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on Law and Economics |
| By: | Régis Blazy; Bertrand Chopard; Agnès Fimayer |
| Abstract: | This paper explores the various governance models for financially distressed firms. We offer a new typology of major bankruptcy models and provide a connection between this bankruptcy law puzzle and the variables depicting the governance of healthy firms in order to shed light on two topics: (1) the factors that the lawyer should consider before removing its national bankruptcy law, and (2) the risks associated with each bankruptcy model according to the economic literature on bankruptcy law. Our final aim is to test whether the various bankruptcy models detailed in the paper perform in separate economic and legal environments. |
| Keywords: | Bankruptcy, Governance, Law and Economics. |
| JEL: | K29 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2007-33&r=law |
| By: | Dirk Engelmann; Dorothea Kübler |
| Abstract: | In order to address the impact of regulation on ethical concerns of consumers, we study the effect of a minimum wage. In our experimental market, consumers have monopsony power, firms engage in Bertrand competition, and workers are passive recipients of a wage payment. Two treatments are employed, one with no minimum wage in the first part but with a minimum wage in the second part, and one treatment with a minimum wage at the outset that is abolished in the second part. In both treatments, wages decrease over time in the first part even though some consumers show an interest in fair wages. If a minimum wage is in place, wages decline even faster. Introducing a minimum wage in a mature market raises average wages, while abolishing it lowers them. We discuss the implications of our results, such as the crowding out of ethical behavior through legal regulation. |
| Keywords: | Fairness, Crowding Out, Consumer Behavior, Minimum Wage, Experimental Economics |
| JEL: | C91 J88 K31 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:hum:wpaper:sfb649dp2008-008&r=law |
| By: | Oliver Gürtler (Department of Economics, BWL II, University of Bonn, Adenauerallee 24-42, D-53113 Bonn, Germany, oliver.guertler@uni-bonn.de,); Matthias Kräkel (Department of Economics, BWL II, University of Bonn, Adenauerallee 24-42, D-53113 Bonn, Germany, m.kraekel@uni-bonn.de,) |
| Abstract: | We consider a double-sided moral hazard problem where each party can renege on the signed contract since there does not exist any verifiable performance signal. It is shown that ex-post litigation can restore incentives of the agent. Moreover, when the litigation can be settled by the parties the pure threat of using the legal system may suffice to make the principal implement first-best effort. As is shown in the paper, this .finding is rather robust. In particular, it holds for situations where the agent is protected by limited liability, where the parties have different technologies in the litigation contest, or where the agent is risk averse. |
| Keywords: | double-sided moral hazard; efficiency wage; litigation; contest; settlement |
| JEL: | D86 J33 K41 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:214&r=law |
| By: | Jo Seldeslachts (Wissenschaftszentrum Berlin (WZB), Reichpietschufer 50, 10785 Berlin, Germany Seldeslachts@wz-berlin.de); Joseph A. Clougherty (Wissenschaftszentrum Berlin (WZB), Reichpietschufer 50, 10785 Berlin, Germany Clougherty@wz-berlin.de); Pedro Pita Barros (Universade Nova de Lisboa and CEPR FEUNL, Campus de Campolide, 1099-032 Lisboa, Portugal PPBarros@fe.unl.pt) |
| Abstract: | Antitrust policy involves not just the regulation of anti-competitive behavior, but also an important deterrence effect. Neither scholars nor policymakers have fully researched the deterrence effects of merger policy tools, as they have been unable to empirically measure these effects. We consider the ability of different antitrust actions – Prohibitions, Remedies, and Monitorings – to deter firms from engaging in mergers. We employ cross-jurisdiction/pan-time data on merger policy to empirically estimate the impact of antitrust actions on future merger frequencies. We find merger prohibitions to lead to decreased merger notifications in subsequent periods, and remedies to weakly increase future merger notifications: in other words, prohibitions involve a deterrence effect but remedies do not. |
| JEL: | L40 L49 K21 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:218&r=law |
| By: | Ojo, Marianne |
| Abstract: | ABSTRACT The role of the external auditor in the supervisory process requires standards such as independence, objectivity and integrity to be achieved. Even though the regulator and external auditor perform similar functions, namely the verification of financial statements, they serve particular interests. The regulator works towards safeguarding financial stability and investor interests. On the other hand, the external auditor serves the private interests of the shareholders of a company. The financial audit remains an important aspect of corporate governance that makes management accountable to shareholders for its stewardship of a company. The debate surrounding the role of external auditors focusses in particular on auditor independence. A survey by the magazine “Financial Director” shows that the fees derived from audit clients in terms of non-audit services are significant in comparison with fees generated through auditing. Accounting firms sometimes engage in a practice called “low balling” whereby they set audit fees at less than the market rate and make up for the deficit by providing non audit services. As a result, some audit firms have commercial interests to protect too. There is concern that the auditor's interests to protect shareholders of a company and his commercial interests do not conflict with each other. Sufficient measures need to be in place to ensure that the external auditor's independence is not affected. As well as considering threats to auditor independence and safeguards to protect against such threats, this paper focuses on how the external auditor can assist the FSA through two of its principal regulatory tools in the FSA's response to risk, namely supervision and enforcement. A lot of work and improvements on audit independence have been carried out over the years and there should be an ongoing process of review and further efforts aimed at improvement. Key words: Supervision, Enforcement, Independence |
| JEL: | K29 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:6828&r=law |