cssi/SciSciGPT-SciSciNet huggingface dataset:
A Theory of Opinion Writing in a Political Hierarchy

We develop a model of opinion writing in the judicial hierarchy. The model adopts a case-space approach to judicial decision making with informational asymmetries across levels of the hierarchy. In the model, a lower court writes an opinion with two features: a legal rule and a level of quality. An upper court must then decide whether to review the decision. The model yields new insights about the strategic incentives created by the judicial hierarchy, including relationships among judicial ideology and opinion quality, judicial quality and the content of an opinion’s rule, and the effect of the case facts on these relationships. The findings suggest that several common tests employed in the literature may not discriminate among competing sets of first principles.
Spatial Heterogeneity, Broadband, and New Firm Formation

Purpose: This paper examines the spatial heterogeneity associated with broadband Internet and new firm formation in a number of U.S. states. Methodology/Approach: Both ordinary least-squares regression and Geographically Weighted Regression are used for the estimation purpose. Findings: The global coefficient estimates of ordinary least-squares regression account for the marginal change in a phenomenon, but such a global measure cannot reveal the locally-varying dynamics. Using Geographically Weighted Regression, it was found that at the aggregate and economic sector levels, the association between single-unit firm births and the provision of broadband Internet varies across counties in Florida and Ohio. Originality/Value of paper: There are numerous studies on broadband Internet in the U.S., but this is the first that explicitly examines broadband provision and new firm formation by taking into account spatial heterogeneity across countries.
Advertising, learning, and consumer choice in experience good markets: an empirical examination*

This article empirically analyzes different effects of advertising in a nondurable, experience good market. A dynamic learning model of consumer behavior is presented in which I allow both “informative” effects of advertising and “prestige” or “image” effects of advertising. This learning model is estimated using consumer level panel data tracking grocery purchases and advertising exposures over time. Empirical results suggest that in this market, advertising's primary effect was that of informing consumers. The estimates are used to quantify the value of this information to consumers and evaluate the welfare implications of an alternative advertising regulatory regime.
The Return of Reasonableness: Saving the Fourth Amendment from the Supreme Court

prohibition against 'unreasonable searches and seizures' into workable guidelines for the decision of particular cases is a difficult task ... "Camera v. Mun. Court, 387 U.S. 523, 528 (1967). The Court has also said, "Unfortunately, there can be no ready test for determining reasonableness other than by balancing the need to searcb against the invasion which the search entails." Id. at 536-37. 8 Vol. 59:1 2008] THE RETURN OF REASONABLENESS 9 specific situations or hinge on the perspectives of ordinary people. Finally, because the proposal argues that the Court should continue to assess, de novo, issues of law enforcement reasonableness, and issues turning on how reasonable officers behave in response to specific factual catalysts, the Court will continue to provide bright-line rules in many cases. The proposal will impact only the small percentage of cases that assess citizen behaviors and beliefs, and it is those cases that deserve a change in process because they currently defy logic and common sense. 11. THE SUPREME COURT'S EVALUATION OF FOURTH AMENDMENT
Do Bond Investors Price Tail Risk Exposures of Financial Institutions

We analyze whether bond investors price tail risk exposures of financial institutions using a comprehensive sample of bond issuances by U.S. financial institutions. Although primary bond yield spre...
Lobbying Regulations and Political Equality in the American States

Laws that regulate the conduct of professional lobbyists in statehouses across the nation are one attempt to ensure that citizens’ opinions receive more equal consideration when elected officials make policy decisions. Do states with stricter lobbying regulations actually display more egalitarian patterns of political representation? Using public opinion measures from the National Annenberg Election Surveys and data on state policies, this article first demonstrates that state policy decisions are consistently more proximate to the opinions of affluent citizens. I then evaluate the relationship between the stringency of state lobbying regulations and representational equality across the states and find evidence that states with stricter regulations weigh citizens’ opinions more equally in the policymaking process. These findings suggest that lobbying regulations can play an important role in promoting greater political equality.
Equity, Efficiency, and Stability: The Importance of Macroeconomics for Evaluating Income Tax Policy

In this period of economic uncertainty, tax scholars must examine income tax policy from a macroeconomic perspective. The standard lenses of efficiency and equity no longer suffice. To highlight the importance of the macroeconomic perspective, this Article demonstrates that most tax expenditures are procyclical, exacerbating the business cycle. Tax expenditures effectively offer government subsidies for certain activities, such as charitable giving or home purchases. Because these activities vary with the business cycle, tax expenditures are higher at business cycle peaks than at business cycle troughs. The more a given activity varies in tandem with the business cycle, the greater the procylicality of the tax expenditure. While recent income tax and government spending policies have been explicitly devoted to stimulating the economy, the destabilizing impact of tax expenditures quietly negate much of the impact of fiscal stimulus measures. Our inability to discern tax expenditures’ hidden destabilizing impact is symptomatic of a general neglect of macroeconomics in income tax policy. To avoid introducing and perpetuating further destabilizing forces into the current era of general economic uncertainty, macroeconomic perspectives should assume a more prominent place in tax policy discourse
Corporate Ethics, Agency, and the Theory of the Firm

This conference paper suggests that the problem of corporate ethics cannot be reduced to the autonomous person. Although the greatest influence on action and choice is one's moral constitution, it does not follow that the agent's behavior is the same within or without the firm. Ethics is a function of corporate form. The theory of agency cannot dismiss the firm as a fiction or metaphorical shorthand since that which does not exist should not be able to cause ethical breakdowns in corporate action. Thus, the theory of the firm, which emphasizes profit and wealth maximization, should incorporate a richer, more realistic account of the economics and ethics of agency.
Foreign Sovereign Immunity and Comparative Institutional Competence

Author(s): Chilton, AS; Whytock, CA | Abstract: Policymakers and legal scholars routinely make "comparative institutional competence" claims-claims that one branch of government is better at performing a specified function than another, and that the more competent branch should be in charge of that function. Such claims pervade American law and policy, but they are rarely evaluated with rigor. We take advantage of an unusual legislative experiment to conduct what we believe to be the first systematic empirical analysis of the comparative institutional competence of the executive and judicial branches in a critical field of American law and policy: U.S. foreign relations. From 1952 to 1976, the U.S. State Department decided whether foreign nations would receive sovereign immunity from suits in U.S. courts. Based on the perception that the State Department's sovereign immunity decisions were overly influenced by political considerations, Congress passed the Foreign Sovereign Immunities Act of 1976 (FSIA), which transferred immunity decisionmaking authority to the judiciary. This transfer was based on an explicit comparative institutional competence claim: that courts are better equipped than the State Department to make immunity decisions based on law rather than politics. To rigorously evaluate this fundamental claim, we created and analyzed an extensive dataset of foreign sovereign immunity decisions made by the State Department and the U.S. district courts over the last fifty years. Our principal findings are threefold. First, we find little evidence that political factors systematically influenced the State Department's immunity decisions. Second, there is strong evidence that political factors have systematically influenced the courts' decisions. Third, the transfer of immunity decisionmaking authority to the courts did not significantly affect the likelihood of immunity. All three findings challenge both the underlying comparative institutional competence claims that supported the FSIA's passage and more general conventional understandings about the proper allocation of authority between the executive and judicial branches. To be sure, there may be valid reasons for the judiciary to play a leading role in immunity decisionmaking, and possibly other areas of U.S. foreign relations as well. But our analysis casts doubt on the widely made comparative institutional competence claim that the judicial branch is necessarily better equipped than the executive branch to make foreign relations law decisions free from systematic political influence.
Which "Client-Centered Counselors"?: A Reply to Professor Freedman

In this article, Professor Cochran responds to Professor Freedman's comments concerning Cochran’s criticism of client-centered lawyering for its tendency to focus exclusively on the interests of clients, often at the expense of other people. Professor Freedman and his co-author, Professor Abbe Smith, appear to be alone among the client-centered counselors in supporting the idea of moral counsel as an integral part of the decision-making process. In this response, Cochran attempts to generate a conversation among those who identify themselves as client-centered lawyers as to the very significant differences between them in the matter of lawyer-client moral discourse. Under the dominant method of client-centered counseling, the lawyer and client consider alternatives in light of consequences for the client, not consequences for others. After lawyers encourage the client to see things from the client's perspective and the client makes a decision, Cochran argues that it will be difficult for lawyers to shift gears and introduce moral discourse. Cochran also criticizes Freedman’s emphasis on client autonomy. Cochran argues that the concept of client autonomy is too absolute, and that each lawyer and client should have a discussion about the appropriate level of client autonomy. Professor Freedman may not be willing to break from the client-centered lawyers and join Professors Cochran, Shaffer, and others as a “collaborative counselor,” in a school of client counseling that better captures his call for lawyer-client moral discourse, but Cochran encourages Professor Freedman to challenge the dominant client-centered position on this issue and seek reform from within. Cochran concludes that lawyer-client moral discourse should be an integral part of legal representation.
THE MORISHIMA ELASTICITY OF SUBSTITUTION FOR THE VARIABLE PROFIT FUNCTION AND THE DEMAND FOR IMPORTS IN THE UNITED STATES

In this article, I derive expressions for the Morishima elasticities of substitution (MES) for the variable profit function and estimate these elasticities to shed some light on the substitutability between imports, capital services, and labor services. The results reveal that capital services and imports are Morishima substitutes, irrespective of whether the price of capital services or imports changes, and imports and labor services are also Morishima substitutes, irrespective of whether the price of imports or the wage rate changes. Thus, an increase in the price of U.S. imports (through tariffs or duties) will result in substitution (in the Morishima sense) into labor and capital services.
More Lessons from the Laboratories: Cy Pres Distributions in Parens Patriae Antitrust Actions Brought by State Attorneys General

"More Lessons from the Laboratories: Cy Pres Distributions in Parens Patriae Antitrust Actions Brought by State Attorneys General."The structure of the article is outlined in the Table of Contents. First, the article introduces a problem - the denial of an effective remedy for consumers overcharged by antitrust conspiracies, then it describes the legislative solution and identifies the unintended consequences that followed. Next, it proposes two alternative means to resolve the newly discovered issue and, finally, structures a proposed test for courts seeking to order the most efficient and effective remedy for consumers in these cases. The article explains that the Hart-Scott-Rodino Antitrust Improvements Act was adopted to fill a gap in antitrust remedies, which had made treble damages practically unavailable to consumers in antitrust cases. The legislative solution empowered state Attorneys General to act as parens patriae on behalf of their citizens in federal antitrust actions and to recover treble damages for them. The statutory reform that opened the courthouse doors to consumer antitrust actions carried with it the seeds of another problem: the difficulty of distributing monetary relief to the unidentified citizens for whose benefit the action was brought. To deal with that unintended consequence, the ancient equitable doctrine of cy pres was pressed into action. The cy pres theory, directing the undistributable remainder of a fund to a "next best" alternative recipient, has been expanded in some cases to distribute the entire corpus of the fund to court-approved charities. The goal in these cases is to provide indirect benefits for the represented consumers, through the services of charitable organizations, in lieu of direct restitution. I analyze two recent cases that exemplify this phenomenon, both alleging overcharges of a few dollars per pair on popular brands of tennis shoes purchased by millions of consumers. I propose a four-part test for determining when direct restitution is unworkable and the comprehensive cy pres theory should be employed as an alternative. Finally, I describe another route to return value directly to consumers that should be considered as a creative alternative to cy pres distributions. Thoughtful application of the test and consideration of various alternative distribution options is consistent with the goals of the statute and should be entertained by the parties in proposing distribution plans and courts in approving such proposals. The large size of these parens patriae antitrust cases, involving thousands of consumers and claims in the millions of dollars, together with their frequency, makes this issue important for scholars, practitioners and courts. My access to unpublished opinions and court documents, cited in the notes, allows a comprehensive treatment of this subject.
Real Activities Manipulation and Auditors' Client-Retention Decisions

ABSTRACT: In this study, we examine the effect of clients' real activities manipulation (RAM) on auditors' client-retention decisions. We find that, with the exception of RAM through overproduction, clients' opportunistic operating decisions are positively associated with the likelihood of auditor resignations. We also provide evidence that auditors are especially sensitive to clients' RAM to just meet or beat earnings benchmarks in their client-retention decisions. In addition, we find that clients whose auditors resign from engagements tend to hire smaller auditors and these clients engage in RAM more aggressively. Our additional analysis shows that, with the exception of RAM through overproduction, clients' abnormal operating decisions are significantly associated with litigation risk against auditors. Overall, our evidence suggests that auditors drop clients with aggressive RAM to avoid excessive risk. Data Availability: Data used in this study are available from public sources identified in the study.
Location‐based mobile advertisements and gender targeting

Purpose – The purpose of this paper is to examine the differential effects of location‐based mobile advertisements on men and women in work leisure situations.Design/methodology/approach – The study conducted was in a scenario based experimental design in the 2×2×2 ANOVA format. Independent variables included: Type of locations (private/public); Situations (work/leisure); and Gender (male/female). Dependent variables included Perceptions and Behavioural intentions.Findings – Recent findings often indicate that men are more receptive to location‐based ads (LBA) than women. However, in this paper the authors show that in some circumstances women are more favourable to the same mobile LBAs than men because both women's and men's reactions depend on specific location and task situations.Practical implications – Based on these findings, managers will be able to better target ads to specific genders in different locations and situations, thus maximizing the relevance of the ads, click through rates and affect c...
Humanizing the Pax-Americana Global Empire

This essay reviews, Chinedu Obiora Okafor and Obijifor Aginam, (eds.) Humanizing Our Global Order: Essays in Honor of Ivan Head, University of Toronto Press, 2003. The essays in the volume use at least three lenses to humanizing the global order. These are cooperation, constructivism, and the critical pragmatic approach. As deployed in the various essays in the book, each of these approaches serves a useful role in its own unique way. Together, the essays may be seen as engaging in resistance within and against a pax-Americana empire especially in so far as they seek the preservation and protection of the values of the post-Second World War international system - non-use of force, the rule of law in international relations, sustainable transnational environmental management, and advancing the goals of the international bill of human rights. On the private international law side, some of the essays call for greater international cooperation in antitrust enforcement and argue that more representation, participation and accountability are the linchpins of any effort to increase the legitimacy of the WTO.
Is Advance Selling Desirable with Competition

It has been shown that a monopolist can use advance selling to increase profits. This paper documents that this may not hold when a firm faces competition. With advance selling a firm offers its service in an advance period, before consumers know their valuations for the firms’ services, or later on in a spot period, when consumers know their valuations. We identify two ways in which competition limits the effectiveness of advance selling. First, while a monopolist can sell to consumers with homogeneous preferences at a high price, this homogeneity intensifies price competition, which lowers profits. However, the firms may nevertheless find themselves in an equilibrium with advance selling. In this sense, advance selling is better described as a competitive necessity rather than as an advantageous tool to raise profits. Second, competition in the spot period is likely to lower spot period prices, thereby forcing firms to lower advance period prices, which is also not favorable to profits. Rational firms a...
Boundedly Rational Entrepreneurs and Antitrust

This article examines entrepreneurial activity and its implication for policy and antitrust law from a behavioral perspective. In particular, the analysis here focuses on the role of two sets of behavioral phenomena—overconfident beliefs and risk-seeking preferences—in facilitating boundedly rational entrepreneurship. Boundedly rational entrepreneurs may engage in entrepreneurial activity, such as the starting of new business ventures, under circumstances in which rational entrepreneurs would decline to do so. Consequently, overconfident or risk-seeking entrants compete with their more rational counterparts and create a post-entry landscape that differs markedly from the picture assumed by traditional economic accounts of entrepreneurial activity. The behaviorally informed analysis of entry sheds new light on the dynamics of competition among entrepreneurs and on its implications for policy and antitrust law.
Toxic Torts, Autism, and Bad Science: Why the Courts May Be Our Best Defense Against Scientific Relativism

This article focuses on childhood vaccine programs, which are among the most important and successful public health projects in history and explores how parents who decline vaccinations and politicians who respond to their anti-vaccine constituents ignore the scientific evidence and the public health risks. Under these circumstances, the judges who must decide over 5,000 pending civil cases against vaccine manufacturers are the most powerful decision makers and are in the best position to shape the future. This article argues that judges must be concerned with both the quality of the scientific evidence presented in their courtrooms and the external ramifications of their decisions on society.When the best available scientific evidence has consistently failed to establish any link between vaccines and autism, judges who allow jurors to be presented with two competing expert opinions create the misleading impression that both opinions are legitimate. In this situation, the burden of the decisions falls to the jurors, despite the fact that even the most conscientious and objective juror lacks the time, training, experience, and resources to accomplish the task. These judges have the power to perform a vital public service and, like Judge John E. Jones (who decided Kitzmiller v. Dover Area School District, last December) they can add a voice of reason that will help diminish relativism and contribute to greater public understanding of science.
A Review of Deep Learning Approaches to EEG-Based Classification of Cybersickness in Virtual Reality

Cybersickness is an unpleasant side effect of exposure to a virtual reality (VR) experience and refers to such physiological repercussions as nausea and dizziness triggered in response to VR exposure. Given the debilitating effect of cybersickness on the user experience in VR, academic interest in the automatic detection of cybersickness from physiological measurements has crested in recent years. Electroencephalography (EEG) has been extensively used to capture changes in electrical activity in the brain and to automatically classify cybersickness from brainwaves using a variety of machine learning algorithms. Recent advances in deep learning (DL) algorithms and increasing availability of computational resources for DL have paved the way for a new area of research into the application of DL frameworks to EEGbased detection of cybersickness. Accordingly, this review involved a systematic review of the peer-reviewed papers concerned with the application of DL frameworks to the classification of cybersickness from EEG signals. The relevant literature was identified through exhaustive database searches, and the papers were scrutinized with respect to experimental protocols for data collection, data preprocessing, and DL architectures. The review revealed a limited number of studies in this nascent area of research and showed that the DL frameworks reported in these studies (i.e., DNN, CNN, and RNN) could classify cybersickness with an average accuracy rate of 93%. This review provides a summary of the trends and issues in the application of DL frameworks to the EEG-based detection of cybersickness, with some guidelines for future research.
Mothers and others: who invests in children's health?

We estimate the impact of family structure on investments made in children’s health, using data from the 1988 National Health Interview Survey Child Health Supplement. Controlling for household size, income and characteristics, we find that children living with step-mothers are significantly less likely to have routine doctor and dentist visits, or to have a place for usual medical care, or for sick care. Who invests in children’s health? It appears these investments are made, largely, by a child’s mother, and that step-mothers are not substitutes for birth-mothers in this domain. © 2001 Elsevier Science B.V. All rights reserved. JEL classification: I1; D1
The "Out of Sample" Performance of Long-run Risk Models

This paper studies the ability of long-run risk models, following Bansal and Yaron (2004) and others, to explain out-of-sample asset returns associated with the equity premium puzzle, size and book-to-market effects, momentum, reversals, and bond returns of different maturity and credit ratings. We examine stationary and cointegrated versions of the models using annual data for 1931-2006. We find that the models perform comparably overall to the simple CAPM. A cointegrated version of the model outperforms a stationary version. For some of the excess returns the long-run risk models deliver smaller average pricing errors than the CAPM, but they often have larger error variances, and the mean squared prediction errors are broadly similar. The long-run risk models perform relatively well on the momentum effect, working through earnings momentum.
Do financial experts make better investment decisions

Abstract We provide direct evidence on the effect of financial expertise on investment outcomes by analyzing private portfolios of mutual fund managers. We find no evidence that financial experts make better investment decisions than peers: they do not outperform, do not diversify their risks better, and do not exhibit lower behavioral biases. Managers do much better in stocks for which they have an information advantage over other investors, i.e., stocks that are also held by their mutual funds. More experienced managers seem to be aware of the limitations to their investment skills as they increase their holdings of mutual fund-related stocks following poor performance of their portfolios. Our results suggest that there are limits to the value added by financial expertise.
The Audit of Fair Values and Other Estimates: The Effects of Underlying Environmental, Task, and Auditor-Specific Factors

SUMMARY: The rising prominence of fair values and other estimates (FVOEs) to financial reporting increases their significance to the audit. Based on inspections that report numerous deficiencies, t...
The Effect of Shareholder-Level Taxes on Organizational Form and Stock Ownership: Evidence from Equity Carve-Outs of Master Limited Partnerships

ABSTRACT I examine the role of heterogeneous shareholder-level taxes in organizational form decisions and in subsequent changes in investor stock ownership. Specifically, I investigate the decision...
Environmental Flows in the Rocky Mountain West: A Progress Report

This paper provides a progress report on state laws and programs for protecting environmental flows of water in the states of the Rocky Mountain West. Included are the programs in Idaho, Montana, Wyoming, Utah, Colorado, New Mexico, and Arizona.
First Impression Bias: Evidence from Analyst Forecasts

We present evidence of first impression bias among finance professionals in the field. Equity analysts’ forecasts, target prices, and recommendations suffer from first impression bias. If a firm performs particularly well (poorly) in the year before an analyst follows it, that analyst tends to issue optimistic (pessimistic) evaluations. Consistent with negativity bias, we find that negative first impressions have a stronger effect than positive ones. The market adjusts for analyst first impression bias with a lag. Finally, our findings contribute to the literature on experience effects. We show that a set of professionals in the field, equity analysts, apply U-shaped weights to their sequence of past experiences, with greater weight on first experiences and recent experiences than on intermediate ones.
On the use of the Dempster Shafer model in information indexing and retrieval applications

Abstract The Dempster Sharer theory of evidence concerns the elicitation and manipulation of degrees of belief rendered by multiple sources of evidence to a common set of propositions. Information indexing and retrieval applications use a variety of quantitative means—both probabilistic and quasi-probabilistic—to represent and manipulate relevance numbers and index vectors. Recently, several proposals were made to use the Dempster Shafer model as a relevance calculus in such applications. This paper provides a critical review of these proposals, pointing at several theoretical caveats and suggesting ways to resolve them. The methodology is based on expounding a canonical indexing model whose relevance measures and combinations mechanisms are shown to be isomorphic to Shafer's belief functions and to Dempster's rule, respectively. Hence, the paper has two objectives: (i) to describe and resolve some caveats in the way the Dempster Shafer theory is applied to information indexing and retrieval, and (ii) to provide an intuitive interpretation of the Dempster Shafer theory, as it unfolds in the simple context of a canonical indexing model.
The Original Meaning of “Democracy”: Capacity to Do Things, not Majority Rule

That the original meaning of democracy is "capacity to do things" not "majority rule" emerges from a study of the fifth and fourth century B.C. Greek vocabulary for regime-types. Special attention is given to -kratos root and -arche root terms. Paper delivered at the American Political Science Association meetings, Philadelphia, 2006.
The Evaluability Hypothesis: An Explanation for Preference Reversals between Joint and Separate Evaluations of Alternatives☆

This research investigates a particular type of preference reversal (PR), existing between joint evaluation, where two stimulus options are evaluated side by side simultaneously, and separate evaluation, where these options are evaluated separately. I first examine how this PR differs from other types of PRs and review studies demonstrating this PR. I then propose an explanation, called theevaluability hypothesis,and report experiments that tested this hypothesis. According to this hypothesis, PRs between joint and separate evaluations occur because one of the attributes involved in the options is hard to evaluate independently and another attribute is relatively easy to evaluate independently. I conclude by discussing prescriptive implications of this research.
Inventory disclosure in online retailing

Abstract Unlike in a traditional store environment where inventory is directly visible to customers, Internet retailers can selectively choose how to divulge inventory level information to customers. For example, when viewing a particular item page, online shoppers may either see merely “in stock” or a specific inventory level. By choosing the appropriate inventory-level cue to display, a retailer can selectively signal stock-out risk to customers. In this paper, we analyze the optimal structure of an online retailer's inventory disclosure and pricing policy, in a two-period setting—a regular selling period followed by a clearance period. Consumers may potentially face uncertainty regarding the firm's inventory level, as well as the overall market demand. We show that there exists an inventory level threshold below which a retailer should optimally disclose inventory, and above which masking (i.e., showing only “in stock”) is optimal. Even though the optimal price decreases in the stock level, we show that equilibrium full-price sales may increase or decrease, highlighting the non-intuitive consumer behavior implications of selective inventory disclosure. The optimal “threshold-type” inventory disclosure that we derive reflects the practice of several prominent online retailers selling fashion products, and is new to the literature as prior models of inventory sharing invoked assumptions that led to either consistent disclosure or consistent masking to be optimal. We also extend the model to consider a stochastic market size, and thus highlight that the threshold policy structure continues to hold with demand uncertainty.
Reconciling Tax Law and Securities Regulation

Issuers in registered securities offerings must disclose the expected tax consequences to investors investing in the offered securities (“nonfinancial tax disclosure”). This Article advances three arguments regarding nonfinancial tax disclosures. First, nonfinancial tax disclosure practice, as the Securities and Exchange Commission (the SEC) has sanctioned it, does not fulfill its intended regulatory purposes. Currently, nonfinancial tax disclosures provide irrelevant information, sometimes fail to provide material information, create unnecessary transaction costs, and divert valuable administrative resources to the enforcement of largely-meaningless requirements. Second, the practical reason for this failure is the SEC and tax practitioners’ unsuccessful attempt to address investors’ heterogeneous tax preferences. Specifically, nonfinancial tax disclosure practice assumes the existence of a “reasonable investor” who is also an “average taxpayer,” and tax disclosures are drafted for the benefit of this average taxpayer. The concept of an “average taxpayer,” however, is not defensible. Third, the theoretical reason for the regulatory regime’s dysfunctionality is the misapplication of mandatory disclosure theory to nonfinancial tax disclosure requirements. Mandatory disclosure theory, even if accepted at face value, does not support the current regulatory framework, due to the special nature of tax laws. To remedy this failure, this Article describes the types of tax-related disclosures that mandatory disclosure theory would support. Under the proposed regulatory reform, nonfinancial tax disclosures will only include issuer-level tax items (namely, tax items imposed on the issuing entity) that affect how “reasonable investors” calculate their own individual tax liabilities. Under such a regime, there is no need to rely on the “average taxpayer” construct.
The Sarbanes-Oxley Yawn: Heavy Rhetoric, Light Reform (And it Might Just Work)

A thorough examination of the much ballyhooed Sarbanes-Oxley Act reveals dominantly a federal codification of extant rules, regulations, practices, and norms. Despite advertising it as "the most far-reaching reforms of American business practices since the time of FDR," a soberly apolitical view sees the Act as more sweep than reform. Important are provisions calling for nine studies; redundant but much publicized were the certification requirements imposed during the summer of 2002; other moves are mere patchwork responses to precise transgressions present in the popularized scandals. The Act is far from trivial, however. A silver bullet relates to the structure and funding of those who set the standards for auditing and accounting in the United States. Stripped of power is the AICPA, and altered in funding structure is the FASB. All parties but Congress are singled out for a wrist-slapping (auditors, accountants, officers, directors and committee members, lawyers, securities analysts, credit rating agencies, investment banks and financial advisors, state corporate lawmakers, the SEC, the Federal Sentencing Commission and even the Supreme Court). No reexamanation of Congressional reforms relating to private securities litigation or the erstwhile barrier between investment and commercial banking appear. In fact there is implicit endorsement of the Congressional approach, rooted in the process and control philosophy of the Foreign Corrupt Practices Act, which the Act follows. This reading of the Act as modest is advanced in three stages of this Article. The first sets the background by summarizing the salient features of the dominant precipitating scandals and their times. The second stage dissects every material provision of the Act in context. The third and final stage suggests why the political rhetoric and substance diverged so widely, with illustrations of what a substantively bold Act might have looked like. Explaining the Act's rhetoric-reality yawn requires speculation but informed hunches readily emerge. On the one hand, Congress may have understood that the visible debacles were not chronic epidemics but discrete pathologies and their root causes were market psychology beyond its regulatory reach (hence a reformless Act). On the other, Congress knew that the public perceived an acute systemic crisis of power abuse they had no responsibility for creating (hence the "sweeping" rhetoric). Another explanation, which also explains the Act's call for so many studies, is that it is too soon to diagnose deep causes or broad shortcomings but that immediate action was politically expedient. The studies bridge the gap between action and knowledge, constituting continuing threats to their targets to abide by the spirit of the Act, a threat to make the "sweeping" rhetoric real "reform."
Transactional Legal Services, Triage, and Access to Justice

The increasing popularity in recent years of free transactional legal services to businesses and entrepreneurs has triggered questions about whether that phenomenon is altogether a good thing, given the increasing and competing need for legal services for low-income individuals and families in distress. This Article, prepared for a symposium at Washington University School of Law, offers a beginning and tentative assessment of that topic. The Article reviews the typically short-term benefits that accompany conventional litigation-based legal services and compares that outcome to the more contingent, longer-term benefits that could result from transactional legal services on behalf of emerging businesses. It acknowledges recent research arguing that entrepreneurship has only a weak record of success as a poverty-fighting strategy, while more collectivist transactional projects have seemingly better chances of effecting meaningful change. But it concludes — again, tentatively — that assistance to entrepreneurs, particularly those from underserved communities, at times can serve many of the same purposes as much of the legal work offered by traditional pro bono and legal services providers.
Foreign Direct Investment: Rule of Law and Corruption

I present a simple model of two representative firms embedded in an environment of institutionalized government corruption. One firm has access to foreign direct investment, but that access is limited by the quality of rule of law in the economy. I use the model to explore the question, addressed in recent economic literature, of whether or not foreign direct investment reduces corruption. I show that corruption may increase or decrease depending on the interaction of foreign direct investment and rule of law. Further, I show that, under certain circumstances, the corrupt governmental bureaucracy may increase corrupt revenue by increasing the quality of legal protection.
Online Consumer Review: Word-of-Mouth as a New Element of Marketing Communication Mix

As a new type of word-of-mouth information, online consumer product review is an emerging market phenomenon that is playing an increasingly important role in consumers' purchase decisions. This paper argues that online consumer review, a type of product information created by users based on personal usage experience, can serve as a new element in the marketing communications mix and work as free “sales assistants” to help consumers identify the products that best match their idiosyncratic usage conditions. This paper develops a normative model to address several important strategic issues related to consumer reviews. First, we show when and how the seller should adjust its own marketing communication strategy in response to consumer reviews. Our results reveal that if the review information is sufficiently informative, the two types of product information, i.e., the seller-created product attribute information and buyer-created review information, will interact with each other. For example, when the product cost is low and/or there are sufficient expert (more sophisticated) product users, the two types of information are complements, and the seller's best response is to increase the amount of product attribute information conveyed via its marketing communications after the reviews become available. However, when the product cost is high and there are sufficient novice (less sophisticated) product users, the two types of information are substitutes, and the seller's best response is to reduce the amount of product attribute information it offers, even if it is cost-free to provide such information. We also derive precise conditions under which the seller can increase its profit by adopting a proactive strategy, i.e., adjusting its marketing strategies even before consumer reviews become available. Second, we identify product/market conditions under which the seller benefits from facilitating such buyer-created information (e.g., by allowing consumers to post user-based product reviews on the seller's website). Finally, we illustrate the importance of the timing of the introduction of consumer reviews available as a strategic variable and show that delaying the availability of consumer reviews for a given product can be beneficial if the number of expert (more sophisticated) product users is relatively large and cost of the product is low.
Contagion effects in strategic mortgage defaults

Abstract Using a large sample of U.S. mortgages observed over the 2005–2009 period, we document contagion effects in strategic mortgage defaults. Strategic defaults result from borrowers choosing to exercise their in the money default option and our findings suggest this choice is influenced by the delinquency rate in surrounding zip codes (within a 5 mile radius), after controlling for other known determinants of mortgage default. These controls include a large array of borrower and loan characteristics, local demographic and economic conditions, spatial correlations, and changes in property values. Our findings that the local area delinquency rate is an important factor for strategic defaulters (borrowers that can be influenced in their decision) but not for defaults that are the result of inability to pay (borrowers that had no choice) lend support the contagion hypothesis. Our estimates suggest that a 1% increase in the local area delinquency rate may increase the probability of a strategic default by 7.25–16.5%.
Severance agreements and the cost of debt

Abstract Upon examining the language used in recent SEC filings, we find that severance agreements are often paid whether or not the CEO leaves the firm due to a change in control. We hypothesize that since severance agreements compensate CEOs in the event of termination, CEOs with these agreements will have an incentive to increase firm risk and decrease effort. Consistent with this hypothesis, we document a significant positive relation between the use of severance agreements and the cost of debt (10% higher yield spreads for firms with severance agreements). The results hold after controlling for the probability of takeover, the probability of CEO turnover, and whether the firm has investment or non-investment grade debt. These results can be explained by an increase in firm risk and a higher likelihood of CEO turnover associated with severance agreements. Overall, the evidence suggests that the effects of severance agreements extend beyond takeovers, and that these additional implications are primarily negative for the firm and for debt holders in particular.
A Modest Proposal: Abolishing Agency Independence in Free Enterprise Fund v. PCAOB

Free Enterprise Fund raises a question of first impression: may executive branch officers, such as members of the PCAOB, be insulated from the President’s oversight and removal power by two layers of tenure protection? The PCAOB was created by the Sarbanes-Oxley Act of 2002 (the Act) outlines a modest proposal for abolishing agency independence. The U.S. Supreme Court’s decision creates a framework for challenging the constitutionality of agency independence and the restrictions on removal that shield the heads of independent agencies from presidential oversight. In the course of assessing the constitutionality of the Public Company Accounting Oversight Board (PCAOB or Board), the Court provides the reasoning for undermining most forms of agency independence. Yet the potential scope of the decision has gone largely unnoticed. Most commentators have pronounced the decision insignificant for presidential authority. This Article questions the conventional interpretation and demonstrates that the structure of the Court’s argument, which focuses on the importance of presidential control and accountability through the removal power, logically calls into question the constitutionality of agency independence. Moreover, the Court’s remedy of severing invalid for-cause removal limits provides a workable approach for future cases—eliminating agency independence without eliminating the independent agencies.
ENVIRONMENTAL CRIME COMES OF AGE: THE EVOLUTION OF CRIMINAL ENFORCEMENT IN THE ENVIRONMENTAL REGULATORY SCHEME

The environmental crimes program in the United States has entered its third decade, yet questions remain about what makes an environmental violation criminal. Our environmental laws make only limited distinctions between criminal and civil liability, so theoretically the same conduct could give rise to criminal, civil, or administrative enforcement. This article will reconsider concerns that have been raised historically about the role of criminal enforcement under the environmental laws and will suggest an answer to the question of what makes an environmental case criminal. The article addresses claims that the complexity of environmental law makes it a difficult fit for criminal enforcement and that the mental state requirements for environmental crime make it possible for corporate officials to be convicted for conduct that they do not know is occurring. The article considers the role of prosecutorial discretion in environmental cases and asserts that criminal prosecution should be reserved for cases involving (1) significant harm of risk of harm to the environment or public health; (2) deceptive or misleading conduct; (3) deliberate efforts to operate outside the regulatory system; or (4) significant and repetitive violations of environmental laws. By limiting criminal prosecution to these cases, prosecutors can ensure that criminal enforcement will advance the goals of the environmental regulatory scheme.
Double take: The effect of sibling sex composition on women’s schooling, earnings, and labor supply

Understanding the role of the family in the production of human capital is a salient question in economics. Using a twin research design that exploits exogenous gender variation in dizygotic twins, this paper investigates the effect of sibling sex composition on schooling, earnings, and labor supply. Women born with a male co-twin have higher earnings and increased rates of high school completion than women born with a female co-twin. Men born with a female co-twin, on the other hand, have outcomes that are statistically indistinguishable from zero. Family attributes provide a limited explanation of the sex composition effect.
Do Non-Investment Bank Analysts Make Better Earnings Forecasts?:

This study compares the earnings forecasts of analysts employed by investment banks with those employed by firms not involved in investment banking. We discuss possible resource and informational a...