New Economics Papers
on Law and Economics
Issue of 2009‒05‒02
four papers chosen by
Jeong-Joon Lee, Towson University

  1. Financial versus Social Efficiency of Corporate Bankruptcy Law: the French Dilemma? By Régis Blazy; Bertrand Chopard; Agnès Fimayer; Jean-Daniel Guigou
  2. Ten Years of Product Market Reform in OECD Countries: Insights from a Revised PMR Indicator By Anita Wölfl; Isabelle Wanner; Tomasz Kozluk; Giuseppe Nicoletti
  3. Tragedies on Natural Resources a Commons and Anticommons Approach By Manuel Coelho, José Filipe and Manuel Ferreira
  4. Limiting audit firms’ liability: A step in the right direction? (Proposals for a new audit liability regime in Europe revisited) By Ojo, Marianne

  1. By: Régis Blazy; Bertrand Chopard; Agnès Fimayer; Jean-Daniel Guigou
    Abstract: We study the French dilemma associated with court administered resolution of corporate financial distress of firms, in which bankruptcy courts have to combine both social efficiency (maintaining employment) and ex post financial efficiency (determining the best issue for financial distress, proxied here by the global recovery rate). We discuss this dilemma empirically, using a large sample of decisions of French commercial courts concerning the future of bankrupt firms (reorganization, sale as a going concern or liquidation). Addressing this dilemma, we discuss the determinants of bankruptcy courts’ selection between rival offers in sales as a going concern. Finally, we evaluate the financial cost of the French pro debtor system through the recovery rates of various claimants. Our main results are: (1) French commercial courts actively work to protect employment by facilitating continuation and reducing the domino effects of bankruptcy. (2) the courts’ choice between rival buyout offers confirms that social considerations prevail in the arbitration of bankruptcy courts. (3) Continuations through reorganization plans generate the highest recovery rates for all classes of creditors. (4) Contrary to the expected trade-off between social and financial efficiency, courts also enact measures to increase debt recovery once continuation has been chosen. However, for sales, recovery rates are inhibited by asset illiquidity and/or by the courts’ attempt to promote a firm’s continuation through sales at a low price.
    Keywords: Bankruptcy, Reorganization; Liquidation; Recovery rate.
    JEL: G33 K22
    Date: 2009
  2. By: Anita Wölfl; Isabelle Wanner; Tomasz Kozluk; Giuseppe Nicoletti
    Abstract: This paper describes patterns and developments of regulation that potentially affect product market competition in OECD countries over the past decade. It uses the 2008 update and revision of the OECD indicators of product market regulation (PMR) that integrate to a larger extent than in the past information on sector-specific regulation and adapt a simpler and more transparent aggregation technique. The results show that OECD countries have extensively liberalised product markets over the past ten years and – as a consequence - convergence of regulation across OECD countries can be observed. However, reforms appear to have slowed in the most recent period (2003-2008) as compared with the earlier period (1998- 2003). Easing of product market regulation appears to have been driven to a considerable extent by reforms in sector-specific regulation, notably as regards the gas, electricity and telecommunications markets. Countries appear also to have followed consistent reform approaches. However, scope for further reform remains, especially as regards controls of governments over businesses, and as regards certain sectors such as professional services and retail trade.<P>Dix ans de réformes sur le marché des produits dans les pays de l’OCDE : Un aperçu sur la base d’un indicateur RMP révisé<BR>Ce papier décrit les évolutions observées en matière de réglementation potentiellement entravant le jeu de la concurrence sur les marchés de produits des pays de l'OCDE au cours des dix dernières années. On utilise une version actualisée et révisée des indicateurs de réglementation des marchés de produits (RMP) qui intègre dans des proportions plus vastes que par le passé des informations sur les réglementations sectorielles et utilise une technique d'agrégation plus simple et transparente. D'après les résultats, les pays de l’OCDE ont considérablement libéralisé leurs marchés de produits depuis dix ans et – par conséquence – la convergence des réglementations peut être observée. Cependant, le rythme des réformes semble avoir ralenti ces dernières années (de 2003 à 2008) par rapport à la période précédente (de 1998 à 2003). Sur l’ensemble de la période, les réformes de la réglementation semblent avoir reposé considérablement sur la réforme des réglementations sectorielles, notamment dans les marchés du gaz, de l’électricité et des télécommunications. Les pays semblent avoir également introduit des réformes d'une façon cohérente. Cependant, il existe encore des marges de manœuvre considérables, notamment en termes du contrôle exercé par l'État, et dans quelques secteurs, tels que les services professionnels et le commerce de détail.
    Keywords: indicators of product market regulation, indicateurs de réglementation des marchés de produits
    JEL: K2 L5
    Date: 2009–04–23
  3. By: Manuel Coelho, José Filipe and Manuel Ferreira
    Abstract: Ambiguous concepts blur analytical and policy prescription clarity. In the literature on Natural Resources it would be difficult to find a concept as misunderstood as commons. This paper clarifies this confusion and establishes an adequate conceptualisation. A typology of property-rights regimes relevant to common property resources is presented and a new concept – anticommons - is introduced. The reflex of this regimes distinction on the design of the natural resources policy is discussed and this conceptualisation is used to study exemplar cases in the area of fisheries and aquaculture policy in Portugal. Key Words: Property rights, commons, anticommons, entrepreneur, fisheries
    JEL: K11 Q20
    Date: 2009–03
  4. By: Ojo, Marianne
    Abstract: This paper considers the responses of six audit firms, to the four options presented by the European Commission in reforming auditors’ liability. Whilst agreeing with a limitation in audit firms’ liability, it does not consider the means of limitation, as provided by the European Commission in its Recommendation, to be the best means of limiting auditors’ liability. In proposing a means whereby not only a limitation of audit firms’ liability can be achieved, but also one which would serve as a better means of facilitating harmonisation, the paper makes reference to the variants presented in the author’s paper “Proposals For a New Audit Liability Regime”, namely a combination of the first and third options. Further, the wide scope permitted by the Commission in leaving it to Member States to decide upon the appropriate method for limiting liability and the means of limiting liability, as the paper will seek to illustrate, do not present the best opportunities in realising the goal of harmonisation.
    Keywords: Audit;Liability;Proposals;Europe
    JEL: K2 M42
    Date: 2009–04–27

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