New Economics Papers
on Law and Economics
Issue of 2009‒07‒28
three papers chosen by
Jeong-Joon Lee, Towson University

  1. Punishment – and beyond By Bruno S. Frey
  2. The Impact of Investor Protection Law on Corporate Policy: Evidence from the Blue Sky Laws By Agrawal, Ashwini K.
  3. The Effect of Learning Varies According to Locality: Micro Data Analysis of the Lawyer Market in Japan By Yamamura, Eiji

  1. By: Bruno S. Frey
    Abstract: This paper argues that the “Economics of Crime” concentrates too much on punishment as a policy to fight crime, which is unwise for several reasons. There are important instances in which punishment simply cannot reduce crime. Several feasible alternatives to punishment exist, such as offering positive incentives or handing out awards for law abiding behavior. These alternative approaches tend to create a positive sum environment. When people appreciate living in a society that is to a large extent law abiding, they are more motivated to observe the law.
    Keywords: Crime; Punishment; Incentives; Motivation; Framing; Broken Window Theory
    JEL: K42 O31
    Date: 2009–06
  2. By: Agrawal, Ashwini K.
    Abstract: Recent studies have debated the impact of investor protection laws on firms’ corporate policies. I exploit the passage of state investor protection statutes (“blue sky laws”) in the U.S. in the early 20th century to estimate the effects of investor protection law on firm financing decisions and investment activity. Regression estimates indicate that the passage of investor protection statutes causes firms to pay out greater dividends, issue more equity, and grow in size. The introduction of investor protection law is also associated with improvements in operating performance and market valuations. Additional analysis suggests that alternative hypotheses for the measured changes in corporate policy and performance have limited explanatory power. Overall, the evidence is strongly supportive of theoretical models which predict that investor protection laws have a significant impact on firm financing and investment policy.
    Keywords: Corporate Governance; Investor Protection; Law and Finance; law; finance; empirical corporate finance; financial institutions;
    JEL: A1 G34 G0 G30
    Date: 2009–07–07
  3. By: Yamamura, Eiji
    Abstract: By using individual level data, this paper attempts to examine how and to what extent behavior and perception of those bringing lawsuit’s differ between large district courts (competitive lawyer market) and medium or small district ones (less competitive lawyer market). The major findings are; (1) in medium or small but not in large districts, trial experience discourages persons from employing a lawyer. (2) A natural person is less likely to employ a lawyer than a legal person in medium or small districts, but not in large ones. (3) The self-rated cost of searching for a lawyer is lower in large districts than small ones. It follows from these results that the lower competitive pressure in the lawyer markets in medium and small districts results in higher costs of employing a lawyer than is found in large districts.
    Keywords: Learning; Lawyer market
    JEL: K49 L13 L88
    Date: 2009–07–16

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