cssi/SciSciGPT-SciSciNet huggingface dataset:
The Purposes, Effects, and Future of the Endangered Species Act's Best Available Science Mandate

In recent years, the use of scientific data in administrative decisions has become increasingly contentious. The Endangered Species Act, because it repeatedly calls for consideration of the best available scientific data and has been at the center of a number of fierce disputes, provides a useful case study of the role of science in environmental policy. To date there has been little explicit analysis of either the reasons for the Act's strong and repeated best available science mandate or the effects of the mandate on the Act's implementation. The mandate could have been intended to increase the substantive accuracy of decisions, to promote political credibility, to alter the terms upon which courts review agency decisions, or to change the decision-making process. Today, the mandate's effect on the substantive accuracy of decisions above the background levels guaranteed by the Administrative Procedure Act appears limited. Its ability to provide political credibility has been eroded by high-profile disputes in which the scientific data supporting decisions has been publicly shown to be thin. It is difficult to tell whether it has had any effect on the outcome of judicial review. Procedurally, the mandate may enhance the influence of career scientific employees in agencies by comparison with that of the political appointees who head the agencies. It could also be interpreted to impose an affirmative data discovery or collection requirement. Early regulations and judicial decisions found just such a requirement, but more recently both implementing agencies and courts appear to have moved away from that interpretation. Recent proposals to amend the Endangered Species Act have concentrated on imposing additional scientific hurdles to regulation. Those proposals would do little to improve the substantive reliability of agency decisions. Scientific information is and will remain limiting for a large proportion of decisions under the Act. In order to achieve the Act's conservation purposes, the implementing agencies must have the discretion to rely on thin scientific information at the outset. The best available science mandate, which allows the agency to extrapolate from existing data, provides that discretion. But the scientific information available could be put to more effective use, consistent with a robust political process. The agencies should be forced to openly acknowledge the limits of the available scientific data and choices made in the face of uncertainty. They should also be required to take stronger steps to improve the knowledge base over time, so that decisions can become progressively more reliable. These steps, which would not require legislative modification of the Act, could improve both the substance and the political credibility of implementing decisions.
When Does Pre‐IPO Financial Reporting Trigger Post‐IPO Legal Consequences?

Prior research suggests that the fear of litigation precludes most managers from manipulating earnings in the initial public offering (IPO) setting. Yet, managers' restraint is perhaps unwarranted: research has not yet linked instances of aggressive pre-IPO reporting to increased litigation risk. This paper investigates when aggressive IPO reporting triggers legal consequences. Examining 2,037 IPOs, we find that even when ex post evidence indicates the presence of earnings inflation, litigation is more likely to occur when investors have relied on the suspect earnings during the pricing process. Why might investors rely on some firms' abnormal accruals when valuing the IPO and yet discount the abnormal accruals of other firms? Our analyses suggest that IPO investors incorporate abnormal accrual information into IPO prices in situations where accruals are more likely to reflect information and where other sources of information to help investors make pricing decisions are lacking or are less reliable. In these situations, we find that abnormal accruals do positively correlate with future performance, validating investors' use of this information when pricing these offerings. Yet, when ex post performance reveals that these pre-IPO abnormal accruals were in fact inflated, we find that litigation emerges to allow harmed shareholders to recover losses incurred dating back to the pricing process—importantly, investors are only harmed if they used those abnormal accruals in pricing the IPO. Collectively, our evidence indicates that litigation in response to earnings inflation does indeed surface in the IPO setting—but only when investors need it to settle the score.
Tests of three parity conditions: Distinguishing risk premia and systematic forecast errors

Abstract This study provides evidence that uncovered interest differentials between currencies cannot be attributed to either risk premia or systematic forecast errors alone. The evidence is based on developing joint tests of three parity conditions: uncovered interest parity, purchasing power parity, and real interest parity. The study tests parameter restrictions based on knowing that risk premiums only affect nominal and real interest differentials, but not inflation differentials, while systematic errors in forecasting exchange rates only affect nominal interest differentials and inflation differentials, but not real interest differentials. The study finds a variety of cases where deviations from some or all of the parity conditions can be systematically related to variables currently known to investors and borrowers. The most intriguing evidence is that for some currencies, these deviations from parity are perfectly correlated as if they were driven by a common factor.
Behavioral Bias Within The Decision Making Process

Behavioral finance studies how subjective behavioral elements introduce distortions in the individual’s decision-making process. The empirical study of systematic errors in cognitive reasoning and perception, and ultimately what these errors reveal about the individual’s underlying thought processes, is often referred to as investor heuristics and biases. This paper investigates the cognitive biases and heuristics to which business students are subject. This was achieved by administering a questionnaire and collecting empirical evidence about both undergraduate and graduate business students’ own perceptions of bias. The psychological phenomenon known as bias and its presence in human decision making, both financial and non-financial, will provide additional insight on the subject of investor irrationality and broaden the ideals of rationality assumed in classical financial theory.
Rational Conjectures Equilibria in the Private Provision of Public Goods

This article examines the role of information acquisition and the interaction between learning and individual choices in a model of voluntary public good provision. It shows that if agents form conjectural variations via a simple econometric learning process, final equilibira are dependent upon initial conditions. There is a significant set of possible equilibria that arise as limit points of this process and they may be given a simple geometric interpretation.
Price Discovery in Crude Oil Futures

This study examines price discovery among the two most prominent price benchmarks in the market for crude oil, WTI sweet crude and Brent sweet crude. Using data on the most active futures contracts measured at the one-second frequency, we …nd that WTI maintains a dominant role in price discovery relative to Brent, with an estimated information share in excess of 80%, over a sample from 2007 through 2012. Our analysis is robust
How The West Has Won Regional and Industrial Inversion in U.S. Patent Activity

AbstractWhile it is clear that there has been a “regional inversion” in American patent activity over the past 25 years (i.e., relative rise of the Northwest and Southwest at the expense of the traditional invention hotbeds of the Northeast and Midwest), the reason is still open to speculation. Theory suggests that it can be explained by some combination of changing demographics and industrial composition. We introduce constant market share analysis, typically used only in international trade theory, offer a new extension to this tool, and conclude that industrial shifts have accounted for almost half the regional inversion among states. The results of the regression analysis show how the West capitalized upon the shift via demographics and policy variables, whose importance varies with the planning horizon.
Regulating an Experience Good Produced in the Formal Sector of a Developing Country when Consumers Cannot Identify Producers

In developing countries, consumers can buy many goods either in formal markets or in informal markets and decide where to purchase based on the product's price and anticipated quality. This pape assumes consumers cannot assess quality prior to purchase and cannot, at reasonable cost, identify who produced the good they are considering. Many products (meats, fruits, vegetables, fish, grains) sold both in formal groceries and, less formally, on the street fit this description. This paper also assumes that producers can adjust quality at a cost and only firms in the formal sector are subject to government regulation. In the long run, producers migrate to the sector that is more profitable. Using this model, we demonstrate how regulations in the formal sector can lead to a quality gap between formal and informal sector goods. Moreover, the paper investigates how changes in regulation affect quality, price, aggregate production, and the number of firms in each sector.
Crisis-related shifts in the market valuation of banking activities

Abstract We examine changes in banks’ market-to-book ratios over the last decade, focusing on the dramatic and persistent declines witnessed during the financial crisis. The extent of the decline and its persistence cannot be explained by the delayed recognition of losses on existing financial instruments. Rather, it is declines in the values of intangibles – including customer relationships and other intangibles related to business opportunities – along with unrecognized contingent obligations that account for most of the persistent decline in market-to-book ratios. These shifts reflect a combination of changed economic circumstances (e.g., low interest rates reduce the value of core deposits; meager growth opportunities reduce the value of customer relationships) and changed regulatory policies. Together, these changes in the business environment since the financial crisis have led investors to associate little value with intangibles. For example, changing market perceptions of the consequences of leverage have affected the way investors value banks; prior to the crisis, higher leverage, ceteris paribus, was associated with greater value (reflecting the high relative cost of equity finance), but during and after the crisis, as default risk and regulatory concerns came to the fore, lower leverage was associated with greater value. Reflecting the rising importance of regulatory risks (e.g., the uncertain consequences of the Volcker Rule), after controlling for other influences, dividend payments (a signal of management and regulatory perceptions of the persistence of financial strength) matter for market prices much more after the crisis, while increases in recurring fee income matter less.
INFLATION INEQUALITY IN THE UNITED STATES

Different spending patterns across households and differences in price increases across goods and services lead to unequal levels of inflation faced by different households. In this paper we measure the degree of inequality in inflation across U.S. households for the period 1987–2000. The broad picture that emerges from our results is that over our whole sample period there are substantial differences in the inflation experiences across U.S. households. We find that the cost of living increases were generally higher for the elderly, in large part because of their health care expenditures, and that the cost of living of poor households is most sensitive to the, historically large, fluctuations in gasoline prices. Still, when looking at the whole population, we find that individual households that are confronted with high inflation in one year do not generally face high inflation in the subsequent year as well.
Operational Transparency: Showing When Work Gets Done

Problem definition: Do the benefits of operational transparency depend on when the work is done? Academic/practical relevance: This work connects the operations management literature on operational...
Random stress and Omori′s law

SUMMARY We consider two statistical regularities that were used to explain Omori's law of the aftershock rate decay: the Levy and Inverse Gaussian (IGD) distributions. These distributions are thought to describe stress behaviour influenced by various random factors: post-earthquake stress time history is described by a Brownian motion. Both distributions decay to zero for time intervals close to zero. But this feature contradicts the high immediate aftershock level according to Omori's law. We propose that these statistical distributions are influenced by the power-law stress distribution near the earthquake focal zone and we derive new distributions as a mixture of power-law stress with the exponent ψ and Levy as well as IGD distributions. Such new distributions describe the resulting inter-earthquake time intervals and closely resemble Omori's law. The new Levy distribution has a pure power law form with the exponent −(1 +ψ/2) and the mixed IGD has two exponents: the same as Levy for small time intervals and −(1 +ψ) for longer times. For even longer time intervals this power-law behaviour should be replaced by a uniform seismicity rate corresponding to the long-term tectonic deformation. We compute these background rates using our former analysis of earthquake size distribution and its connection to plate tectonics. We analyse several earthquake catalogues to confirm and illustrate our theoretical results. Finally, we discuss how the parameters of random stress dynamics can be determined through a more detailed statistical analysis of earthquake occurrence or by new laboratory experiments.
The Length of Product Line in Distribution Channels

This paper studies a manufacturer's optimal decisions on extending its product line when the manufacturer sells through either a centralized channel or a decentralized channel. We show that a manufacturer may provide a longer product line for consumers in a decentralized channel than in a centralized channel if the market is fully covered. In addition, a manufacturer's decisions on the length of its product line may not always be optimal from a social welfare perspective in either a centralized or a decentralized channel. Under certain conditions, a decentralized channel can provide the product line length that is socially optimal, whereas a centralized channel cannot.
Criminal Law and Common Sense: An Essay on the Perils and Promise of Neuroscience

This article is based on the author’s Barrock Lecture in Criminal Law presented at the Marquette University Law School. The central thesis is that the folk psychology that underpins criminal responsibility is correct and that our commonsense understanding of agency and responsibility and the legitimacy of criminal justice generally are not imperiled by contemporary discoveries in the various sciences, including neuroscience and genetics. These sciences will not revolutionize criminal law, at least not anytime soon, and at most they may make modest contributions to legal doctrine, practice, and policy. Until there are conceptual or scientific breakthroughs, this is my story and I’m sticking to it.
Querying Web-Sources within a Data Federation

The Web is undoubtedly the largest and most diverse repository of data, but it was not designed to offer the capabilities of traditional data base management systems – which is unfortunate. In a true data federation, all types of data sources, such as relational databases and semi-structured Web sites, could be used together. IBM WebSphere uses the “request-reply-compensate” protocol to communicate with wrappers in a data federation. This protocol expects wrappers to reply to query requests by indicating the portion of the queries they can answer. While this provides a very generic approach to data federation, it also requires the wrapper developer to deal with some of the complexities of capability considerations through custom coding. Alternative approaches based on declarative capability restrictions have been proposed in the literature, but they have not found their way into commercial systems, perhaps due to their complexity. We offer a practical middle-ground solution to querying Web-sources, using IBM’s data federation system as an example. In lieu of a two-layered architecture consisting of wrapper and source layers, we propose to move the capability declaration from the wrapper layer to a single component between the wrapper and the native data source. The advantage of this three-layered architecture is that each new Web-source only needs to register its capability with the capability-declaration component once, which saves the work of writing a new wrapper each time. Thus the inclusion of Web-sources through this mechanism can be accelerated in a way that doesn't require a change in existing data federation technology.
Financial and social complications as barriers to satisfaction with life among living kidney donors.

This commentary and analysis focuses on financial and social complications as barriers to satisfaction with life among living kidney donors.
Choosing Among Tools for Assessing Unilateral Merger Effects

A. INTRODUCTION In 2010 a raft of articles offered contrasting views on analytic tools for assessing unilateral effects from differentiated products mergers. They provided some useful insights but did not acknowledge that this is just one of many scenarios encountered in merger assessment, and they paid insufficient attention to the problems faced by a competition agency. We revisit this debate to clarify the issues and place them in context. We first review the basics of unilateral merger effects, the model-based analytic tools used for assessing unilateral effects, and the contrasting views expressed in the recent debate. With this foundation, we consider the choice among analytic tools at three stages of a merger assessment—initial screening, ultimate decision, and courtroom presentation. We explain how the proper analytical tool for a particular merger depends on the information available. We also explain how the proper analytic tool for a particular merger depends on the competitive process in which the merging firms engage and how the merger is apt to affect it. Our experience has been that shortrun price competition among differentiated products most often is not a satisfactory characterization of the process, and we offer two scenarios that require tools very different than those applicable to differentiated consumer products. In addition, we address the Upward Pricing Pressure Index (UPPI), which was a focal point in the recent debate. We find some merit in the idea of a very simple tool for differentiated products mergers and suggest a slightly simpler calculation. We also conclude that either as a screen or as part of a full assessment of a merger, other tools are preferable to the UPPI.
Markets as Monitors: A Proposal to Replace Class Actions with Exchanges as Securities Fraud Enforcers

This Article proposes the replacement of securities fraud class actions for "fraud on the market" with an enforcement regime administered by the securities exchanges. It discusses the social costs of fraud in secondary trading markets and the respective roles of compensation and deterrence in controlling those costs. The expense and ineffectiveness of securities class actions in achieving deterrence are explained. An alternative regime enforced by the exchanges is outlined, and the incentives of exchanges to enforce anti-fraud prohibitions are analyzed.
Institutional quality and international trade

Institutions — quality of contract enforcement, property rights, shareholder protection, and the like — have received a great deal of attention in recent years. Yet trade theory has not considered the implications of institutional differences, beyond treating them simply as different technologies or taxes. The purpose of this paper is twofold. First, we propose a simple model of international trade in which institutional differences are modeled within the framework of incomplete contracts. We show that doing so reverses many of the conclusions obtained by equating institutions with productivity. Institutional differences as a source of comparative advantage imply, among other things, that the less developed country may not gain from trade, and factor prices may actually diverge as a result of trade. Second, we test empirically whether institutions act as a source of trade, using data on US imports disaggregated by country and industry. The empirical results provide evidence of “institutional content of trade:” institutional differences are an important determinant of trade flows.
The Cost of Misaligned Governance in R&D Alliances

Transaction cost economics argues that aligning transactions with governance structures leads to more efficient outcomes. While empirical evidence demonstrates that firms choose governance consistent with transaction cost predictions, the performance implications of governance choices are less well explored. Here I examine the cost of misaligned governance in the context of research and development (R&D) alliances. Two costs of misalignment are evaluated: excessive contracting hazards and excessive bureaucracy. Using a sample of R&D alliances in the telecom equipment industry, I find that alliance governance selected according to transaction cost arguments improves collaborative benefits substantially over governance not so selected. Interestingly, governance misalignments imposing excessive bureaucracy reduce collaborative benefits more than misalignments imposing excessive contracting hazards. These results provide empirical evidence of the cost of misaligned governance and have implications for research on the limits of internal organization and links between organizational form and innovation. Copyright 2004, Oxford University Press.
Structural estimation of pairwise stable networks with nonnegative externality

Abstract This paper develops a framework to structurally estimate pairwise stable networks with nonnegative externality. We characterize pairwise stable equilibria as a fixed point of a certain mapping and show that the set of pairwise stable equilibria with nonnegative externality is a complete lattice. We extend the characterization to an econometric framework for structural estimation based on the moment inequality model. We apply our methodology to friendship networks of students in the United States, using data from Add-Health. We find that the preference toward racial homophily is overestimated if we do not control for the preference toward clustering.
Market failures and misallocation

I develop a method to measure and separate the production misallocation caused by failures in factor markets versus financial markets. When I apply the method to rice farming villages in Thailand I find surprisingly little misallocation. Optimal reallocation would increase output in most villages by less than 15 percent. By 2006 most misallocation comes from factor market failures. I derive a decomposition of aggregate growth that accounts for misallocation. Declining misallocation contributes little to growth compared to factor accumulation and rising farm productivity. I use a government credit intervention to test my measures. I confirm that credit causes a statistically significant decrease in only financial market misallocation. (JEL O47, O16, E13)
No Shortcuts on Human Rights: Bail and the International Criminal Trial

International tribunals should serve as models for human rights best practices. The International Criminal Tribunal for the former Yugoslavia (ICTY) has made progress, but ultimately fallen short in serving as such a model in the area of bail or “provisional release,” as it is known there. Lengthy trials, excessive judicial discretion and an unwritten rule that all defendants, whether or not they pose a risk of flight or danger to the community, be detained for their trials raise serious human rights concerns. Focusing on the ICTY, this article explores the human rights implications of provisional release for defendants on trial at international tribunals. It concludes that to achieve one of international criminal justice’s most important goals – promoting respect for human rights – the ICC and other international tribunals should depart from the provisional release model of the ICTY. The article offers proposals for reform, including measures to make release for trial a realistic option.
Beyond Worship: The Religious Land Use and Institutionalized Persons Act of 2000 and Religious Institutions' Auxiliary Uses

Religious institutions have long offered their congregants services that go beyond worship. From access to schools or community halls to services as basic as parking, religious institutions necessarily use their land and resources for more than just religious observance. But particularly in the last two decades, they have begun expanding far beyond their traditional offerings to a wider and more diverse array of "auxiliary uses" non-worship uses that are affiliated with a religious institution. Religious institutions now run insurance agencies, hospitals, health maintenance organizations, and transportation companies.1 They manage retail stores that sell religiously themed merchandise,2 incorporate popular franchises like Starbucks3 and McDonald's,4 finance recording studios,5 and operate credit unions and banks.6 The nation's second-largest church (with 30,000 congregants) has even begun developing
The Copyright Misuse Doctrine's Role in Open and Closed Technology Platforms

A platform owner who sells copyright-protected software bundled with hardware essentially locks up a user’s choice of technology platforms. As a company becomes more entrenched in a market, the company has a greater ability (and incentive) to close off proprietary environments, usually through the use of boilerplate contracts. By restricting a consumer’s purchase of a technology to its post-combination product, the company raises market entry thresholds and pushes smaller innovators out of the market. The recent Apple, Inc. v. PsyStar Corp. case highlights this trend in action. Apple combines its operating system, Mac OS X, with various hardware configurations that are then sold directly to the end user. Even though Apple distributes full copies of its operating system by itself, under the banner of an "upgrade," it contractually precludes any user of the software from installing it - or any other copies of Mac OS X - on anything but Apple-branded hardware. This Article explains why courts should consider re-aligning the copyright misuse defense in light of the intellectual property rights spectrum. It first defines the concept of a platform in today’s high technology world and then weighs the differences between open and closed platforms. This Article argues that open platforms not only increase innovation, but are more in-tune with the doctrinal purposes of the respective intellectual property regimes. Next, this Article evaluates the creation and evolution of copyright misuse, including a look at the origins of patent misuse and the entangled history of antitrust, patent misuse, and copyright misuse. This Article concludes by considering how a re-aligned copyright misuse doctrine in today’s technological world might restore both the balance between the intellectual property regimes and the balance between intellectual property creators and intellectual property consumers.
Justice Stevens and the Obligations of Judgment

How to sum up a corpus of opinions that spans dozens of legal fields and four decades on the bench? How to make the most sense of a jurisprudence that has always been resistant to classification, by a jurist widely believed to have "no discernible judicial philosophy"? These questions have stirred Justice Stevens' former clerks in recent months. Since his retirement, many of us have been trying to capture in some meaningful if partial way what we found vital and praiseworthy in his approach to the law. There may be something paradoxical about the attempt to encapsulate in a formula the views of someone who was so sensitive to the potential tyranny of labels, to taxonomize the output of someone so skeptical about neat legal categories. There is certainly something reductive about it. Be that as it may, I will try in these pages to contribute to the effort by suggesting that an important clue to Justice Stevens' jurisprudence can be found in his frequent recourse to the notion of judicial "judgment." If one word must be selected to illuminate a life's work, this would be my submission. . . . [Tribute essay prepared for Justice Stevens dedication issue]
A Theory of Adjudication: Law as Magic

A Theory of Adjudication: Law as Magic This article takes a new approach to the problem of legal rationality. In the 1920s and 1930s the Legal Realists criticized judicial decisions as “magic solving words” and “word ritual.” Though the Realist critique continues to shape American jurisprudence, the legal magic they observed has never been seriously explored. Here, drawing on anthropological studies of magic and ritual, I reconsider the irrational legal techniques the Realists exposed. My thesis is that the Realists were right that law works like magic, but wrong about how magic works. That is, they were right that adjudication makes use of a particular combination of techniques – enacting performances, heightened formality, transformative analogy, performativity, temporal play – that is also found in ritual magic. But they were wrong that those techniques necessarily preclude rational decisionmaking. Drawing on the insights of field anthropology, I theorize legal magic as an authentic mode of legal practice. After considering the different aspects of legal magic and the Realists’ critique, I propose three potential roles for legal magic: as a way to imbue official legal decisions with the affective moral force of lived experience, as an institutional practice that may enhance judicial impartiality, and as a method for symbolically reversing otherwise irreparable injuries. I hope that my reanalysis of legal magic can provide a new perspective on the relationship of law and reason, illuminate undertheorized aspects of law and contribute to a more concrete and nuanced understanding of adjudication’s social role. A Theory of Adjudication: Law as Magic
How Senate confirmation hearings should better educate senators and the American public: The instructional necessity of case-specific questioning

This Article undertakes a systematic rebuttal to the arguments made by Supreme Court nominees and others that Court nominees are constrained, in their Senate hearings on possible confirmation, from expressing their specific views on legal issues and cases of the day. It argues that nominee articulation of such case-specific views is not only permissible, it is necessary for the Senate, and for the country, to learn anything meaningful about the Court, the nominees, the Constitution, and the relationship between them.
Interrogating Thomas More: The Conundrums of Conscience

The martyrdom of Thomas More for refusing to take an oath affirming Henry VIII's marriage to Anne Boleyn and his supremacy over the church has fascinated historians, playwrights, and their readers. Why did More refuse, at such sacrifice to take an oath that nearly everyone in the realm (including More's family and friends) had taken - and that they regarded him as obstinate and absurd for not taking? Why did More refuse to explain the reasons for his refusal, even to close family and friends, beyond saying that they were reasons of "conscience"? And how can More's eloquent affirmation that he would "leave every man to own conscience" and that "every man should leave me to mine" be reconciled with his active persecution and execution of Protestants whose consciences impelled them to embrace what More regarded as heresy? This essay investigates these questions and reflects on their significance for modern commitments to (and difficulties with) the idea of "freedom of conscience."
Parental human capital investment and old-age transfers from children: Is it a loan contract or reciprocity for Indonesian families?

Abstract This paper proposes two alternative models of intergenerational transfers linking parental investment in human capital of children to old-age support. The first model formulates these transfers as a pure loan contract and the second model as self-enforcing reciprocity. Both models predict neutrality of intergenerational redistribution of resources within the family, also known as the “difference in income transfer derivatives property”. Two models, however, provide different reasons for the failure of this property, and yield different policy implications for parental human capital investment and provision of old-age support. Specification tests on the Indonesian Family Life Survey data reject the pure loan model in favor of the reciprocity model. The estimated difference in income transfer derivatives for this data is found to be significantly higher than the difference estimated by Altonji, Hayashi and Kotlikoff Altonji et al. (1992) [Altonji, J.G., Hayashi, F. and Kotlikoff, L.J. (1992). Is the Extended Family Altruistically Linked? Direct Tests Using Micro Data. The American Economic Review, vol. 82(5): 1177–98.] for the U.S. PSID data.
PRODUCER AND CONSUMER RESPONSES TO GREEN HOUSING LABELS

We find “green” labels increase residential property values by an average of 5%. This premium varies by label stringency and across market segments. Builders respond to the stringency of labels by strategically incorporating green features to achieve higher ratings. This strategy seems reasonable as there is no market premium for green features that lead to scores between label rating cutoff values. These results raise important questions as to how green label policies should be designed in order to foster the supply of green features. Gradations of green attributes are influential, particularly for highly rated homes. The most stringent labels have the greatest role at the high price end of the market. (JEL Q20, Q40, R31)
The Ideology of Silence at the Harvard Business School: Structuring Faculty’s Teaching Tasks for Moral Relativism

Abstract Business schools offer a unique window into the making of corporate morals since they bring together future executives at formative moments in their professional lives. This paper relies on an analysis of faculty’s teaching tasks at the Harvard Business School to better understand the making of corporate morals. More specifically, it builds on a coding of teaching notes used by faculty members to highlight the importance of silence in promoting a form of moral relativism. This moral relativism constitutes, I argue, a powerful ideology – one that primes business leaders not to vilify any moral stand. In such a context, almost anything can be labeled “moral” and few behaviors can be deemed “immoral.”
Perceived Auditor Independence and Audit Litigation: The Role of Nonaudit Services Fees

ABSTRACT: This study investigates whether audit litigants act as if they believe jurors will associate auditor-provided nonaudit services (NAS) with impaired auditor independence, and thus substandard auditor performance. Using GAAP-based financial statement restatements disclosed from 2001–2007 as an indicator for audit failure, I find that the amount of NAS fees and the ratio of NAS fees to total fees is positively associated with the likelihood that a restatement results in audit litigation. I also find that when plaintiff attorneys argue that auditor independence was impaired due to dependence on client fees and, in particular, NAS fees, restatement-related audit litigation is more likely to result in an auditor settlement and a larger amount of settlement. These results suggest that audit litigants act as if they believe NAS fees will strengthen the case against the auditor, and thus affect the court resolution if the lawsuit is taken to verdict. Data Availability: All data are publicly available fro...
Open Market Repurchases: Signaling or Managerial Opportunism

Managers conduct open market repurchases (“OMRs”) for many different reasons, including to distribute excess cash. However, the most widely discussed explanation for OMRs is the “signaling theory:” that managers announce OMRs to signal that the stock is underpriced. The first purpose of this paper is to show that the signaling theory is theoretically problematic—in part because it assumes managers deliberately sacrifice their own wealth to increase that of shareholders—as well as inconsistent with much of the empirical evidence. The second purpose of the paper is to put forward an alternative explanation for managers’ use of OMRs: the managerial-opportunism theory. This theory, which assumes that managers seek to maximize their own wealth, predicts that managers announce OMRs both when the stock is underpriced and when it is not. When the stock is underpriced, managers may announce and conduct an OMR to transfer value to themselves and other remaining shareholders. When managers wish to sell a large portion of their shares, they announce an OMR to boost the stock price before selling their shares. The paper shows that managerial opportunism is not only a more plausible motive for OMRs than is signaling, it is also more consistent with the empirical data. The paper concludes by describing some testable predictions of the theory.
Understanding delegation through machine learning: a method and application to the European Union

Delegation of powers represents a grant of authority by politicians to one or more agents whose powers are determined by the conditions in enabling statutes. Extant empirical studies of this problem have relied on labor-intensive content analysis that ultimately restricts our knowledge of how delegation has responded to politics and institutional change in recent years. We present a machine learning approach to the empirical estimation of authority and constraint in European Union (EU) legislation, and demonstrate its ability to accurately generate the same discretionary measures used in an original study directly using all EU directives and regulations enacted between 1958–2017. We assess validity by training our classifier on a random sample of only 10% of hand-coded provisions and replicating an important substantive finding. While our principal interest lies in delegation, our method is extensible to any context in which human coding has been profitably produced.
Entry, licensing and research joint ventures

Abstract Consider an incumbent monopolist faced with potential competitors who can enter the market by developing a substitute, but inferior, technology. What is the incumbent's optimal licensing policy? When, to whom, and under what conditions should the incumbent firm license its superior technology? Can the incumbent firm reduce the threat of entry by using its licensing policy strategically? If so, can the potential entrants counter the incumbent's strategic use of licensing by forming a research joint venture among themselves? This paper provides a detailed analysis of these issues in a model with two potential entrants.
Towards a conceptual framework for specifying manufacturing workgroups congruent with technological change

Abstract Using a congruency orientation, conditions most congruent for establishing successful manufacturing workgroups are proposed. In addition, a typology of workgroups varying in levels of task differentiation and autonomy is proposed. Finally, factors determining when each type of workgroup is most likely to succeed are proposed. Case examples using these propositions illustrate the utility of the framework for managerial decision-making when new technology is introduced.
Interpreting Empirical Estimates of the Effect of Corporate Governance

Empirical studies of corporate governance address potential endogeneity problems, but fail to place endogeneity in the context of a model and ignore the possibility of disparate treatment effects across companies. This paper tackles these defects. The model and analysis in the paper demonstrate that: (1) Valid and positive estimates for the effect of governance can only arise if there is random variation in governance and governance is systematically underproduced, or governance is chosen randomly without bias and the randomness under study concerns a subpopulation with below-average governance. (2) Governance models that correct for endogeneity using subsamples of firms, fixed effects, or instrumental variables estimates focus on subpopulations of companies that may have different responses to a governance treatment than the average firm.
How Does Acquisition Experience Affect Managerial Career Outcomes

We use hand-collected data from acquisition press releases to investigate how acquisition experience affects the career outcomes of non-CEO senior managers. To address the non-random nature of gaining experience, we separately use manager and firm-year fixed effects, as well as an instrumental variable analysis. Acquisition experience is positively related to compensation, the likelihood of a future board seat, and the likelihood of promotion to chief executive officer. Further tests suggest that the effects of experience decay over time, have diminishing returns, and do not depend on deal quality. Finally, we search Securities and Exchange Commission filings to document novel information on managerial roles in mergers and acquisitions.
Separating Information About Cash Flows From Information About Risk in Losses

Prior literature interprets the weak earnings response coefficient (ERC) of accounting losses as a manifestation either of lack of forward-looking information in losses or of market mispricing of l...
Deferred Prosecutions and Corporate Governance: An Integrated Approach to Investigation and Reform

When evaluating how to proceed against a corporate investigative target, law enforcement authorities often ignore the target’s governance arrangements, while subsequently negotiating or imposing governance requirements, especially in deferred prosecution agreements. Ignoring governance structures and processes amid investigation can be hazardous, and implementing improvised reforms afterwards may have severe unintended consequences—particularly when prescribing standardized governance devices. Drawing, in part, on new lessons from three prominent cases—Arthur Andersen, AIG, and Bristol-Myers Squibb—this Article criticizes prevailing discord and urges prosecutors to contemplate corporate governance at the outset and to articulate rationales for prescribed changes. Integrating the role of corporate governance into prosecutions would promote public confidence in prosecutorial decisions to broker firm-specific governance reforms currently lacking, and would increase their effectiveness. The Article, therefore, contributes a novel perspective on the controversial practice: though substantial commentary urges prosecutors to avoid intruding into corporate governance, this Article explains the importance of prosecutors investing in it. INTRODUCTION 2 I. CORPORATE GOVERNANCE AND ARTHUR ANDERSEN 5 * Henry St. George Tucker III Research Professor of Law, The George Washington University Law School. For helpful comments, thanks to Miriam Baer, Samuel Buell, Stephanie Cuba, Lisa Fairfax, Roger Fairfax, Brandon Garrett, Peter Henning, Renee Jones, Thomas Morgan, Michael Perino, Paul Radvany, Adam Spilka, and William Wang. For the opportunity to present drafts of this Article as a work-in-progress, thanks to participants in workshops at Benjamin N. Cardozo School of Law, Fordham University School of Law, New York Law School, and St. John’s University School of Law. 1 Cunningham: Deferred Prosecutions and Corporate Governance: An Integrated App Published by UF Law Scholarship Repository, 2 FLORIDA LAW REVIEW [Vol. 66 A. Definition and Variability 6 B. Movement and Power Shifts 8 C. Compliance and the Rise of DPAs 14 D. Andersen’s Seminal Lesson 20 II. AIG, OVERSIGHT, AND INATTENTION 25 A. AIG’s Governance Profile 26 B. Ex Ante Miscalculation 31 C. Ex Post Standardization 35 III. AN INTEGRATED APPROACH 40 A. Conceptualization: Contract, Regulation, Discretion 41 1. Pure Contract? The Implicit Status Quo Conception 41 2. Pure Regulation? The Mirror-Image Critique 44 3. Prosecutorial Discretion: Most Faithful to Reality 46 B. Comparative Benefits of the Integrated Approach 50 1. Integrated Approach v. Pure Contract and Pure Regulation Conception 50 2. Integrated Approach v. Pure Regulation Conception 52 3. Integrated Approach v. Status Quo 54 C. Costs and Other Potential Objections 57 IV. SPECIFIC TERMS AND BRISTOL-MYERS SQUIBB 61 A. Officers and Directors 62 B. Charitable Giving 65 C. Monitors and Consultants 68 D. Shareholders and Disclosure 69 CONCLUSION 71 APPENDICES 72
The Deflated Sharpe Ratio: Correcting for Selection Bias, Backtest Overfitting, and Non-Normality

With the advent in recent years of large financial data sets, machine learning, and high-performance computing, analysts can back test millions (if not billions) of alternative investment strategies. Backtest optimizers search for combinations of parameters that maximize the simulated historical performance of a strategy, leading to back test overfitting. The problem of performance inflation extends beyond back testing. More generally, researchers and investment managers tend to report only positive outcomes, a phenomenon known as selection bias. Not controlling for the number of trials involved in a particular discovery leads to overly optimistic performance expectations. The deflated Sharpe ratio (DSR) corrects for two leading sources of performance inflation: Selection bias under multiple testing and non-normally distributed returns. In doing so, DSR helps separate legitimate empirical findings from statistical flukes.
Regulating Robocalls: Are Automated Calls the Sound of, or a Threat to, Democracy

Automated telephone calls, also known as robocalls, have become one of the most used, most controversial, and least expensive tools of political campaigns. Robocalls have been used for legitimate campaigning and public opinion polling, but have also been used for vote suppression, false endorsements, and negative campaigning that borders on fraud. Robocalls also annoy voters. Unsurprisingly, Congress and many states are considering banning or regulating them. The federal regulatory regime currently excludes political robocalls from most telemarketing regulations. Patchwork state regulation of robocalls has created confusion and made compliance difficult. As a result, presidential campaigns and national interest groups have accidently violated state laws in trying to communicate with voters by using robocalls. This paper examines the use of robocalls by political campaigns, how robocalls are currently regulated at the federal and state level, legislative proposals for new regulation, and the First Amendment issues raised by regulating robocalls. Finally, this paper advocates a solution that allows political robocalls, subject to transparency requirements to prevent the worst abuses, and recognizes the need for a national solution to protect political speech by preventing patchwork state regulation.