nep-law New Economics Papers
on Law and Economics
Issue of 2022‒04‒11
twelve papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Recidivism and neighborhood institutions: evidence from the rise of the evangelical church in Chile By Barrios-Fernandez, Andres; Garcia Hombrados, Jorge
  2. Judge Dread: court severity, repossession risk and demand in mortgage and housing markets By Montebruno Bondi, Piero; Silva, Olmo; Szumilo, Nikodem
  3. Do financial advisors matter for M&A pre-announcement returns? By Betzer, André; Gider, Jasmin; Limbach, Peter
  4. Digital Trade Agreements, Protection of Personal Information and Data Governance (Japanese) By ISHII Yurika
  5. Strengthened Regulations for Digital Platform Businesses in China: Focusing on the Anti-Monopoly Law (Japanese) By KAWASHIMA Fujio
  6. Non-Disclosure Agreements and Externalities from Silence By Jason Sockin; Aaron Sojourner; Evan Starr
  7. Subsidizing Compliance: A Multi-Unit Price List Mechanism for Legal Fishing Nets at Lake Victoria By Diekert, Florian; Eymess, Tillmann; Goeschl, Timo; Gómez-Cardona, Santiago; Luomba, Joseph
  9. Determinant of Social Norms By Voigt, Stefan
  10. Gender Quotas and Support for Women in Board Elections By Gertsberg, Marina; Möllerström, Johanna; Pagel, Michaela
  11. Facing Displacement and a Global Pandemic: Evidence from a Fragile State By Michele Di Maio; Francisco Fasani; Valerio Leone Sciabolazza; Vasco Molini
  12. Are universal ethics necessary? And possible? A systematic theory of universal ethics and a code for global moral education By Winkler, Enno A.

  1. By: Barrios-Fernandez, Andres; Garcia Hombrados, Jorge
    Abstract: Rehabilitating convicted criminals is challenging; indeed, an important share of them return to prison only a few years after their release. Thus, finding effective ways of encouraging crime desistance, particularly among young individuals, has become an important policy goal to reduce crime and incarceration rates. This paper provides causal evidence that the local institutions of the neighborhood that receives young individuals after prison matter. Specifically, we show that the opening of an Evangelical church reduces twelve-months re-incarceration rates among property crime offenders by more than 10 percentage points. This effect represents a drop of 16% in the probability of returning to prison for this group of individuals. We find smaller and less precise effects for more severe types of crime. We discuss two classes of mechanisms that could explain our results: religiosity and social support. We provide evidence that the social support provided by evangelical churches is an important driver of our findings. This suggests that non-religious local institutions could also play an important role in the rehabilitation of former inmates.
    Keywords: crime desistance; recidivism; religion
    JEL: K42 H42 J40
    Date: 2021–05–21
  2. By: Montebruno Bondi, Piero; Silva, Olmo; Szumilo, Nikodem
    Abstract: We study the impact of borrower protection on mortgage and housing demand. We focus on variation in the likelihood that a house is repossessed – conditional on the mortgage being in arrears and taken to court – coming from heterogeneity in preferences of judges that adjudicate on repossession cases in England and Wales. We develop a simple theoretical framework that shows that too much borrower protection restricts credit supply, while not enough restricts credit demand. Market outcomes depend on which side dominates. To test the predictions of our model, we exploit exogenous spatial variation in repossession risk created by the boundaries of courts’ catchment areas. In our setting, housing market characteristics, borrower attributes and mortgage rates do not change discontinuously across these boundaries – allowing us to isolate the causal effects of borrower protection. We find that less borrower protection decreases both mortgage sizes and house prices. This pattern suggests that judges in our sample are too strict and that demand determines market outcomes. Furthermore, we find that our measure of borrower protection does not react to market conditions – causing frictions in credit and housing markets.
    Keywords: house repossessions; mortgages; house prices; housing demand; mortgage default
    JEL: G21 R21
    Date: 2021–05–11
  3. By: Betzer, André; Gider, Jasmin; Limbach, Peter
    Abstract: This study documents economically meaningful and persistent financial advisor fixed effects in target firms' abnormal stock returns shortly prior to takeover announcements.Additional difference-in-differences analyses suggest that advisors are associated with lower pre-bid stock returns after their senior staff were defendants in SEC insider trading enforcement actions. Returns are higher for advisors with more previously advised deals and those located in NYC. The evidence helps explain the prevalent phenomenon of pre-bid stock returns. It contributes to the inconclusive literature on banks' exploitation of private information gained via advisory services, which is limited to disclosed, traceable activities indicative of information leakage.
    Keywords: Financial Advisors,Mergers and Acquisitions,Information Leakage,Target Runups
    JEL: G14 G15 G21 G34 K42
    Date: 2022
  4. By: ISHII Yurika
    Abstract: Recent digital trade agreements and digital chapters of free trade agreements that provide for a high level of obligations require member states to ensure free cross-border transfer of data, prohibit member states from requiring the installation of computer-related equipment in their territory and ban member states from requiring source code and algorithm disclosure to the operators. On a separate track, states have enacted or amended laws to protect personal information and data. Many regulate the cross-border transfer of personal data and require foreign operators to comply with strengthened regulations. However, such legislation includes rules that may conflict with the laws of the digital trade agreements. Based on empirical evidence, this paper examines how (1) privacy and data protection legislation and (2) measures taken by importing countries against business operators as part of data governance, in particular regulations requiring disclosure of source code or algorithms, are governed under digital trade agreements.
    Date: 2021–02
  5. By: KAWASHIMA Fujio
    Abstract: Since December 2020 when the Central Political Bureau of the Communist Party of China and the Central Economic Work Council adopted a priority policy to ‘strengthen the Anti-Monopoly and prevent disorderly expansion of capital,’ regulation based on the Anti-Monopoly Law has actually been strengthened, particularly against digital platform businesses such as Alibaba and Tencent, who had been regarded as operating outside of the scope of its regulation and thus as ‘sanctuary’ businesses. This discussion paper firstly examines the background behind the strengthening of its regulation and secondly introduces and analyzes concrete cases of the application of the Anti-Monopoly Law regulation against digital platform business. Thirdly, it introduces the trends in the application of the regulations of other laws such as the Network Security Law to such business and clarifies the trends and characteristics related to the Antimonopoly Law regulations in comparison with other regulations. Towards the design and creation of multilateral rules on digital trade, this discussion paper's examination has practical implications as a foundational work, describing the state-of-play of relevant regulations in China, which can significantly affect the future direction of said rules.
    Date: 2021–03
  6. By: Jason Sockin (University of Pennsylvania); Aaron Sojourner (University of Minnesota and IZA Institute of Labor Economics); Evan Starr (University of Maryland)
    Abstract: We examine how non-disclosure agreements (NDAs) influence the flow of information in labor markets, leveraging workers' reviews of their employers on the website Glassdoor. Beginning in 2019, three states passed laws that 'narrowed NDAs' by prohibiting firms from using NDAs to restrict workers from sharing about unlawful conduct, and strengthened workers' anti-retaliation protections for speaking out. On average, these laws reduced ratings of firms by approximately 5%, with stronger effects in industries where NDAs are more prevalent. The rise in negative information pertains to many dimensions of jobs, including a 22% increase in reviews related to problems with harassment. The laws also reduced the likelihood with which employees who write negative reviews conceal aspects of their identity---consistent with reduced concern about retaliation risks. Finally, these laws increased dispersion in firm ratings within a market, suggesting that broad NDAs facilitate equilibria where firms with worse employment practices can 'pool' reputations among firms with better practices. Our results highlight how firms can use broad NDAs to preserve their reputation by silencing workers, but doing so imposes negative externalities on jobseekers who value such information and competing 'high-road' employers who are less able to distinguish themselves.
    Keywords: Imperfect Information, Non-Disclosure Agreements, Externalities, Firm Reputation
    JEL: M55 K31 J58
    Date: 2022–01
  7. By: Diekert, Florian; Eymess, Tillmann; Goeschl, Timo; Gómez-Cardona, Santiago; Luomba, Joseph
    Abstract: Like many common-pool resources, the Lake Victoria fisheries are characterized by poor compliance with production input regulations that are intended to reduce overexploitation. To explore the use of input subsidies to increase compliance, we determine the subsidy level required to induce demand for legal fishing nets, thereby compensating fishermen for loss of productivity net of enforcement risk. Our study additionally tests the subsidy-enhancing effect of a norm-nudge. A new multiple price list mechanism for eliciting revealed willingness to pay for multiple units of a production input is developed, adapted to the demands of a challenging field setting, and implemented with 462 fishermen at 20 landings sites on the Tanzanian lakeshore. Consistent with the high prevalence of illegal fishing gear at our sites, we find a zero median demand for legal net panels at local market prices. The subsidy required to shift median demand to at least one legal net panel is a 21% discount. Norm-nudging generates no policy-relevant enhancement of the subsidy.
    Keywords: compliance; natural resource management; subsidies
    Date: 2022–03–09
  8. By: Tulun, Teoman Ertuğrul
    Abstract: As we have explained in detail in our analysis of last year, the Nationalist Socialist Underground (NSU) far-right terror group, between 2000 and 2007, murdered ten people in Germany . Eight of the victims belonged to Germany's more than three million Turkish community. The last victim was a German policewoman who was gunned down in 2007. This terror cell carried out also several robberies and bombings in this period. Between 1998 and 2011, they robbed 11 banks in Saxony towns of Chemnitz, Zwickau, one bank in Stralsund, Mecklenburg-West Pomerania, and two banks in Arnstadt and Eisenach in Thuringia . As it was given the details in our mentioned last year's analysis Beate Zschäpe, Uwe Mundlos and Uwe Böhnhardt were the nucleus of the National Socialist Underground. Only a couple of hours later, the third member of the group, Beate Zschäpe, set fire to the group's flat in Zwickau, left the scene, and mailed about twelve prepared envelopes containing copies of DVDs claiming responsibility for their acts to newspapers, mosques, parties and one right-wing extremist mail order company, and stayed hidden for several days before turning herself in to the police, accompanied by her lawyer. Searching the debris of the flat, investigators found more weapons, among others the pistol of the first nine murders, and a laptop containing copies of the video claiming responsibility. As a result, the last surviving member of the NSU Beate Zschäpe was charged with co-founding a terrorist organization and the complicity in ten murders, two bombings and fourteen bank robberies .The NSU trial began on 6 May 2013 in the 6th Criminal Division of Munich's Higher Regional Court and Beate Zschäpe together with the four suspected accomplices deemed to be in the "close periphery" of the NSU trio, including Ralf Wohlleben and André Eminger, were tried. Zschäpe is accused of 10 murders, arson, forming a terrorist organization and membership of a terrorist organization. After nearly a five-year trial, the Munich Higher Regional Court has issued the verdict on 11 June 2018. Beate Zschäpe was found guilty of being complicit in 10 murders, 43 attempted murders, 2 severe bombing attacks and 15 bank and other robberies, and sentenced to life in prison . Carsten Schultze, a juvenile at the time, was found guilty of handing the pistol and silencer to the NSU, and was sentenced to three years. Last but not least, André Eminger was given only two years and six months for helping a terrorist group and was released, having already served his prison time during the trial . Meanwhile, many held a minute of silence for NSU's victims before the verdict was read out . The verdict of the Munich Court has been widely criticized, especially for the light sentences given to the already very limited number of accomplices of these serious crimes. The Munich court, almost after two years of its verdict, published the reasoning of its judgement on 21 April 2020. According to the report of Deutsche Welle, the lawyer of one of the plaintiffs whose father was killed by the NSU suggests that the main purpose of the case was not only to convict the only surviving core member of the NSU. Per the report, the BfV identified 32,080 right-wing extremists in Germany in 2019, up from 24,100 the year before. The BfV classified 13,000 of these cases as prepared to use violence, 300 more than in 2018. The report underlines the increase in racism, right-wing extremism, anti-Semitism in Germany, and considers these areas as the biggest threat to security in Germany. There is no doubt that the German government and a large segments of the German society are fighting seriously against terrorist acts that started to emerge in parallel with the rise of the far-right. At this point, it is necessary to add the serious rise in Islamophobia to the list of threats to security in Germany mentioned by the German authorities. In this context, it is also possible to name Islamophobia as anti-Muslim racism. A video titled "Anti-Muslim racism on the rise in Germany" prepared and broadcasted by DW News on 17 September 2020 is a useful start in studying this issue. In the light of the foregoing, as a concluding remark, the following question comes to mind: Did the timid verdict of the Munich Court on the NSU case play a role in the recent increase of number of right-wing extremists and rise in far-right terrorist acts in Germany? It is considered that investigating an answer to this question through an academic research can contribute to elucidating the reasons for the recent rise of the far right in Germany. On the other hand, recent revelations of confirmed infiltration of right wing extremists into the police force as well as the military structure and intelligence units is a most worrisome development that necessitate an even more scrutinizing follow up to this article.
    Date: 2020–09–24
  9. By: Voigt, Stefan
    Abstract: It is now abundantly clear that social norms channel behavior and impact economic development. This insight leads to the question: How do social norms evolve? This survey examines research that relies on geography to explain the development of social norms, and suggests that religion and family organization are potential mediators. It turns out that many social norms are either directly or indirectly determined by geography and can, hence, be considered largely time invariant. Given that successful economic development presupposes the congruence between formal institutions and social norms, this insight is highly relevant for all policy interventions designed to facilitate economic development.
    Keywords: social norms,internal institutions,informal institutions,Institutional Economics,geography,religion,family
    JEL: A13 D90 K00 O10 Z10
    Date: 2022
  10. By: Gertsberg, Marina (University of Melbourne); Möllerström, Johanna (George Mason University); Pagel, Michaela (Columbia GSB, NBER, and CEPR)
    Abstract: We study shareholder support for corporate board nominees before and after the 2018 California gender quota. Pre-quota, new female nominees received greater support than new male nominees, consistent with women being held to a higher standard. Post-quota, as the number of women increased, support for new (mandated) female nominees decreased to the same level of, but not lower than, the support that new male nominees enjoy. Still, share prices reacted negatively to the quota. We show that this reaction was concentrated in firms that did not turn over their least-supported male directors when adding women to comply with the quota.
    Keywords: Board of directors; Gender quota; Regulation; Corporate Governance
    JEL: G30 G34 G38 J16 K38
    Date: 2022–03–24
  11. By: Michele Di Maio (Michele Di Maio); Francisco Fasani (Francisco Fasani); Valerio Leone Sciabolazza (Valerio Leone Sciabolazza); Vasco Molini (Vasco Molini)
    Abstract: We use novel survey data to assess the impact of COVID-19 pandemic on the Libyan population. In our sample, 9.5% of respondents report that a household member has been infected by COVID 19, while 24.7% of them have suffered economic damages and 14.6% have experienced negative health effects due to the pandemic. Our analysis focuses on the differences between IDPs and non-displaced individuals, controlling for individuals and household characteristics, geo-localized measures of economic activity and conflict intensity. Displaced individuals do not experience higher incidence of COVID-19 relative to comparable non-displaced individuals, but are about 60% more likely than non-displaced respondents to report negative economic and health impacts caused by the pandemic. Our results suggest that the larger damages suffered by IDPs can be explained by their weaker economic status - which leads to more food insecurity and indebtedness - and by the discrimination they face in accessing health care.
    Keywords: Internally Displaced Persons, COVID-19, Debt, Health, Forced Migration, Conflict, Libya
    JEL: F22 J61 K37
    Date: 2022–03
  12. By: Winkler, Enno A.
    Abstract: This paper analyzes the political, philosophical, societal, legal, educational, biological, psychological and technological reasons why there is an urgent need for basic intercultural and interfaith ethics in the world and whether it is possible to formulate a valid code of such ethics. It is shown that universal ethics could be founded on natural law, which can be understood in both religious and secular ways. Alternatively, universal ethics could be based on a single supreme principle that is independent of worldview and culture: human dignity. In accordance with these concepts, a minimalist and normative code of essential, self-evident universal ethical principles and norms is proposed. The implementation of universal ethics in society is a long-term political task that could be achieved by including universal ethics in the compulsory school curriculum of all countries and in the UNESCO agenda of Global Citizen Education.
    Date: 2022–03–22

This nep-law issue is ©2022 by Eve-Angeline Lambert. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.