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on Law and Economics |
| By: | Enriques, Luca; Nigro, Casimiro A. |
| Abstract: | Private ordering enables investors to design firm-specific governance arrangements. Aided by specialized lawyers, sophisticated contracting parties can engage in complex private ordering exercises yielding agency cost-minimizing governance structures. Venture capital ('VC') contracting is a notable example. Through decades-long iterations, US VC contracts have emerged as the best real-world solutions to the challenges of financing high-tech firms, informing transactional practice globally. Yet, the law, corporate law included, can hinder the "transplant" of US VC contracts. In a companion paper, we provide systematic evidence that German and Italian corporate laws literally crash contracting parties' ambitions to transplant US VC contracts. Importantly, we spotlight that blackletter corporate law provisions are less often to blame for this outcome than (widely accepted) scholarly interpretations. Corporate law in action is thus 'über-mandatory'. This essay complements our previous research by asking how Italian legal culture can explain this character. We note that Italy's internal legal culture grants legal professionals wide discretion on how to interpret the law and how they use it to complement blackletter law with a number of implicit rules and principles of a mandatory nature. External legal culture, in turn, explains legal professionals' (and chief among them legal scholars') inclination to build a 'system' of mandatory corporate law rules. To begin with, the long-standing predominance of banks' role in corporate finance created demand for rigid corporate laws. Second, legal professionals' inclination to extend mandatory corporate law is consistent with their self-interest as it increases demand for legal services and, hence, their rents. Third, few Italian legal scholars appear to trust markets and decentralized rulemaking as efficient and fair tools to allocate resources, consistently with the dominant political ideology. Lastly, Italian legal scholars aspiring to establish their academic reputation and advance their careers face stronger incentives to identify novel mandatory requirements that constrain private ordering - thereby demonstrating their mastery of the legal system - rather than to advocate for legal deference to existing private ordering solutions, which may be perceived as trite and unoriginal. |
| Keywords: | Comparative Corporate Law, Comparative Corporate Governance, Legal Culture, Regulatory Styles, Financial Contracting, Venture Capital, Private Ordering, Start-ups |
| JEL: | G38 K22 L26 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:lawfin:313661 |
| By: | Enriques, Luca; Nigro, Casimiro A.; Tröger, Tobias |
| Abstract: | Policymakers around the globe have sought to stimulate Venture Capital (VC) investments, and an extensive literature has inquired into the institutional determinants of a vibrant VC market, including corporate law. We contribute to that literature by exploring the significance of corporate law for VC contracting and hence VC investments. Corporate law's relative rigidity or flexibility is key to the efficiency of the contractual technology governing VC deals. Importantly, it can hamper such transactions through a number of "constraints, " which we have identified in a companion paper. To illustrate our point, in another companion paper, we take German and Italian corporate laws as two case studies and show how they are largely averse to VC contracting. In addition, we show that the regulatory constraints they impose stem from blackletter corporate law much less often than from scholarly constructs and courts' interpretations. This chapter anticipates two objections that cast doubt over the importance of our findings as to the construction of vibrant VC markets in Germany and Italy. Specifically, the first of these objections is that VC funds and entrepreneurs planning to run their startups in Germany and Italy can circumvent the strictures of local corporate laws by incorporating abroad, and the other is that formal contracts are inconsequential in VC deals, meaning that the regulatory constraints we document are irrelevant. Meanwhile, the chapter also shows that the detailed understanding of regulatory constraints unveiled by our research can inform more effective policymaking. Ultimately, we make two policy recommendations: first, we propose the adoption of a statutory provision that would explicitly insulate the arrangements that typically shape U.S. VC deals from undue interventions; and, second, we argue in favor of a standard charter aligned with U.S. VC transactional practice that the law itself should declare entirely enforceable. |
| Keywords: | Comparative Corporate Law, Comparative Corporate Governance, Entrepreneurship, Financial Contracting, Private Ordering, Startups, Venture Capital, Entrepreneurial Finance |
| JEL: | G38 K22 L26 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:lawfin:313660 |
| By: | Enriques, Luca; Nigro, Casimiro A.; Tröger, Tobias |
| Abstract: | Venture capital ("VC") has built a solid reputation for spurring innovation and economic growth, thus emerging as a crown jewel of the U.S. economy since the 1980s. The development of the U.S. VC market has benefited from the enabling nature of U.S. (Delaware) corporate law, which allows parties to devise a complex contractual framework that economists consider the best realworld solution to the market frictions bedeviling the finance of high-tech innovative projects. The law and finance literature has paid attention to corporate law as one of the determinants of VC investments by examining how variations in shareholder protection shape VC contracting. It has underscored the importance of flexible corporate law to enable the tailor-made arrangements that define VC-backed firms' unique governance structure. Vice versa, it has also documented anecdotally how mandatory corporate laws can impede the adoption and use of some specific components of the U.S. contractual framework. This article contributes to this literature, first, by conceptualizing, in a general theoretical framework, the role that flexible or rigid corporate law in action plays in supporting or hindering VC. Second, it identifies the channels through which mandatory corporate law constrains VC contracting. Third, it documents the real-world significance of these phenomena by illustrating how the constraints stemming from the corporate law regimes in force in two European jurisdictions, namely Germany and Italy, impact the transplant of the contractual framework governing VC deals in the U.S. |
| Keywords: | Comparative Corporate Law, Comparative Corporate Governance, Entrepreneurship, Financial Contracting, Private ordering, Start-ups, Venture Capital |
| JEL: | G38 K22 L26 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:lawfin:313659 |
| By: | naryono, endang (STIE PASIM SUKABUMI) |
| Abstract: | The crime of human trafficking during the 2018-2022 period is very worrying and endangers national security, the policies taken by the government are not very significant for cases of human trafficking. The high number of unemployed, limited employment opportunities resulting in an increasing poverty rate is one of the factors that has resulted in high public interest in working abroad even though they work in the non-formal sector without having high knowledge or sufficient competence to work abroad. This condition is exploited by perpetrators of human trafficking crimes by giving lures or promises to get high salaries while working abroad so that they can improve their economic life. Low education causes them to be deceived by perpetrators of human trafficking crimes, the fact is that when they arrive, many are not employed. humane, unpaid work, even made into women commercial sex workers which is not surprising that many illegal migrant workers end up dying. The increasing prevalence and intensity of human trafficking crimes is caused by the still weak resources owned by the government and it is then suspected that there are law enforcement officials involved in supporting human trafficking crimes in Indonesia. |
| Date: | 2023–07–17 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:mjquh_v1 |
| By: | Li, Yanjun; Liu, Xinyan; Tanaka, Ryuichi |
| Abstract: | Violence against children, especially trafficking, is a global concern. This paper proposes that nearby educational institutions can help reduce such violence. Using a quasi-experiment in China from 1999, where university campuses were exogenously established, the study shows that these institutions led to fewer trafficked children. The mechanism involves economic development, improved public safety, and changes in family behavior, ultimately reducing child trafficking. The findings highlight that the establishment of social facilities, such as universities, can unintentionally enhance children's safety and well-being by improving the surrounding community's economic and social conditions. |
| Keywords: | Childhood Maltreatment, Child trafficking, Illegal behaviors, University expansion policy |
| JEL: | H54 K42 O15 O18 R23 J13 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1590 |
| By: | Erica Bosio; Ana Palacio Jaramillo |
| Date: | 2023–10 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:40457 |
| By: | Papathanassiou, Chryssa; Nieto, María J. |
| Abstract: | Greenwashing is a generic term used for breaches and misleading claims about the sustainability credentials of various legal provisions, ranging from unfair competition, securities laws infringements and unethical advertising to wrong corporate disclosure. This paper focuses on the latter. Against the background of the significant financial flows needed to finance the transition to meet the objectives of the Paris Agreement and the EU Climate law, the EU corporate sustainability reporting rules integrated in the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), as well as the EU taxonomy constitute an ambitious legislative framework which is aimed at establishing common mandatory European Sustainability Reporting Standards for companies to report comparable and relevant information required by investors and other stakeholders. This framework’s aim is to support companies in the transition to a more sustainable economy and help stakeholders and investors understand the sustainability risks in their investments (and facilitate financial flows for the transition). This framework’s aim is to support companies in the transition to a more sustainable economy and help stakeholders and investors understand the sustainability risks in their investments (and facilitate financial flows for the transition). This will help mitigate greenwashing risks because this framework raises the responsibility for inaccurate disclosure. In addition, accurate data are important for central bank operations because they can ensure that prices and the risk control framework adequately reflect climate physical and transition risks. The success of the regulatory framework will rely heavily on its credible implementation, including penalties, which will help anchor expectations and condition the behaviour of economic agents. […] |
| Keywords: | climate, disclosure, greenwashing, sustainability |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbops:2025370 |
| By: | David Freestone; Duygu Çiçek |
| Keywords: | Environment-Adaptation to Climate Change Environment-Coastal and Marine Environment Law and Development-Environmental & Natural Resources Law |
| Date: | 2023–11 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:40584 |