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on Law and Economics |
| By: | Ylenia Brilli (European University Institute); Marco Tonello (Bank of Italy) |
| Abstract: | We estimate the contemporaneous effect of education on adolescent crime by exploiting the variation in crime rates between different cohorts and at different ages that followed a reform that raised the school-leaving age in Italy. A 1 percentage-point increase of the enrollment rate reduces adolescent crime by 1.3 per cent in the North of Italy but increases it by 3.9 per cent in the South. The crime-reducing effect depends mainly on incapacitation (i.e. adolescents stay in school instead of on the street); the crime-increasing effect is consistent with a channel of criminal capital accumulation, operating through social interactions and organized-crime networks. |
| Keywords: | adolescent crime, school enrollment, incapacitation, human capital |
| JEL: | I20 I28 J13 K42 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1008_15&r=law |
| By: | Sofia Amaral |
| Abstract: | This paper uses the staggered implementation of a legal change in inheritance law in India to estimate the effect of women's improved access to inheritance on both police-reported and self-reported violence against women. I find a decrease in reported violence and female unnatural deaths following the amendments. Further, women eligible for inheritance are 17 percent less likely to be victims of domestic violence. These findings are explained by an improvement in husbands' behaviour and via better marriage market negotiations. However, I find little evidence of changes in women's participation in decision-making. |
| Keywords: | Crime, Domestic Violence, Property Rights, Intra-household |
| JEL: | J12 J16 K42 O15 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:15-10&r=law |
| By: | Xi Li (Department of Accounting, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology); Amir N. Licht (Interdisciplinary Center Herzliya); Christopher Poliquin (Harvard Business School, Harvard University); Jordan I. Siegel (Harvard Business School, Harvard University) |
| Abstract: | On March 29, 2010, the U.S. Supreme Court signaled its intention to geographically limit the reach of the U.S. securities antifraud regime and thus differentially exclude U.S.-listed foreign firms from the ambit of formal U.S. antifraud enforcement. We use this legal surprise as a natural experiment to test the legal bonding hypothesis. This event nonetheless was met with positive or indifferent market reactions based on matched samples, Brown-Warner, and portfolio analyses. These results challenge the value of at least the U.S. civil liability regime, as currently designed, as a legal bonding mechanism in such firms. |
| Keywords: | bonding, enforcement, reputation, cross-listing, corporate governance, civil liability |
| JEL: | G15 G18 G38 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:hku:wpaper:201519&r=law |
| By: | Gavrilova, Evelina (Norwegian School of Economics); Campaniello, Nadia (University of Essex) |
| Abstract: | Using data from the U.S. National Incident Based Reporting System we document a gender gap in the number of crimes committed in the property crime market: only 30% of the crimes are committed by women. Starting from the classical Becker's model on crime we investigate some potential reasons for the participation gap looking at the differential incentives, measured in terms of earnings and probability of arrest. We observe that women obtain on average 32% less criminal earnings and face a 10% higher probability of arrest with respect to males. Once we account for type of crime and the attributes of offending, such as weapons, we find that the earnings gap is zero on average, while females still face a 1% higher probability of arrest than males. We also observe that females sort into offense types, characterized by a lower variation in the earnings risk, which reveals that females in the crime market are more risk averse than males. Furthermore, we analyze the participation gap by looking at the perceived incentives. We estimate the elasticities of crime with respect to the expected earnings and to the expected probability of not being arrested for both genders. We find that males respond to both these incentives, while females respond less to the incentive for higher earnings than males and they do not respond to the probability of arrest. Finally, we use a Blinder-Oaxaca type decomposition technique to measure crime differentials between females and males that arise due to different responses to incentives. We find that, in a counter factual scenario where the female elasticities increase to the level of the male ones, women would commit 40% more crimes than they actually do, reducing the male-female participation gap by almost 50%. |
| Keywords: | participation gap, gender discrimination, crime |
| JEL: | J71 J16 K42 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8982&r=law |
| By: | Gralf-Peter Calliess |
| Abstract: | Lex mercatoria or Law Merchant (‘LM’) is said to be the self-made law of international commerce. According to its proponents, LM is an autonomous legal order that not only supplements state commercial law, but works as a substitute for it. The ‘ancient’ LM, which accompanied the commercial revolution in late medieval Europe, is taken as a blueprint for ‘new’ LM, a transnational law that develops in international commercial arbitration to govern modern global commerce. According to its opponents, ancient LM as a uniform customary law of Europe never existed. Rather it was dreamed-up in order to support the neo-liberal agenda of new LM. This paper investigates the historical and empirical foundations of these claims in the three dimensions of transnational dispute resolution, norm making, and enforcement. It is concluded that truly autonomous transnational legal regimes are industry-specific exceptions, where socio-economic sanctions are formally organized. Transnational commercial law in general is characterised by a hybrid mode of governance, which combines institutions of private (norms, arbitration, and social sanctions) and public (laws, courts, and enforcement) origin. However, the latter are disembedded from their domestic context to a considerable extent. |
| Keywords: | Law Merchant, international commercial arbitration, transnational law, cross-border contracts, international trade, private international law, conflict of laws, contract enforcement, general principles of law, party autonomy, trade usage, standard form contracts |
| JEL: | A14 B11 B15 F13 F14 F15 F23 K12 K33 K41 K49 L14 L22 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:zen:wpaper:52&r=law |
| By: | Brian Bell |
| Abstract: | The coalition government's austerity programme has resulted in some sizeable reductions in the police workforce, yet crime has continued to fall. A key question for the next Parliament is whether further real-terms reductions in police budgets can occur without more deleterious effects on crime. This paper explores the evidence on the trends in crime and the police workforce, and factors that may have led to the continued fall in reported crime. |
| Keywords: | crime, police, #ElectionEconomics |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepeap:031&r=law |
| By: | Felix J. Lopez-Iturriaga (National Research University Higher School of Economics); Emilio Lopez-Millan (University of Valladolid) |
| Abstract: | We combine agency theory with the law and finance approach to analyze how the legal protection of investors and the corporate ownership structure affect the corporate investment in research and development (R&D). We use information from 1,091 firms from the five most R&D intensive industries in 19 developed countries. Our results show that the better protection of investors’ rights by the institutional environment has a positive influence on corporate R&D. We also find that corporate ownership concentration works as a substitute for legal protection. This finding means that the R&D investment of the firms in the countries with poor legal protection increases as long as the ownership becomes more concentrated. Our results also show that the identity of shareholders has a relevant effect: Whereas banks and nonfinancial institutions as shareholders result in lower R&D, institutional investors as shareholders increase the corporate investment in R&D. |
| Keywords: | Institutional setting, ownership structure, corporate R&D, legal protection |
| JEL: | G32 O32 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:36man2015&r=law |
| By: | Giacomo Rodano; Nicolas Serrano-Velarde; Emanuele Tarantino |
| Abstract: | Exploiting the timing of the 2005-2006 Italian bankruptcy law reforms, we disentangle the effects of reorganization and liquidation in bankruptcy on bank financing nd firm investment. A 2005 reform introduces reorganization procedures facilitating loan renegotiation. The 2006 reform subsequently strengthens creditor rights in liquidation. The first reform increases interest rates and reduces investment. The second reform reduces interest rates and spurs investment. Our results highlight the importance of identifying the distinct effects of liquidation and reorganization, as these procedures differently address the tension in bankruptcy law between the continuation of viable businesses and the preservation of repayment incentives. JEL classification: G33, K22. Keywords: Financial Distress, Financial Contracting, Renegotiation, Multi-bank Borrowing, Bankruptcy Courts. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:igi:igierp:547&r=law |
| By: | Siekmann, Helmut |
| Abstract: | The Treaty of Maastricht imposed the strict obligation on the European Union (EU) to establish an economic and monetary union, now Article 3(4) TEU. This economic and monetary union is, however, not designed as a separate entity but as an integral part of the EU. The single currency was to become the currency of the EU and to be the legal tender in all Member States unless an exemption was explicitly granted in the primary law of the EU, as in the case of the UK and Denmark. The newly admitted Member States are obliged to introduce the euro as their currency as soon as they fulfil the admission criteria. Technically, this has been achieved by transferring the exclusive competence for the monetary policy of the Member States whose currency is the euro on the EU, Article 3(1)(c) TFEU and by bestowing the euro with the quality of legal tender, the only legal tender in the EU, Article 128(1) sentence 3 TFEU. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:imfswp:89&r=law |
| By: | Konstantin Yanovskiy (Gaidar Institute for Economic Policy); Sergey Zhavoronkov (Gaidar Institute for Economic Policy); Ilia Zatcovetsky (Samuel Neaman Institute for Advanced Studies in Science and Technology) |
| Abstract: | Advocates of the war against discrimination and affirmative action claim it is necessary to set up additional regulatory procedures that will defend interests of minorities who, previously, were not given enough chances to succeed. Because there is no set definition of a minority who suffered from discrimination in the past (Historically Excluded Groups [HEGs] consider all women to be a minority), law-enforcement practices are to a large degree dependent on precedence (judicial authorities) as well as the behavior of bureaucrats who have the authority to defend people against discrimination. Incentives and the true criteria for choosing minorities will be analyzed in this report. There are practices in the USA and Israel, as well as statistics of EEOC practices (a committee on equal rights in hiring, that is a kind of specialized public prosecution office) supporting the hypothesis that the main anti-discriminatory activity aims to mobilize groups who traditionally voted against a limited government, to vote for a nanny state that provides cradle to grave care. |
| Keywords: | historically excluded groups, pure public goods, discrimination, Limited Government |
| JEL: | D72 D73 J15 K31 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:gai:wpaper:0111&r=law |
| By: | Ulrich Matter; Alois Stutzer (University of Basel) |
| Abstract: | The U.S. tort system has experienced various reforms during the last three decades. While there is a broad literature on the consequences of these reforms, very little is known about their determinants. In this study, we investigate the politico-economic forces that were driving the reform process across U.S. states. We focus on five types of medical malpractice tort reform and apply semi-parametric proportional hazards models to assess the factors that are related to reform enactments. We find, first, that a higher fraction of Republicans in a state legislature as well as a Republican governor are the major drivers of medical malpractice tort reforms. Second, we find that a higher fraction of women in a state legislature is associated with reforms being deferred. This finding is corroborated by micro-evidence on female legislators’ voting behavior on medical malpractice tort reforms, and it is consistent with the notion that women are disproportionally aggrieved by such reforms. |
| Keywords: | Tort reform, tort law, medical malpractice, rent-seeking, legislatures, women in politics |
| JEL: | D72 K13 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:bsl:wpaper:2015/02&r=law |
| By: | Xi Li (Department of Accounting, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology); Mingyi Hung (Department of Accounting, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology); Larry Fauver (Department of Accounting, University of Tennessee); Alvaro Taboada (Department of Accounting, University of Tennessee) |
| Abstract: | We examine the impact of corporate board reforms on firm value in 41 countries. Using a difference-in-differences design, we find that firm value increases after enactment of the reforms. The valuation increase is associated with both the intensity and major components of the reform, including board independence, audit committee, and the separation of the roles of chief executive officer and chairman. We also find that the effect of these reforms primarily exists in countries with weak legal institutions. In addition, the effect of reforms is concentrated among comply-or-explain reforms, and the role of country-level institutions is less important for these reforms than for regulation reforms. Taken together, our findings suggest exogenously introduced governance changes benefit shareholders, mainly in countries with weak institutional quality and for reforms with a comply-or-explain approach. |
| Keywords: | cross-country study, firm value, governance reforms |
| JEL: | G15 G34 K22 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:hku:wpaper:201520&r=law |
| By: | Binder, Jens-Hinrich |
| Abstract: | The creation of the Banking Union is likely to come with substantial implications for the governance of Eurozone banks. The European Central Bank, in its capacity as supervisory authority for systemically important banks, as well as the Single Resolution Board, under the EU Regulations establishing the Single Supervisory Mechanism and the Single Resolution Mechanism, have been provided with a broad mandate and corresponding powers that allow for far-reaching interference with the relevant institutions' organisational and business decisions. Starting with an overview of the relevant powers, the present paper explores how these could - and should - be exercised against the backdrop of the fundamental policy objectives of the Banking Union. The relevant aspects directly relate to a fundamental question associated with the reallocation of the supervisory landscape, namely: Will the centralisation of supervisory powers, over time, also lead to the streamlining of business models, corporate and group structures of banks across the Eurozone? |
| Keywords: | Banking Union,Single Supervisory Mechanism,Single Resolution Mechanism,Banking Regulation,Bank Corporate Governance |
| JEL: | G15 G21 G28 K22 K23 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:96&r=law |