cssi/SciSciGPT-SciSciNet huggingface dataset:
Measuring uncertainty based on rounding: New method and application to inflation expectations

Abstract The literature on cognition and communication documents that people use round numbers to convey uncertainty. This paper introduces a method of quantifying the uncertainty associated with round responses in pre-existing survey data. I construct micro-level and time series measures of inflation uncertainty since 1978. Inflation uncertainty is countercyclical and correlated with inflation disagreement, volatility, and the Economic Policy Uncertainty index. Inflation uncertainty is lowest among high-income consumers, college graduates, males, and stock market investors. More uncertain consumers are more reluctant to spend on durables, cars, and homes. Round responses are common on many surveys, suggesting numerous applications of this method.
The influence of political bias in state pension funds

Abstract Using a sample of state pension funds’ equity holdings, we find evidence of not only local bias, but also bias towards politically-connected stocks. Political bias is detrimental to fund performance. State pension funds have longer holding durations of politically-connected local firms and display disposition behavior in these positions. Political bias is positively related to the percentage of politically-affiliated trustees on the board and Congressional connections. The more politically-affiliated trustees on the board, the more the fund shifts toward risky asset allocations. Overall, our results imply that political bias is likely costly to taxpayers and pension beneficiaries.
Resolving the Global Imbalance: The Dollar and the U.S. Saving Rate

The massive deficit in the U.S. trade and current accounts is one of the most striking features of the current global economy and, to some observers, one of the most worrying. Although the current account deficit finally began to shrink in 2007, it remained at more than 5 percent of GDP -- more than $700 billion. While some observers claim that the U.S. economy can continue to have trade deficits of this magnitude for years -- some would say for decades -- into the future, I believe that such enormous deficits cannot continue and will decline significantly in the coming years. This paper discusses the reasons for that decline and the changes that are needed in the U.S. saving rate and in the value of the dollar to bring it about. Reducing the U.S. current account deficit does not require action by the U.S. government or by the governments of America's trading partners. Market forces alone will cause the U.S. trade deficit to decline further. In practice, however, changes in government policies at home and abroad may lead to faster reductions in the U.S. trade deficit. More important, the response of the U.S. and foreign governments and central banks will determine the way in which the global economy as a whole adjusts to the decline in the U.S. trade deficit. Reductions in the U.S. current account deficit will of course imply lower aggregate trade surpluses in the rest of the world. Taken by itself, a reduction in any country's trade surplus will reduce aggregate demand and therefore employment in that country. I will therefore look at what other countries -- China, Japan, and European countries -- can do to avoid the adverse consequences of the inevitable decline of the U.S. trade deficit.
Approximation Bias in Linearized Euler Equations

A wide range of empirical applications rely on linear approximations to dynamic Euler equations. Among the most notable of these is the large and growing literature on precautionary saving that examines how consumption growth and saving behavior are affected by uncertainty and prudence. Linear approximations to Euler equations imply a linear relationship between expected consumption growth and uncertainty in consumption growth, with a slope coefficient that is a function of the coefficient of relative prudence. This literature has produced puzzling results: estimates of the coefficient of relative prudence (and the coefficient of relative risk aversion) from linear regressions of consumption growth on uncertainty in consumption growth imply estimates of prudence and risk aversion that are unrealistically low. Using numerical solutions to a fairly standard intertemporal optimization problem, our results show that the actual relationship between expected consumption growth and uncertainty in consumption gro...
Insider Trading Restrictions and Analysts' Incentives to Follow Firms

Motivated by extant finance theory predicting that insider trading crowds out private information acquisition by outsiders, we use data for 100 countries for the years 19872000 to study whether analyst following in a country increases following restriction of insider trading activities. We document that analyst following increases after initial enforcement of insider trading laws. This increase is concentrated in emerging market countries, but is smaller if the country has previously liberalized its capital market. We also find that analyst following responds less intensely to initial enforcement when a country has a preexisting portfolio of strong investor protections. THE AVAILABILITY OF INFORMATION IS A KEY determinant of the efficiency of resource allocation decisions in economies and their securities markets. There is, however, considerable cross-country variation in the quality and quantity of corporate reporting, information intermediation, and information dissemination structures (e.g., Bushman, Piotroski, and Smith (2004)). Hence an important research task is to understand why information infrastructures vary and what factors determine their evolution over time. In this paper, we focus on one element of information infrastructure, sellside analysts. We exploit cross-country and intertemporal variation in analyst following for 100 countries for the years 1987-2000 to test the hypothesis that analyst following increases upon the restriction of insider trading. Our analysis specifically tests whether analyst following increases after adoption of insider trading legislation and/or the initial act of enforcement of these laws.
The "Normal" Successes and Failures of Feminism and the Criminal Law

To write of feminist reform in the criminal law is to write of simultaneous success and failure. We have seen marked changes in the doctrines and the practice of rape law, domestic violence law, and the law of self-defense. There is not a criminal law casebook in America today, nor a state statute book, that does not tell this story. Yet for all of this success, we also live in a world in which reform seems to suffer routine failures. Many believe, for example, that feminist reforms have rid rape law of the resistance requirement; however, recent scholarship makes it clear that the resistance requirement has not disappeared. Similarly, many believe that feminism has rid us of the marital rape exemption; in fact, there is evidence that marital rape immunities remain on the statute books. Finally, many believe that reform has brought widespread judicial acceptance of battered women's self-defense claims; but the battle over this defense in the law reviews and popular media testifies to the continuing lack of settlement of the underlying issues.
The politics of land property rights

Legal reforms that improve the security of private property rights to land have characteristics of a public good with dispersed benefits. However, nothing ensures that the state will provide property protection as a public good. Some states provide property protection selectively to powerful groups. Others are unable to provide property protection. In this paper, we argue that whether the state provides property protection as a public good, selectively, or cannot establish private property rights depends on the following features of politics: political stability, government capacity to administer and enforce private property rights, constraints on political decision-makers, and the inclusivity of political and legal institutions. We illustrate the theory using evidence from reforms that increased opportunities to privately own land in the US from the late eighteenth through nineteenth centuries, selective enforcement of land property rights in China, and the absence of credible legal rights to land in Afghanistan.
What One Hand Giveth, The Other Taketh Away: How Future Dangerousness Corrupts Guilt Verdicts and Produces Premature Punishment Decisions in Capital Cases

This article aims to further the discussion of the constitutionality of the Texas capital sentencing scheme by focusing on how the statutory focus on the defendant’s future dangerousness dismantles bifurcation and encourages early sentencing decisions. Using data from the Capital Jury Project (CJP), the article demonstrates the biasing effect of early exposure to the concept of dangerousness during voir dire. It traces how jurors use the concept of the defendant’s dangerousness in their guilt decisions and it parses out the ways in which the topic facilitates early sentencing decisions.
Debt Maturity Structure and Credit Quality

We examine whether a firm’s debt maturity structure affects its credit quality. Consistent with theory, we find that firms with greater exposure to rollover risk (measured by the amount of long-term debt payable within a year relative to assets) have lower credit quality; long-term bonds issued by those firms trade at higher yield spreads, indicating that bond market investors are cognizant of rollover risk arising from a firm’s debt maturity structure. These effects are stronger among firms with a speculative-grade rating and declining profitability, and during recessions.
Implications of biased reporting: conservative and liberal accounting policies in oligopolies

We examine the effects of biased (conservative or liberal) reporting on product market competition. Cournot duopolists observe either firm-specific or industry-wide shocks and provide noisy reports subject to an exogenous mandated bias attributed to public policy. Given neutral prior beliefs, either a conservative bias or a liberal bias enhances overall reporting-system informativeness as measured by the reduction of uncertainty. Consistent with previously established effects in the information sharing literature regarding increases in informativeness, we show that expected industry profits and expected consumer surplus may gain or lose from bias, depending on whether the shocks are firm-specific or industry-wide and the degree of product competition. Expected social welfare, however, always increases in bias, irrespective of the source of uncertainty and product substitutability or complementarity. We next consider a setting where firms self-select whether to bias reports and characterize regions of potential conflict with a public policy that maximizes expected social welfare. Further results on the differential effects of conservative or liberal bias follow from relaxing the assumption of neutral prior beliefs.
Short selling around the 52-week and historical highs ☆

Abstract Although the distance of a stock price to its past price high does not provide fundamental-related information, it plays an important role of anchoring investors׳ expectations about the performance of stocks. Using a stock׳s 52-week and historical highs, we examine the impact of the nearness to these price highs on short sellers’ trading behavior in the U.S. equity market from 1988 to 2012. We find that short selling is negatively associated with the nearness of the price to the 52-week high, while it is positively associated with the nearness to the historical high. This suggests that short sellers exploit other investors’ behavioral biases.
Decision-making and biases in cybersecurity capability development: Evidence from a simulation game experiment

Abstract We developed a simulation game to study the effectiveness of decision-makers in overcoming two complexities in building cybersecurity capabilities: potential delays in capability development; and uncertainties in predicting cyber incidents. Analyzing 1479 simulation runs, we compared the performances of a group of experienced professionals with those of an inexperienced control group. Experienced subjects did not understand the mechanisms of delays any better than inexperienced subjects; however, experienced subjects were better able to learn the need for proactive decision-making through an iterative process. Both groups exhibited similar errors when dealing with the uncertainty of cyber incidents. Our findings highlight the importance of training for decision-makers with a focus on systems thinking skills, and lay the groundwork for future research on uncovering mental biases about the complexities of cybersecurity.
Revisiting the At-Will Employment Doctrine: Imposed Terms, Implied Terms, and the Normative World of the Workplace

This article describes developments that have modified the at-will doctrine in the United States. It argues that the courts are evolving a hybrid type of employment contract which is neither strictly at-will nor a general form of dismissal protection.
TaxonGrab: Extracting Taxonomic Names From Text

Identification of organism names in biological texts is essential for the management of archival resources to facilitate comparative biological investigation. Because organism nomenclature conforms closely to prescribed rules, automated techniques may be useful for identifying organism names from existing documents, and may also support the completion of comprehensive indices of taxonomic names; such comprehensive lists are not yet available. Using a combination of contextual rules and a language lexicon, we have developed a set of simple computational techniques for extracting taxonomic names from biological text. Our proposed method consistently performs at greater than 96% Precision and 94% Recall, and at a much higher speed than manual extraction techniques. An implementation of the described method is available as a Web based tool written in PHP. Additionally, the PHP source code is available from SourceForge: http://sourceforge.net/projects/taxongrab, and the project website is http://research.amnh.org/informatics/taxlit/apps/.
Claiming Nanotechnology: Improving USPTO Efforts at Classification of Emerging Nano-Enabled Pharmaceutical Technologies

A constant theme weaving through the history of science, technology, and medicine is that the law consistently lags behind innovation. By the time we understand the science and technology involved, there is already another more advanced and complex product in the pipeline or entering the market. One area where this is proving particularly acute is nanotechnology. Nanotechnology and nanoscience have facilitated breakthroughs in the pharmaceutical and medical device realms, enabling cutting-edge treatments. Not surprisingly, innovations at the intersection of nanotechnology and medicine have inundated the United States Patent and Trademark Office (USPTO) with patent applications. The USPTO has implemented a nanotechnology classification system for review and categorization purposes. However, problems of overlapping claims and complicated scientific aspects will largely be left to courts to sort out – a clumsy forum for determination of complex patent law issues that arise based on scale, size, and interactions at the nanoscale that transcend previously envisioned physical and chemical boundaries. As nanopatenting continues, the USPTO and courts will increasingly face three core problems: (1) limitations of and inconsistencies among current definitions of nanotechnology; (2) uncertainty and lack of uniformity in measurement capabilities regarding critical aspects of size, properties, and characteristics at the nanoscale; and (3) the role of patent claims to accurately and consistently encapsulate and distinguish the scope of nanotechnology inventions. Given the Supreme Court’s recent interest in questions of patentability and appropriate claim scope of genetic inventions, the time is ripe for the USPTO to extract lessons for nanotechnology. This article will utilize the recent district court case Elan Pharma v. Abraxis Bioscience involving the blockbuster nanotechnology cancer treatment Abraxane to illustrate inherent problems with the USPTO nanotechnology classification system and will suggest a research agenda of steps that might be taken to assist the USPTO in fulfilling its mission to foster and reward innovation while also assisting in broader efforts to gather nanotechnology information.
Enabling global price comparison through semantic integration of web data

"Sell and shop globally" has been seen as a potential benefit of electronic business. A step toward realising this benefit is to know how things are selling worldwide. Global price comparison services would address this need. But there have not been many such services. We use a global price dispersion case study to illustrate the value of such services. Then we identify technology challenges, including semantic heterogeneity, in providing such services. We propose a mediation architecture to address the semantic heterogeneity problem, and demonstrate its feasibility with a prototype that enables global price comparison using web sources in several countries.
The Promise of Positive Optimal Taxation: Normative Diversity and a Role for Equal Sacrifice

Abstract A prominent assumption in modern optimal tax research is that the objective of taxation is Utilitarian. I present new survey evidence that most people reject this assumption's implications for several prominent features of tax policy, instead preferring tax policies based at least in part on a classic alternative objective: the principle of Equal Sacrifice. I generalize the standard model to accommodate this preference for a mixed objective, proposing a method by which to make disparate criteria commensurable while respecting Pareto efficiency. Then, I show that optimal policy in this generalized model, calibrated to the survey evidence and U.S. microdata, is capable of quantitatively matching several features of existing tax policy that are incompatible in the conventional model but widely endorsed in the survey and reality, including the coexistence of substantial redistribution and limited tagging. Together, these findings demonstrate the potential of a positive theory of optimal taxation.
How facts make law

Nearly all philosophers of law agree that nonnormative, nonevaluative, contingent facts—descriptive facts, for short—are among the determinants of the content of the law. In particular, ordinary empirical facts about the behavior and mental states of people such as legislators, judges, other government officials, and voters play a part in determining that content. It is highly controversial, however, whether the relevant descriptive facts, which we can call law-determining practices, or law practices (or simply practices) for short, are the only determinants of legal content, or whether legal content also depends on normative or evaluative facts—value facts, for short. In fact, a central—perhaps the central—debate in the philosophy of law is a debate over whether value facts are among the determinants of the content of the law (though the debate is not usually characterized in this way).
A supply chain of things: The EAGLET ontology for highly visible supply chains

Abstract Recently, technological developments, such as radio frequency identification (RFID), have facilitated the identification of individual things and information sharing regarding their behavior throughout the supply chain. Such developments have generated the capabilities of a highly visible supply chain (HVSC): a supply chain where the location of arbitrary individual things can be determined at any point in time by all appropriate supply chain partners, made possible by an “Internet of Things” for the supply chain, referred to as a “Supply Chain of Things.” A critical component of a Supply Chain of Things is an ontology to facilitate the visibility and interoperability of things along the supply chain. As a result, the objective of this paper is to define an ontology that leverages the availability of an individual thing's (object) identification information within the context of a standard set of economic phenomena that support multiple views in a range of data architectures. Our design science approach begins with a set of ontological primitives and gradually defines structuring principles that provide guidance for the design of supply chain systems that are characterized by increased visibility and interoperability and which facilitate management of and collaborative decision making about supply chain activities. The EAGLET ontology is named after its five primitives: E vent, AG ent, L ocation, E quipment, and T hing. The following are some of its unique characteristics: location and equipment are recognized as ontological primitives, and creating and destroying of containment structures is explicitly modeled; the economic phenomena underlying the supply chain are defined from an independent view, as opposed to a trading-partner view; the supply chain is defined from three different perspectives: the physical flow, the chain of custody, and the chain of ownership; event sequences that resemble the economic scripts underlying the supply chain are defined.
Do the Poor Pay More for Food? An Analysis of Grocery Store Availability and Food Price Disparities

Do the poor pay more for food? To answer this question, this study was conducted to provide an empirical analysis of grocery store access and prices across inner city and suburban communities within the Minneapolis and St. Paul metropolitan area. The comparison among different types of grocers and geographic areas is drawn from a survey of approximately fifty grocery items for fifty-five stores. Results indicate that the poor pay only slightly more in the Twin Cities grocery market. More significantly, those who shop in non-chain stores pay a significant premium, and the poor have less access to chain stores. This study reveals that the biggest factor contributing to higher grocery costs in poor neighborhoods is that large chain stores, where prices tend to be lower, are not located in these neighborhoods.
Research on Innovation: A Review and Agenda for Marketing Science

Innovation is one of the most important issues in business research today. It has been studied in many independent research traditions. Our understanding and study of innovation can benefit from an integrative review of these research traditions. In so doing, we identify 16 topics relevant to marketing science, which we classify under five research fields: Consumer response to innovation, including attempts to measure consumer innovativeness, models of new product growth, and recent ideas on network externalities; Organizations and innovation, which are increasingly important as product development becomes more complex and tools more effective but demanding;. Market entry strategies, which includes recent research on technology revolution, extensive marketing science research on strategies for entry, and issues of portfolio management; Prescriptive techniques for product development processes, which have been transformed through global pressures, increasingly accurate customer input, Web-based communication for dispersed and global product design, and new tools for dealing with complexity over time and across product lines; Defending against market entry and capturing the rewards of innovating, which includes extensive marketing science research on strategies of defense, managing through metrics, and rewards to entrants. For each topic, we summarize key concepts and highlight research challenges. For prescriptive research topics, we also review current thinking and applications. For descriptive topics, we review key findings.
Ethnic partition as a solution to ethnic war - an empirical critique of the theoretical literature

Some theorists of ethnic conflict argue that the physical separation of warring ethnic groups may be the only possible solution to civil war. Without territorial partition and (if needed) forced population movements, they argue, ethnic war cannot end and genocide is likely. Other scholars have counter-argued that partition only replaces internal war with international war, creates undemocratic successor states, and generates tremendous human suffering. So far this debate has been informed by few important case studies. The author uses a new set of data on civil wars to identify the main determinants of ethnic partitions and to estimate their impact on the probability of war's recurrence, on low-grade ethnic violence, and on the political institutions of successor states. The author's analysis is the first large-sample quantitative analysis of the subject, testing the propositions of partition theory and weighing heavily on the side of its critics. He shows that almost all of the assertions of partition theorists fail to pass rigorous empirical tests. He finds that, on average, partition does not significantly reduce the probability of new violence. A better strategy might be to combine ethnic groups, but most important is to establish credible and equitable systems of governance. It is also important not to load the strategy with subjective premises about the necessity of ethnically pure states and about the futility of inter-ethnic cooperation.
CENTRAL BANK'S VALUE AT RISK AND FINANCIAL CRISES: AN APPLICATION TO THE 2001 ARGENTINE CRISIS

Blejer and Schumacher (1999) were the first to suggest that Central Bank’s Value at Risk (VaR), a widely used composite measure of potential portfolio losses in the corporate sector, could be used as an early warning indicator of financial crises. We extend their research in two aspects. First, we develop an operational model to calculate Central Bank’s VaR and illustrate the methodology using data from the recent financial crisis in Argentina. Second, we compare the predictive performance of diverse measures based on the VaR approach to that of another well known early warning system, the signals approach, and several univariate leading indicators. The results reveal a strong relationship between the measures proposed and the crisis. Furthermore, one of the measures provides higher accuracy and announces the probability of a crisis sooner than the competing indicators.
Do You Really Know If It’s True? How Asking Users to Rate Stories Affects Belief in Fake News on Social Media

The rise of “fake news” has become a major concern for social media platforms. In response, Facebook has proposed and tested the idea of users flagging and rating news articles and sources, much akin to how consumers rate products and services on the Internet. One obvious challenge with this crowdsourced rating approach is whether the users really know enough to rate news articles and sources. Perhaps, a side benefit of asking users to evaluate an article—and asking about their personal experience with the event described in the article—is making them realize that they do not know enough about the event to make an accurate judgment, thus pushing them to become more skeptical. We asked 68 social media users to assess the believability of 42 social media headlines. We found that, while users were generally more likely to believe articles that agreed with their point of view, asking users to rate pushed them to think more critically about the truthfulness of the articles. Moreover, once users had been asked to rate some articles, they remained critical of other articles as well, even without the rating prompt. Overall, our findings suggest that asking users to evaluate the truthfulness of articles may not only produce rating information that can be a useful reference at a later point in time but also have an immediate benefit of alerting users to think more critically about all articles they see.
Some Thoughts on the Conduct/Status Distinction

Some Thoughts on the Conduct/Status Distinction critically examines the common perception that the law may criminalize and regulate acts but never status. In this piece, Colb suggests that the conduct/status divide is artificial and masks a more important divide. Colb notes that differences in status can be an important feature of determining when the same act should be punished and when it should be excused. Some take the position that what makes an act the proper subject of punishment is its tendency to manifest a bad character. Though judging people on the basis of racial status is invidious and indefensible, the law can and does judge people on the basis of their character. The anti-gay military bans, for example, effectively and invidiously criminalized the status of being gay – while an act of gay sex did not necessarily disqualify a person from military service (under either policy), a gay orientation (or identity, under “Don’t Ask, Don’t Tell”) did. The sexual dalliances of President Clinton while in office were deemed disqualifying or not, based on whether the people making the judgment believed that these actions manifested a bad presidential character. Outside the context of sexual status and conduct, the law of evidence betrays our tendency to judge people on the basis of character by expressly prohibiting jurors from considering evidence of a criminal defendant’s criminal propensity in determining guilt or innocence. To ask jurors to think only about the defendant’s actions and not about his propensity or character (despite its relevance to determining actions) is to fight a strong contrary human inclination to pay close attention to character in passing judgment. Much of the time, it is character that animates human actions and gives them legal and moral meaning. The primary battle, Colb argues, may therefore be in deciding not whether to take status into account but instead in deciding what sorts of status ought to “count” in judging actions, and which ought to be legally irrelevant.
The Emotionally Intelligent Law Professor: A Lesson from the Breakfast Club

While some law review articles emphasize the importance of teaching Emotional Intelligence (EI) as part of the students' law school curriculum as a component of “professionalism,” fewer articles thus far have illuminated how professors can cultivate their own EI to become better educators. The present article aspires to provide law professors with a workable explanation of EI, and practical guidance to make EI accessible and useful in the classroom. Part I of this article explains the basic concept and components of Emotional Intelligence, and how understanding and cultivating one's own EI in a classroom dynamic can enhance teaching. This section also urges law professors to embrace a “growth mindset,” a term advanced by Dr. Carol Dweck, to describe our fundamental ability to change qualities about ourselves that we once might have thought were “fixed.” Part II describes some of the distinctive characteristics of the Millennial generation of law students; in fact, we also need to start studying the characteristics of the post-Millennial “Generation Z.” Understanding the underlying societal drivers behind the current and next generation's classroom demeanor and approach to learning will help professors overcome kneejerk “Breakfast Club”-style behavioral stereotypes based on past assumptions which may no longer be valid. Part III draws from Dr. Ken Bain's study of exemplary college-level teachers, as well as the 2013 book, What the Best Law Teachers Do, to identify specific qualities for improving effectiveness as an El-savvy law teacher. Finally, Part IV suggests practical techniques for applying EI in the law school classroom so that professors can adjust more readily to a constantly evolving classroom dynamic and the needs of the inimitable mosaic of individual learners within each student group.
Governing Bad Behavior by Users of Multi-Sided Platforms

Multi-sided platforms such as exchanges, search engines, social networks, and software platforms create value by assembling and serving communities of people and businesses. They generally solve a transaction problem that prevents agents from coming together to exchange value. An essential feature of these platforms is that they promote positive externalities between members of the community. But as with any community, there are numerous opportunities for people and businesses to create negative externalities, or engage in other bad behavior, that can reduce economic efficiency and, in the extreme, lead to the tragedy of the commons. Multi-sided platforms, acting selfishly to maximize their own profits, often develop governance mechanisms to reduce harmful behavior. They also develop rules to manage many of the same kinds of problems that beset communities subject to public laws and regulations. They enforce these rules through the exercise of property rights and, most importantly, through the “Bouncer’s Right” to exclude agents from some quantum of the platform, including prohibiting some agents from the platform entirely. Private control is likely to be more efficient than social control (through laws and regulation) in dealing with negative externalities on platform communities because the platform owner can monitor bad behavior more closely and deal with this behavior more expeditiously than a public regulator. Therefore, the courts and antitrust authorities should exercise caution in finding anti-competitive exclusion when that exclusion is conducted as part of a private governance mechanism for dealing with bad behavior of some platform users that harm other users. © 2012 David S. Evans. † Chairman, Global Economics Group; Lecturer, University of Chicago Law School; Visiting Professor, Faculty of Laws, University College London. I would like to thank Richard Epstein and Richard Schmalensee for helpful comments; Lauren Chiang, Jacqueline Murphy, Steven Joyce, Margaret Schilt, and Nikhil Tuladhar for excellent research help; and Google for research funding. None of these individuals or entities necessarily agrees with me and I retain sole ownership of any errors. 1201_1250_EVANS_WEB_110612 (DO NOT DELETE) 11/6/2012 5:38 PM 1202 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 27:1201
Corporate Governance Changes in the Wake of the Sarbanes-Oxley Act: A Morality Tale for Policymakers Too

This paper seeks to draw a lesson for designing major reforms of corporate governance in the future. It recalls the key events leading to the recent seismic shift in corporate governance policies applicable to American public corporations, and identifies the four sources of policy changes – the Sarbanes-Oxley Act, new listing requirements, governance rating agencies, and tougher judicial opinions (notably in Delaware) about perennial corporate governance issues. It presents a synthetic overview of the numerous reforms, which at the most general level aim to fix the audit process, increase board independence, and improve disclosure and transparency. It pauses to identify the vast territory of unchanged corporate governance rules that are still left to state law, and then examines some of the empirical studies that bear on whether the governance reforms can be confidently predicted to have strong positive results for investors. The exercise suggests an irony: Studies about the impacts of the most costly reforms, those concerning audit practices and board independence, are fairly inconclusive or negative, while studies about proposals for shareholder empowerment and reduction of managerial entrenchment indicate that changes in these areas – which in general are only atmospherically supported by the SOX-related changes – could have significant positive impacts. Admittedly, the general evidence for mandatory disclosure does suggest that the new round of enhanced disclosures, which are only moderately costly, will have good effects. The concluding section presents and explains a new approach for the next crisisgenerated reform movement. It is based on the notion that bandwagons are unavoidable, but their motivating impact can be leveraged and their bad effects alleviated by good statutory design. In particular, legal reforms in the area of corporate governance should have bite but should also be explicitly structured to authorize and mandate (1) serious empirical study of the effects of particular regulatory changes (or existing rules), (2) periodic reassessment of regulations in light of such evidence (while also considering experience and analytical arguments, of course), and (3) explicit decisions to reaffirm or alter regulations in light of these reassessments. * Harvard University Distinguished Service Professor. This essay, which was first written for an audience of European corporate lawyers and law professors, has benefited greatly from the helpful comments of colleagues and practitioners, including Lucian Bebchuk, Marjorie Knowles, Mark Moore, Mark Ramseyer, and Paul Washington. Mistakes and misjudgments are all my own.
Universal Jurisdiction as an International "False Conflict" of Laws

This symposium Essay uses the private law notion of a "false conflict" of laws to develop a coherent and normatively sound legal framework for evaluating the exercise of universal jurisdiction by states in the international legal system. The Essay suggests that properly exercised, universal jurisdiction creates no conflict of laws among states because, as a matter of prescriptive jurisdiction, universal jurisdiction is never really extra-territorial, and thus never generates the possibility of conflicting, overlapping laws. Rather, universal jurisdiction comprises a comprehensive territorial jurisdiction, originating in a universally-applicable international law that covers the globe. Individual states may apply and enforce that law in domestic courts, to be sure, but its prescriptive scope encompasses all territory subject to international law, i.e. the entire world.Because the justification for exercising universal jurisdiction is an entitlement to apply international law, a number of limiting principles follow from a false-conflict view: (i) states must faithfully apply international law, or else risk violating both other states' sovereignties and individual rights; (ii) the international law of sovereign immunity applies; and (iii) non bis in idem or double jeopardy protection attaches to bar successive prosecutions based solely on universal jurisdiction.
The behavior of individual and aggregate stock prices

News about an individual stock normally has only a trivial impact on the aggregate economy. The news of the aggregate stock market, however, may have a significant impact on the prospects of the economy, and so has a large impact on the pricing kernel. This difference between the aggregate stock market and individual stocks is analyzed in a dynamic general equilibrium setting with incomplete information. The main findings are as follows. First, consistent with existing empirical evidence, the correlation between stock returns and earnings surprises is, on average, positive at the individual stock level and is lower or even negative at the aggregate level. Second, a stock’s return is less sensitive to its earnings surprises if the expected earnings growth of the stock is more pro-cyclical. Third, a decrease of information quality of a stock increases its risk premium if the stock accounts for a small fraction of the economy, but decreases its risk premium if the stock accounts for a large fraction.
A Christian Vision of Freedom and Democracy: Neutrality as an Obstacle to Freedom

This article presents the underlying vision for the argument that principles of liberal neutrality pose a genuine obstacle to freedom in democratic society. There is a growing concern that liberty and justice are unattainable in modern democratic societies that are grounded in neutrality, including the United States. Experience has demonstrated significant shortcomings of the modern freedom movements grounded in political theories, which—along with the theory of neutrality—reject the need for core substantive values to guide law and policy. The underlying basis of such theories is a particular modern conception of freedom. But a well-grounded and reasoned alternative vision of human freedom exists: a distinctively Christian vision of human freedom as understood in light of the philosophical and theological study of God’s revelation to man. A comprehensive treatment of the Christian vision of human freedom can be gleaned from the scholarly work of Cardinal Joseph Ratzinger, currently Pope Emeritus Benedict XVI. From this alternative perspective, freedom is promoted and safeguarded only when core substantive values and moral insights are respected as the point of reference for law and justice in society, a condition which posits a role for the State in prudently fostering respect for those values and insights. Because this alternative vision is often misunderstood, the purpose of this article is to present a concise but in-depth synthesis of the writings of 1 Jordan: A Christian Vision of Freedom and Democracy: Neutrality as an Obs Published by Trace: Tennessee Research and Creative Exchange, 2014 Spring 2014| Volume 9 | Issue 3 Tennessee Journal of Law and Policy 359 Ratzinger bearing on human freedom and democracy and to thereby encourage dialogue leading to a more moderate use of neutrality principles.
Discount functions and self-control problems

In this paper we propose a new strategy for comparing the behavior of a hyperbolic discounter who possesses self-control problems to an exponential discounter who does not. Our strategy controls for inherent differences in overall levels of impatience across discount functions, which thereby allows us to isolate the pure effect of self-control problems. We argue that self-control problems, in their pure form as we identify them, can have a very surprising effect on intertemporal choices. Our method reveals that differences in decision making that could be attributed to self-control problems are at least partly (and perhaps entirely) just an artifact of an uncontrolled comparison.
Review for Release: Juvenile Offenders, State Parole Practices, and the Eighth Amendment

State parole boards have historically operated free from constitutional constraints when making decisions about whether to release prisoners. Recent Supreme Court decisions subject states to a new constitutional requirement to provide a “meaningful opportunity to obtain release” for at least some categories of juvenile offenders. Using original data collected through a survey, this Article provides the first comprehensive description of existing parole board release procedures nationwide and explores whether these practices comply with the Court’s Eighth Amendment mandate. The Court’s recent decisions in Graham v. Florida and Miller v. Alabama prohibit sentences of life without the possibility of release (LWOP) for juvenile offenders in nonhomicide cases and forbid mandatory LWOP sentences in homicide cases. States must now provide nonhomicide juvenile offenders with a “meaningful opportunity to obtain release” and give judges the option of imposing a sentence with the chance of release on homicide offenders. Around the country, state courts, legislatures, and governors have started to respond to Graham and Miller. Yet there is little scholarship focusing on a central issue raised by these cases: What constitutes a meaningful opportunity to obtain release under the Eighth Amendment? The Court has declined to provide detailed guidance on the matter, stating that “[i]t is for the State, in the first instance, to explore the means and mechanisms for compliance.” Viewed in the context of the Court’s earlier Eighth Amendment jurisprudence, the meaningful opportunity for release requirement appears to encompass three distinct components: (1) a chance of release at a meaningful point in time, (2) a realistic likelihood of release for the rehabilitated, and (3) a meaningful opportunity to be heard. For the most part, states have responded to Graham and Miller by making juvenile offenders eligible for release under existing and long-standing parole board procedures. To date, the debate in the states has focused primarily on the first component of the meaningful opportunity requirement—when a juvenile offender should be eligible for release. Most states have paid little attention to whether existing parole board practices satisfy the other two components of the meaningful opportunity requirement. These practices, which were designed for a different purpose, may not offer a realistic chance of release and meaningful hearings for juvenile offenders. Parole procedures in every state are different, and many parole boards operate under unwritten and unpublished rules. To understand existing practices, I sent a survey to every parole board in the country. The survey results revealed procedures
Are You Sure You're Saving Enough for Retirement?

Many view the soon-to-retire Baby Boomers as woefully unprepared for their golden years, while other economists have taken a more sanguine view of American levels of saving. And if Americans are failures at saving enough for retirement, why are some retirees so happy? The seemingly simple question of "Am I saving enough for retirement?" is apparently not so simple at all. Instead, it touches on a variety of deeper issues in economics, psychology, and health policy. I use the program ESPlanner to present life-cycle retirement wealth targets for a range of incomes and situations typical of American Economic Association members. (Readers are warned that life-cycle retirement wealth targets presented in this paper may lead to feelings of financial inadequacy.)
Narrowing Successorship: The Alter Ego Doctrine and the Role of Intent

When one company is acquired by another in a bona fide transaction, the successor employer generally is not bound by the substantive provisions of a collective bargaining contract negotiated by its predecessor. When, however, a company merely changes its name or corporate form, courts will use the alter ego doctrine to hold the company to its labor obligations. Courts are split regarding the role intent should play in distinguishing successor companies from alter ego companies. Our Article argues that courts should be able to infer invidious intent from anti-union animus, from the employer's receiving a foreseeable benefit by eliminating its collective bargaining obligations, or from the employer's desire to avoid its collective bargaining obligations, even if the employer was motivated by other factors, as well.'
Importer-specific elasticities of demand: Evidence from U.S. exports

This paper investigates whether the elasticity of demand systematically changes from one importer country to another in an international trade context. Evidence from U.S. exports supports this view by suggesting that the elasticity of demand in an importer country among the products purchased from the U.S. significantly decreases in GDP per capita and distance to the U.S. of the importer country. In terms of policy implications, using a common elasticity measure would overestimate the gains from reducing trade costs with developed or distant countries and underestimate them with developing or remote countries.
Short Interest as a Signal of Audit Risk

Motivated by evidence from the empirical accounting and finance literatures suggesting that short sellers target firms with suspect financial reporting, we investigate whether short interest provides a signal of the degree of audit risk. We find a positive association between audit fees and short interest (total shares sold short scaled by total shares outstanding) after controlling for other determinants of audit fees. This finding suggests that short interest is an indicator of audit risk that reflects information not captured by traditional client risk measures. We also find an increase in the magnitude of the association between audit fees and short interest after events in the early 2000s (corporate scandals, the collapse of Arthur Andersen, and the implementation of new auditing standards) which increased auditors’ responsibilities to deter fraud and made the implications of fraud particularly salient to external auditors. Our findings are important because they suggest that auditors’ sensitivity to client risk information increased post-2002, indicating that efforts by regulators and standard setters (e.g., the PCAOB and the AICPA) to increase auditors’ attention to risk have been successful.