside that of the states and the federal government. The least we can do to honor the Constitution is to recognize the reality of conquest while committing not to do it ourselves. We can do that by consulting with Indian nations over matters that concern them; we can honor our treaty commitments. We can follow the lead of Chief Justice Marshall who lamented the fact of conquest and counseled the United States not to do it anymore.

There has been a great deal of discussion of the welfare effects of digital goods, including social media. The discussion bears on both private practice and potential regulation. A pilot experiment, designed to monetize the benefits of Facebook use, found a massive disparity between willingness to pay and willingness to accept. The median willingness to pay to use Facebook for a month was $1. By contrast, the median willingness to accept to cease using Facebook for a month was $59. The sheer magnitude of this disparity – a “superendowment effect” – suggests that in the context of the willingness to pay question, people are giving protest answers, signaling their intense opposition to being asked to pay for something that they had formerly enjoyed for free. Their answers are expressive, rather than reflective of actual welfare effects. There is also a question whether the willingness to accept measure tells us much about the actual effects of Facebook on people’s lives and experiences. It may greatly overstate those effects. In this context, there may well be a sharp disparity between conventional economic measures and actual effects on experienced well-being.