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on Law and Economics |
| By: | Thomas J. Miceli (University of Connecticut); Henry J. Munneke (University of Georgia); C. F. Sirmans (Florida State University); Geoffrey K. Turnbull (Georgia State University) |
| Abstract: | This paper examines the impact of land title systems on property values. The predominant system in the U.S., the recording system, awards title to claimants over current possessors, whereas the Torrens registration system awards title to the current owner. In theory, the registration system maximizes property value, all else equal, but in practice, the systems differ depending on the risk of a claim and administrative costs. A natural experiment in Cook County, Illinois, where both systems have existed since 1897, allows a test of the theory. The results, based on commercial and industrial properties, reveal that parcels tend to self-select into the two systems based on the predictions of the theory. |
| Keywords: | Land title system, property rights, recording system, Torrens system |
| JEL: | K11 P14 R14 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2008-32&r=law |
| By: | Zsolt Bedo (University of Pecs); Eva Ozsvald (Institute of Economics, Hungarian Academy of Sciences) |
| Abstract: | The purpose of the paper is to account for the short history of the soft law regulation of corporate conduct on the Budapest Stock Exchange (BSE). In theory, voluntary codes of good governance are expected to improve the deficiences of the existing mechanisms of corporate governance. In case of the Hungarian public companies the most important corporate governance problems are those related to the fragile safeguards of the interests of minority shareholders and to the lack of incentives for a much higher degree of transparency and disclosure. It is these two sets of issues on which the present analysis concentrates. The empirical core of the paper assesses the quality of information to be gained from the corporate governance reports of listed companies on the BSE. In order to discover links between the quality of information and firm characteristics we categorized the declarations based on their adequacy and applied binary regression analysis. We found inverse relationship between ownership concentration and the quality of information, while the higher liquidity of shares enhanced the adequacy of declarations. |
| Keywords: | Corporate governance, company law, voluntary codes of governance |
| JEL: | G18 G34 K22 P34 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:0818&r=law |
| By: | Giovanni Immordino (Università di Salerno and CSEF); Marco Pagano (Università di Napoli Federico II, CSEF, EIEF and CEPR) |
| Abstract: | We analyze corporate fraud in a model where managers have superior information but, due to private benefits from empire building, are biased against liquidation. This may induce them to misreport information and even bribe auditors when liquidation would be value-increasing. To restrain fraud, shareholders optimally choose auditing quality and the performance sensitivity of managerial pay, taking into account external corporate governance and auditing regulation. For given managerial pay, it is optimal to rely on auditing when external governance is in an intermediate range. When both auditing and managerial incentive pay are used, worse external governance must be balanced by heavier reliance on both of these incentive mechanisms. In designing managerial pay, equity can improve managerial incentives while options worsen them. |
| Keywords: | accounting fraud, auditing, managerial compensation, corporate governance, regulation |
| JEL: | G28 K22 M42 |
| Date: | 2008–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:203&r=law |
| By: | David G. Mayes (Bank of Finland); María J. Nieto (Banco de España); Larry Wall (Federal Reserve Bank of Atlanta) |
| Abstract: | This paper presents a stylized mechanism aimed at dealing with the cross border agency problems that arise in supervising and resolving cross border banking groups in the European Union (EU). The authors assume that PCA policies have been implemented by the national supervisors and explore the institutional changes needed in Europe if PCA is to be effective as an incentive compatible mechanism. The paper identifies these changes starting with enhancements in the availability of information on banking groups to supervisors. Next, the paper considers the collective decision making by supervisors with authority to make discretionary decisions within the PCA framework as soon as a bank of a cross border banking group falls below the minimum capital standard. Finally, the paper analyzes the coordination measures that should be implemented if PCA requires the bank to be resolved. |
| Keywords: | banking supervision, European Union, Prompt Corrective Action |
| JEL: | G28 K23 F20 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:0819&r=law |
| By: | Nora El-Bialy Ibrahim (Faculty of Management Technology, The German University in Cairo) |
| Abstract: | This paper develops the first applied econometric model to examine the efficiency of existing enforcement measures and legal framework on prevailing software piracy rates in Egypt. Hence, it can be used as a tool when discussing new policies concerning the welfare of the interest groups and the pricing of protected software products (i.e., original software products). The model will focus on the available time-series data during 1992-2002 in Egypt. This time period was chosen due to the paucity of quantitative data concerning the model. The institutional environment is examined according to the New Institutional Economics (NIE) to illustrate the legal framework, the informal constraints and the enforcement authorities to support the empirical model. Analytical results show that efficient enforcement of property rights does not only imply increasing legal enforcement through imposing more severe punishments and prosecutions, as decreasing the prices of software plays a much bigger role. Thus relying on legal enforcement authorities alone is not always economically optimal, as it will not be able to deter IPR infringement on its own. |
| Keywords: | Intellectual Property Rights (IPR), Legal Enforcement, New Institutional Economics (NIE), Software Piracy, Egypt |
| JEL: | F19 K39 K42 L86 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:guc:wpaper:13&r=law |
| By: | Cordeiro, Jose Luis |
| Abstract: | This paper gives a global summary of the number of constitutions and the number of　articles in each constitution for many representative countries around the world. Several　works have already been written comparing different legal systems and different　constitutional traditions around the world; the purpose of this paper is just to compare the　numbers of constitutions and articles in the diverse regions of the world, namely: North　America, Latin America, Europe, Oceania, Middle East, Asia and Africa. Around the world, on average, Latin America has had the most convoluted constitutional history. The Dominican Republic has had a total of 32 constitutions, the largest number of constitutions of any country, since its independence in 1844. Three other countries have also had 20 or more constitutions throughout their history, all of them in Latin America: Venezuela (26), Haiti (24) and Ecuador (20). On the other hand, there are economies and societies that do not even have codified constitutions, like the United Kingdom in Europe, Hong Kong in Asia and New Zealand in Oceania. The United States has had only one constitution, even if it has been amended several times. There are also the special cases of Israel and Saudi Arabia, both in the Middle East, that do not have official written constitutions for historical and religious reasons. Comparative constitutional numbers and history help explain several things about the stability of political systems, but not necessarily about their quality. |
| Keywords: | constitutions, law and economics, Latin America |
| JEL: | K00 K10 K40 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper164&r=law |
| By: | Voon, Sze-Ling; Puah, Chin-Hong; Entebang, Harry |
| Abstract: | Building on the perception of both existing and potential investors in Kuching, Sarawak, this study aims to identify the factors that appear to stimulate corporate crime activity in organizations. A survey was carried out by distributing questionnaires to both types of investors selected on randomly basis. The findings reveal that corporate crime activities are mostly due to inadequate cash security practices, inadequate supervision as well as a lack of internal auditing. To minimize the effects of corporate crime on investors and organizations, managers should pay extra attention to these factors. On the other hand, future research within the context of corporate crime may consider the extent to which organizational crime can affect the shareholder value creation of organizations. |
| Keywords: | Corporate Crime; Internal Control |
| JEL: | K20 K42 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10643&r=law |
| By: | Antonio Merlo (Department of Economics, University of Pennsylvania); Kenneth I. Wolpin (Department of Economics, University of Pennsylvania) |
| Abstract: | In this paper, we propose a new approach to the empirical study of the relationships among schooling, youth employment and youth crime which provides a comprehensive analysis of the dynamic interactions among these choices and exposure to the criminal justice system. The empirical framework takes the form of a multinomial discrete choice vector autoregression of a youth’s schooling, work and crime decisions as well as arrest and incarceration outcomes. We allow for observable initial conditions, unobserved heterogeneity, the possibility of measurement error and for missing data. We use data from the NLSY97 on black male youths starting from age 14. The estimates indicate an important role for heterogeneity in initial conditions. We also find that stochastic events that arise during one’s youth can be important in determining outcomes as young adults. |
| Keywords: | crime, schooling, work, VAR |
| JEL: | K42 J24 J15 |
| Date: | 2008–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:08-033&r=law |
| By: | Betsey Stevenson |
| Abstract: | Divorce law changes made in the 1970s affected marital formation, dissolution, and bargaining within marriage. By altering the terms of the marital contract these legal changes impacted the incentives for women to enter and remain in the labor force. Whereas earlier work had suggested that the impact of unilateral divorce on female employment depended critically on laws governing property division, I show that these results are not robust to alternative specifications and controls. I find instead that unilateral divorce led to an increase in both married and unmarried female labor force participation, regardless of the pre-existing laws regarding property division. |
| JEL: | D1 J1 J2 K36 N3 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14346&r=law |