cssi/SciSciGPT-SciSciNet huggingface dataset:
Technological Progress Through Trade Liberalization in Transition Countries

Liberalization increases competitive pressures on domestic firms, creating incentives for reducing costs of production through technological progress. Through this channel, backward countries get a chance to narrow the technological gap with advanced countries. In this paper, the case of transition countries is analyzed. A model of oligopolistic firms’ strategic decision on R&D is developed to motivate the empirical analysis. The results suggest that initial conditions on size of the gap, and openness, as well as the stage of the market reforms, in particular, rate of liberalization and structure of markets are important factors in narrowing the technology gap.
Autocorrelation in daily short-sale volume

Abstract While Diether, Lee, and Werner (2009) find that daily shorting activity is serially correlated, this study uses more formal tests and finds significant first-order autocorrelation in daily short volume. Contrary to prior research that suggests that autocorrelation in total trade volume is explained by the flow of information into prices, our tests indicate that the information contained in short sales is decreasing in the level of autocorrelation. In additional tests, we do not find that short-sale constraints explain the presence of autocorrelation. However, our tests do provide evidence that the level of autocorrelation in daily short volume is highest in stocks that are least liquid suggesting that illiquidity might explain the presence of autocorrelation.
Private Control Benefits and Informative Earnings Smoothing: Evidence from Dual Class Share Firms

ABSTRACT: This study explores the relationship between firms' tendencies to smooth earnings and the perception that firms may face of extracting private control benefits. Using a direct estimate of private control benefits that is routinely priced by noncontrolling parties, this study documents that such firms face high capital market costs, which induces them to disclose more private information through earnings smoothing. Furthermore, these results are observed primarily in less developed stock markets where disclosure costs due to information uncertainty are low and therefore the disclosure is more likely to be valued and correctly understood by market participants.
FDI and the Task Content of Domestic Employment for U.S. Multinationals

Using a unique dataset, we examine how the foreign direct investment activities of U.S. multinational manufacturers are related to the composition of their domestic employment. The analysis is based on a dataset in which Bureau of Economic Analysis (BEA) firm-level data on the foreign operations of U.S. multinationals are matched with Bureau of Labor Statistics (BLS) establishment-level data on occupation and wage distributions. The main implication of our findings is that foreign direct investment is generally positively correlated with domestic labor demand, with automated/routine tasks representing an important exception. For firms that export a significant amount to their foreign affiliates for further processing, foreign labor in low-income countries appears to substitute for domestic labor in automated/routine tasks. Our results show that these firms tend to be younger and smaller. They do not seem to be more engaged in innovative activity at home compared to other multinational manufacturers in our sample.
Constitutional Fidelity, The Rule of Recognition, and the Communitarian Turn In Contemporary Positivism

H.L.A. Hart famously distinguishes between the “internal” and “external” points of view.1 The “internal point of view” is a mental state that at least some participants in any legal system must possess for that system to exist. It is the mental state of “accepting” a rule, and the connection to the existence of legal systems is as follows. A legal system exists only if the system’s rule of recognition, stating its ultimate criteria of legal validity, is accepted by the persons who count as officials within that system—only if those persons adopt the internal point of view towards the rule of recognition. The “external point of view” is an ambiguous term, sometimes meaning the mental state of a legal theorist describing a legal system, sometimes that of a participant who may comply with the legal system’s rules because of the threat of sanction but does not accept those rules. The “external point of view,” in this latter sense, is the attitude of Oliver Wendell Holmes’s “bad man.”2 Hart’s account of law prioritizes the internal point of view over the Holmesian “bad man’s” point of view. The first is essential to a legal system, the second inessential—because it is impossible to have a legal system in which all participants take the perspective of Holmes’ “bad man” towards the rule of recognition and other rules of that system, but possible (if not necessary) for all the participants in a legal system to take the internal point of view towards its rule of recognition and other rules.3 This
The Crisis in Economic Theory: A Review Essay

The Great Recession and the financial crisis of 2007-09 prompted calls for fundamental reforms of economic theory. The role of theory in economics and in recent economic events is considered in light of two recent books: the sociologist Richard Swedberg's The Art of Social Theory and the economist Andre Orlean's The Empire of Value: A New Foundation for Economics.
Are Financial Constraints Priced? Evidence from Firm Fundamentals and Stock Returns

Using comprehensive firm- and aggregate-level data, this paper studies the real and financial implications of capital market imperfections. We first examine whether financially constrained firms' business fundamentals (capital spending and operating earnings) are more sensitive to macroeconomic movements than unconstrained firms' fundamentals. We then examine whether financial constraint “return factors” respond to macroeconomic shocks in tandem with the responses from business fundamentals. The evidence in this paper points to financial constraints affecting both fundamental quantities and asset returns.
An Economic Analysis of the Criminal Law as a Preference-Shaping Policy

In this Article I provide an economic analysis of criminal law as a preference-shaping policy. I argue that in addition to creating disincentives for criminal activity, criminal punishment is intended to promote various social norms of individual behavior by shaping the preferences of criminals and the population at large. By taking into account this preference-shaping function, I explain many of the characteristics of criminal law that have heretofore escaped the logic of the economic model. It is also the preference-shaping function and the prerequisite ordering of preferences that distinguish criminal law from tort law. My analysis suggests that society will make an activity a crime whenever the social benefits of changing individual preferences through criminal punishment outweigh the social costs. However, since this weighing of social costs and benefits is conducted through a political process on the basis of ethical and moral standards and requires estimates of the costs of changing opportunities and preferences, I conclude that other disciplines can usefully inform the economic model of criminal law.
What Does the Corporate Bond Market Know

Do related markets reflect new information simultaneously? For high-yield bonds, a large abnormal price decline in a corporation's most liquid bond over a month is followed by an average abnormal stock price decline of −1.42%. This effect is larger for stocks that have increased in value and for volatile stocks. It is also larger for bonds with high coupons and shorter maturities. These results support the view that high-yield corporate bonds have an informational edge when news is negative and stock returns are noisy, and add to the growing literature on the substantial lags in price discovery between related markets.
Folk theorems with bounded recall under (almost) perfect monitoring

A strategy profile in a repeated game has bounded recall L if play under the profile after two distinct histories that agree in the last L periods is equal. Mailath and Morris (2002, 2006) proved that any strict equilibrium in bounded-recall strategies of a game with full support public monitoring is robust to all perturbations of the monitoring structure towards private monitoring (the case of almost-public monitoring), while strict equilibria in unbounded-recall strategies are typically not robust. We prove the perfect-monitoring folk theorem continues to hold when attention is restricted to strategies with bounded recall and the equilibrium is essentially required to be strict. As a consequence, the perfect monitoring folk theorem is shown to be behaviorally robust under almost-perfect almost-public monitoring. That is, the same specification of behavior continues to be an equilibrium when the monitoring is perturbed from perfect to highly-correlated private.
The Sarbanes-Oxley Act and the private company discount: An empirical investigation

While criticism of the Sarbanes-Oxley Act of 2002 (SOX) typically focuses on its negative impact on small public companies, this study uses acquisition data to empirically investigate whether the Sarbanes-Oxley Act impacts the value of private firms. This study presents strong evidence that the private firm discount was greater post-SOX. The evidence represents support for the argument that SOX has been more detrimental for private companies than for public companies.
Not) Advising Corporate Officers about Fiduciary Duties

This Article explores the intersection of an important, unresolved corporate law issue and an overlooked professional responsibility issue persistently arising in the corporate milieu. The corporate law question—currently unaddressed in Delaware law—is whether the fiduciary duties of corporate officers, as agents, are the same as, or different from, the fiduciary duties of corporate directors. A related question is whether, in reviewing officer conduct, courts will apply the business judgment rule in the same broad (and protective) manner in which it is applied to assessing director behavior. The professional responsibility issue concerns whether, and how well, lawyers are advising corporate officers about their fiduciary duties. In recent years, much attention has been given to the professional obligations of a corporate lawyer upon learning, ex post, of corporate wrongdoing, including director and officer breaches of fiduciary duty. Virtually no attention has been paid to whether, ex
Development, Reform, and the Rule of Law: Some Prescriptions for a Common Understanding of the "Rule of Law" and its Place in Development Theory and Practice

In spite of the ubiquity of the phrase in contemporary development discourse and policy, there exists no generally, or even substantially, agreed-upon definition of the “rule of law” for the purposes of development. This Note investigates the intellectual and normative tensions created by the conceptual conflict surrounding the rule of law in development theory and practice. Drawing on both moral and economic understandings of human development, I attempt strenuously to identify the obstacles to consensus on the meaning of the rule of law. I conclude that the rule of law must be construed as a means of development rather than one of its fully-fledged ends. I also advocate greater attention to the dynamic character of institutions in the developing world, and theoretical moderation in specifying the normative goals of rule of law.
“Won’t You Please Help Me Get My Son Home”: Peonage, Patronage, and Protest in the World War II Urban South

During World War II, young African Americans from southern cities left their homes for what appeared to be patriotic job opportunities harvesting sugar cane in Florida. When returning workers described peonage and slavery instead, parents worried about their children's safety. After attempting to contact their children directly, the parents appealed to the federal government. Their decision to mobilize the federal government and the strategies they used to do so reveal important aspects of wartime African American protest that historians have previously overlooked. This article focuses on families instead of atomized individuals, revealing the importance of families, neighborhoods, and communities to the emergence of rights consciousness. It also complicates the historiographical dichotomy between rights consciousness and patronage relationships. Patrons served as liaisons with law enforcement agencies and provided links to a law-centered rights consciousness. For many historians, until protest exits the realm of patronage ties, it is not really protest, and once interactions with government themselves become bureaucratized they cease to be protest any longer. The efforts of the peons' families challenge both ends of this narrow category of protest; they both used patronage relations to lodge their protests and also forged rights consciousness within the legal process itself.
The impact of ordering behavior on order-quantity variability: a study of forward and reverse bullwhip effects

We introduce the concept of the reverse bullwhip effect (RBWE), which can be caused by supply disruptions. In the RBWE, order variability increases as one moves downstream in the supply chain, and therefore the RBWE is the opposite of the classical bullwhip effect (BWE). We test our conjecture that disruptions cause the RBWE using both a live “beer game” experiment and a simulation study. In the beer game, we find that players modify their ordering behavior during disruptions, and that these modifications cause the RBWE. We confirm this cause of the RBWE under a broad range of settings using discrete-event simulation. Our results demonstrate that supply uncertainty (in the form of random disruptions) and an overweighting of the supply line cause the RBWE. They also confirm previous studies showing that demand uncertainty and an underweighting of the supply line cause the BWE. Moreover, our study provides guidance for models of operational disruptions by incorporating human reactions to disruptions.
Constitutional Rights and Judicial Independence: Lessons from Iowa

Iowa held its 2010 judicial retention elections in the shadow of Varnum v. Brien, the 2009 Supreme Court opinion recognizing same sex marriage. As the result of highly politicized campaign, three talented jurists lost their seats on the Court. This commentary examines that election and offers a structural solution that might better protect constitutional rights against majoritarian intimidation.
Collaboration, Interruptions, and Changeover Times: Workflow Model and Empirical Study of Hospitalist Charting

Problem definition: Collaboration is important in services but may lead to interruptions. Professionals exercise discretion on when to preempt individual tasks to switch to collaborative tasks. Aca...
Coordination with Rational Inattention

We study information acquisition in a coordination game with incomplete information. To capture the idea that players can flexibly decide what information to acquire, we do not impose any physical restriction on feasible information structure. Facing an informational cost measured by reduction of Shannon's entropy, players collect information most relevant to their welfare and are rationally inattentive to other aspects. When coordination is valuable and information is cheap, endogenous and flexible information acquisition enable players to acquire information that makes efficient coordination possible, but also give rise to multiplicity of equilibria. This contrasts with the global game literature, where information structure is less flexible and cheap information leads to unique equilibrium with inefficient coordination. This distinction results from the difference between the flexible information structure of our approach and the rigidity implicitly imposed on the information structure of global models. We also provide a clear and intuitive condition for the emergence of multiplicity in terms of the relative magnitude of strategic complementarity and informational cost.
Investment Options and the Business Cycle

Abstract This paper extends [R. Mehra, E.C. Prescott, Recursive competitive equilibrium: The case of homogeneous households, Econometrica 48 (1980) 1365–1380] to a production economy with two capital goods. It is an RBC model in which each unit of investment requires a new idea, an ‘option.’ When options are scarce, new capital is harder to put in place and the value of old capital rises. Thus the stock market and Tobin's Q are negative indexes of intangibles. During a boom, Q rises gradually , as options are used up. Because investment represents an exercise of options, it has an intertemporal substitution tradeoff that is absent from the adjustment-cost model. Equilibrium may be efficient even without markets for knowledge; the stock market may suffice.
A Markov-modulated stochastic control problem with optimal multiple stopping with application to finance

This paper studies the valuation of multiple American options in an incomplete market where asset prices follow Markov-modulated dynamics. The holder's optimal hedging and exercising strategies are determined from a utility maximization problem with optimal multiple stopping. We analyze the associated system of variational inequalities for the holder's utility indifference price, and construct a duality formula involving relative entropy minimization over a random horizon.
Using Incentive Pay and Providing Pay Supplements in U.S. Job Markets

This article investigates whether the earnings premium found with use of incentive pay is offset by lower supplemental pay. More comprehensive measures of employer costs for employee compensation are used to test the hypothesis. These data indicate that bonuses, overtime work, pension provision, and shift differentials can be less common in jobs with incentive pay, but the lower incidence of these forms of compensation does not offset the higher earnings associated with incentive pay.
An Empirical Exploration of Decision‐making Under Agency Controls and Stewardship Structure

Two theories have emerged in the managerial control literature as to the best way for organizations to ensure that managers are acting in the firm's best interest: agency theory, which stresses controlling decision-makers through monitoring and incentives aligned with organizational goals, and stewardship theory, which stresses that decision-makers will act in the organization's best interest even in the absence of controls. Much of the research investigating the utility of these two positions is based on archival data where actual decision-making can only be inferred. In this study, we utilize a laboratory methodology in order to determine if decision-makers actually make different decisions when under the types of control (or lack thereof) suggested in these two theories. The results of this study show that individuals under agency controls invest more in alternatives that maximize profits of an organization than individuals under stewardship controls.
Endogeneity and the dynamics of internal corporate governance

Abstract We use a well-developed dynamic panel generalized method of moments (GMM) estimator to alleviate endogeneity concerns in two aspects of corporate governance research: the effect of board structure on firm performance and the determinants of board structure. The estimator incorporates the dynamic nature of internal governance choices to provide valid and powerful instruments that address unobserved heterogeneity and simultaneity. We re-examine the relation between board structure and performance using the GMM estimator in a panel of 6,000 firms over a period from 1991 to 2003, and find no causal relation between board structure and current firm performance. We illustrate why other commonly used estimators that ignore the dynamic relationship between current governance and past firm performance may be biased. We discuss where it may be appropriate to consider the dynamic panel GMM estimator in corporate governance research, as well as caveats to its use.
Racial treatment disparities after machine learning surgical risk-adjustment

Black patients are less likely to receive certain surgical interventions. To test whether a health risk disparity and thus differential appropriateness for surgery explains a treatment disparity, researchers must adjust observed rates for patient-level health differences using valid contextual regression controls to increase patient comparability. As an alternative to the standard health adjustment with predetermined diagnosis groups, I propose a machine learning-based method that better captures clinical practices to adjust for the important predictors of invasive surgery applied to the context of acute myocardial infarction (AMI). With data from the Nationwide Inpatient Sample, this method decreases the standard adjusted AMI surgery disparity by 45–55%. Nonetheless, a significant surgery disparity of 5.9 percentage points with hospital fixed effects and 4.5 percentage points with physician fixed effects remains after adjusting for predictive controls. The smaller yet persistent disparity provides evidence of differential AMI treatment beyond that explained by health risk differences.
The Environmental Effects of Cruelty to Agricultural Animals

Laws criminalizing animal abuse should apply to the agricultural industry. When we exempt the agricultural industry from these laws, factory farms increase production to unnaturally high levels. This increased production causes devastating environmental effects, such as climate change, water shortages, and the loss of topsoil. In light of these effects, the law needs to do much more to regulate the agricultural industry, and the first step should be to criminalize cruelty to agricultural animals. This would force the industry to slow down production to more natural levels that are much less harmful to the environment.
How Daubert and Its Progeny Have Failed Criminalistics Evidence and a Few Things the Judiciary Could Do About It

A recent report of the President’s Council of Advisors on Science and Technology questioned the validity of several types of criminalistics identification evidence and recommended “a best practices manual and an Advisory Committee note, providing guidance to Federal judges concerning the admissibility under Rule 702 of expert testimony based on forensic feature-comparison methods.” This article, prepared for a symposium to discuss this recommendation, supplies information on how the Committee — or courts applying the current rules — can improve their regulation of criminalistics identification evidence. First, it describes how courts have failed to faithfully apply Daubert v. Merrell Dow Pharmaceutical’s criteria for scientific validity to this type of evidence. It shows how ambiguities and flaws in the terminology adopted in Daubert have been exploited to shield some test methods from critical judicial analysis. Second, it notes how part of the Supreme Court’s opinion in Kumho Tire Co. v. Carmichael has enabled courts to lower the bar for what is presented as scientific evidence by maintaining that there is no difference between that evidence and other expert testimony that need not be scientifically validated. It suggests that if the theory of admissibility is that the evidence is nonscientific expert knowledge, then only a “de-scientized” version of evidence should be admitted. Third, it sketches various meanings of the terms “reliability” and “validity” in science and statistics on the one hand, and in the rules and opinions on the admissibility of expert evidence, on the other. Finally, it articulates two distinct approaches to informing judges or jurors of the import of similarities in features — the traditional one in which examiners opine on the truth and falsity of source hypotheses — and a more finely grained one in which criminalists report only on the strength of the evidence. It contends that courts should encourage the latter, likelihood based testimony when it has a satisfactory, empirically established basis.
A psychological law of inertia and the illusion of loss aversion

The principle of loss aversion is thought to explain a wide range of anomalous phenomena involving tradeoffs between losses and gains. In this article, I show that the anomalies loss aversion was introduced to explain — the risky bet premium, the endowment effect, and the status-quo bias — are characterized not only by a loss/gain tradeoff, but by a tradeoff between the status-quo and change; and, that a propensity towards the status-quo in the latter tradeoff is sufficient to explain these phenomena. Moreover, I show that two basic psychological principles — (1) that motives drive behavior; and (2) that preferences tend to be fuzzy and ill-defined — imply the existence of a robust and fundamental propensity of this sort. Thus, a loss aversion principle is rendered superfluous to an account of the phenomena it was introduced to explain.
The Rising Resilience of Emerging Market and Developing Economies

Summary Economic performance in many emerging market and developing economies (EMDEs) improved substantially over the past 20 years. In the past decade EMDEs spent more time in expansion and had smaller downturns than advanced economies for the first time. We document the history of EMDEs’ resilience over the past 60 years, and investigate what factors have been associated with it. We find that their improved performance since the 2000s is accounted for by both good policies and a lower incidence of external and domestic shocks—better policies account for about three-fifths of their improved resilience, while less frequent shocks account for the remainder.
Explicit Relative Performance Evaluation in Performance-Vested Equity Grants

Using data from FTSE 350 firms, we examine factors influencing explicit relative performance evaluation (RPE) conditions in performance-vested equity grants. We provide exploratory evidence on whether the use or characteristics of RPE are associated with efforts to improve incentives by removing common risk, other economic factors discussed in the RPE literature, or external pressure to implement RPE. We find that many of these economic factors, including common risk reduction, are more closely related to specific relative performance conditions than to the firm-level decision to use RPE in some or all of their equity grants. We also find that greater external monitoring by institutional investors or others is associated with plans with tougher overall RPE conditions. The relative performance conditions are binding in most RPE plans, with nearly two-thirds of the grants vesting only partially or not vesting at all. Further, we find evidence that vesting percentages vary in RPE and non-RPE plans.
A RENT EXTRACTION THEORY OF RIGHT OF FIRST REFUSAL

When a seller encumbers a property with a right of first refusal, whenever a third party offers to purchase the property, the right-holder can acquire the property by simply matching the third party's offer. I model the right as a modified auction where the right-holder gets to observe the third party's bid before making his own. I show that, compared to the standard auctions, the right increases the joint profit of the seller and the right-holder by reducing the third party's profit. This result is independent of whether the third party is aware of the right's existence and whether the right creates a welfare loss.
Understanding the Effects of Education on Health: Evidence from China

Using a national representative sample in China from three largest on-going surveys, this study examines the effects of education on health among working-age population and explores the potential mechanisms. Using the exogenous variation in temporal and geographical impacts of Compulsory Schooling Laws (CSLs), it finds an additional year of schooling decreases 2-percentage points in reporting fair or poor health, 1-percentage points for underweight and 1.5-percentage points for smoking, and increases cognition by about 0.16 standard deviation. Further analysis also suggests that nutrition, income, cognition and peer effects are important channels in the education-health nexus, and all of these factors explain almost half of the education's impact. These suggest that CSLs have improved national health significantly in China and the findings help to explain the mixed findings in the literature.
Searching for evidence of long-run PPP from a post-Bretton Woods panel: separating the wheat from the chaff

Abstract This paper reexamines the issue of long-run PPP using multiple panel tests in the framework of confirmatory analysis. Application of six panel tests under competing null hypotheses to the real exchange rates of 21 industrial countries yields seemingly contradictory evidence on the parity during the post-Bretton Woods period. Regardless of numeraire currency, four I(1) panel tests unanimously reject the null hypothesis in favor of long-run PPP, whereas two I(0) panel tests lend little support to the parity at conventional significance levels. Confirmatory analysis suggests that this puzzling result can be explained either by nonlinear dynamics of the real exchange rates or by a mixture of I(0) and I(1) series in the panel. Monte Carlo experiments indicate that potential mix of I(0) and I(1) series is more relevant to the empirical finding. The use of a sequential classification method sorts out six real exchange rates which exhibit most persistent deviations from long-run equilibrium. Systematic behavior of these series can be characterized better by country specific factors than by observable macroeconomic variables.
Market Reaction Surrounding the Filing of Periodic SEC Reports

ABSTRACT: Using data from the EDGAR era, we find a significant market reaction surrounding quarterly periodic reports only when their filing coincides with the first public disclosure of earnings, although that for 10‐K reports is not subsumed by earnings releases. However, after eliminating incidence of concurrent earnings releases, the 10‐K market reaction is restricted to a quarter of the reports that are filed around calendar quarter‐ends. The calendar quarter‐end price and volume effects are unrelated to the filing of periodic reports and are not explained by self‐selection. However, while the quarter‐end volume reaction is indistinguishable between filers and non‐filers, we find an incremental price reaction to 10‐K filings at calendar quarter‐ends in recent times. We provide evidence that the calendar‐time effect is partially due to an intraindustry information transfer that is a function of the incidence of 10‐K reports at quarter‐ends. Finally, equity analyst reactions are muted around periodic f...
Must Formalism Be Defended Empirically

In the Nazi period, German judges rejected formalism.' They did not rely on the ordinary or original meaning of legal texts. On the contrary, they thought that statutes should be construed in accordance with the spirit of the age, defined by reference to the Nazi regime. They thought that courts could carry out their task "only if they do not remain glued to the letter of the law, but rather penetrate its inner core in their interpretations and do their part to see that the aims of the lawmaker are realized."' Thus, for example, the German Supreme Court concluded that a law forbidding "sexual intercourse" between Gernans and Jews is
Meeting Company-Issued Guidance and Management Guidance Strategy

We analyze the rationale for the market rewarding accurate management earnings guidance. We postulate that firms with better quality of information before investment also have better quality of information after investment but before earnings are realized. This late-interim information is of no value for production-investment decisions; however, by issuing accurate guidance, firms can signal a high-quality information environment, leading to better investment decisions in the future. We show that guidance accomplishment predicts future performance even if current earnings are not statistically correlated to future earnings. A manager interested in short-term market value tends to issue optimistic earnings guidance in equilibrium. Since the market rewards accurate guidance, though the management guidance is not verifiable, the equilibrium market valuation still induces the manager to issue informative guidance that enhances the investment efficiency through information quality discovery process.
Private Benefits of Control, Antitakeover Defenses, and the Perils of Federal Intervention

This Article develops a theory that sheds light on recent evidence that shows that high-quality issuers antitakeover adopt defenses during an IPO, and keys this behavior to the existing literature on private benefits of control. The Article then analyzes the decision of the pre-IPO owners concerning takeover defenses. Their decision is shown to be influenced by the quality of the venture that goes public. High quality in firms that go public often means an abundance of growth and business opportunities, rather than sizeable existing assets. In such ventures, managers are unlikely to consume many harmful control benefits. Nevertheless, managers derive a great deal of non-monetary control benefits from their stint in the promising entity. Consequently, takeover defenses help the pre-IPO owners to preserve their non-monetary control benefits without causing too much harm to the value of the enterprise. This Article also shows that even if we take as given the conventional assumption that antitakeover defenses are harmful to shareholders, the inimical influence of takeover defenses is hard to trace since the issuers that adopt them are those whose antitakeover charter provisions' influence is the least harmful. Finding a matching sample for the adopting issuers, as some have tried before, may therefore be an impossible task. This Article thus considers possible extensions that result from complications of asymmetric information, and concludes with the perils of federal intervention.
Standards Ownership and Competition Policy

Antitrust law is a blunt instrument for dealing with many claims of anticompetitive standard setting. Antitrust factfinders lack the sophistication to pass judgment on the substantive merits of a standard. In any event, antitrust is not a roving mandate to question bad standards. It requires an injury to competition, and whether the minimum conditions for competitive harm are present often can he determined without examining the substance of the standard itself. When government involvement in standard setting is substantial, antitrust challenges generally should be rejected. The petitioning process in a democratic system protects even bad legislative judgments from collateral attack. In any event, antit•ust's purpose is to correct private markets. It is not a general corrective for political processes that have gone awry. The best case for antitrust liability occurs when the government somehow has been deceived into adopting a standard that it would not have adopted had it known the true facts. Even then, nonantitrust remedies such as equitable estoppel are probably a su-
Did Earnings Conservatism Increase for Former Andersen Clients

The unexpected fall of Arthur Andersen is an extraordinary event. Although Arthur Andersen was initially convicted in 2002, subsequently, the Supreme Court unanimously threw out the conviction. Was the Department of Justice hasty in shutting down Arthur Andersen? Could the managers and the new auditors of former Andersen clients have restored financial reporting credibility? This study examines whether earnings conservatism has increased for a sample of former Arthur Andersen clients that were forced to switch auditors in 2002. Relative to control samples consisting of audit clients of remaining brand-name auditors that did not switch auditors and those that switched within Big Four auditors, this study finds that earnings conservatism has increased for former Andersen clients that switched to a Big Four auditor. Furthermore, the level of conservatism for 2002 for former Andersen clients is even higher than those observed for a matched sample of non-Andersen clients that did not switch auditors. These fin...
The illiquidity puzzle: theory and evidence from private equity

Abstract This paper presents the theory that managers can use the liquidity of securities as a choice variable to screen for deep-pocket investors, those that have a low likelihood of facing a liquidity shock. We assume an information asymmetry about the quality of the manager between the existing investors and the market. The manager then faces a lemons problem when he has to raise funds for a subsequent fund from outside investors, because the outsiders cannot determine whether the manager is of poor quality or the existing investors were hit by a liquidity shock. Thus, liquid investors can reduce the manager's cost of capital in future fundraising. We test the assumptions and predictions of our model in the context of the private equity industry. Consistent with the theory, we find that transfer restrictions on investors are less common in later funds organized by the same private equity firm, where information problems are presumably less severe. Also, partnerships whose investment focus is in industries with longer investment cycles display more transfer constraints. Finally, we present evidence consistent with the assumptions of our model, including the high degree of continuity in the investors of successive funds and the ability of sophisticated investors to anticipate funds that will have poor subsequent performance.
Prospects for Personalization on the Internet

Abstract Personalization is a key component of an interactive marketing strategy. Its purpose is to adapt a standardized product or service to an individual customer's needs. The goal is to create profit for the producer and increased value for the consumer. This goal fits nicely into traditional notions of segmentation. Applications of personalization have advanced greatly in conjunction with the Internet, since it provides an environment that is information rich and well suited to interactivity. This article reviews past research on personalization and considers some examples of personalization in practice. We discuss what we believe are key problems and directions for personalization in the future.
Asset bubbles and borrowing constraints

Abstract In this paper, we study the existence of asset bubbles in an overlapping generations economy a la Tirole [Tirole, J., 1985. Asset bubbles and overlapping generations. Econometrica 53, 1499–1528] with borrowing constraints. Deriving a condition for the existence of equilibrium paths with bubbles, we demonstrate that (i) a monetary steady state (a steady state with bubbles) is constrained dynamically inefficient, whereas capital in the monetary steady state is underaccumulating relative to the quasi-golden rule, (ii) there exists a government intervention which corrects the constrained dynamic inefficiency, and (iii) for some parameter values, such a government intervention reduces the utilities of agents with high productivity, while it increases per capita consumption.
Contracting for Cooperation in Recovery

There is a longstanding debate about whether courts should enforce contract terms purporting to limit the parties’ liability for fraud. It is less-often noticed that many contracts are designed to incorporate fraud liability by requiring one party to make representations about her performance that, if false, can satisfy the elements of deceit. Such contractual representations are best understood as members of a broader, hitherto underappreciated category of contract terms: duties designed to increase the other party’s chances of recovering for breach. Examples include the duty to keep records, to share information about performance, to permit audits, and not to hide breach. This Article shows that the logic of proving proximate harm from the breach of such terms entails that legal liability for such breach often makes a practical difference only when it includes penalties, punitive damages, or other extracompensatory measures. The Article also demonstrates that most of the costs of extracompensatory remedies (such as deterring efficient breach) do not apply when those remedies are attached to duties to cooperate in recovery, and that, in many cases, adopting such duties is a better solution to underenforcement than damages multipliers. Parties now contract for liability in fraud, where punitive damages are available, because they cannot get these remedies in contract. The practical upshot is a new argument against rulings, most recently via a broad reading of the economic loss doctrine, that there can be no liability in fraud for lies that are also breaches. Rather than serving the oft-stated goal of protecting the parties’ contractually chosen allocation of risk, these rules defeat party choice. Even better, however, would be exceptions to the rules against penalties and punitive damages when those remedies are attached to the breach of a duty to cooperate in recovery. author. Associate Professor, Georgetown University Law Center. I want to thank Jennifer Arlen, Guido Calabresi, Richard Craswell, Kevin Davis, Chris Elmendorf, John Mikhail, Jed Purdy, Chris Sanchirico, Christian Turner, Bill Vukowich, Ethan Yale, and Kathy Zeiler, each of whom added to the ideas in this Article through discussion or comment. I owe special thanks to Ian Ayres, who suggested that I write down these thoughts during a walk in the Arizona desert. The Article also benefited from faculty workshops at the University of Virginia Law School and Georgetown University Law Center, and from discussion at the Stanford/Yale Junior Faculty Forum. Jason Daniels provided excellent research assistance. Finally, I thank Sanjukta Misra, who not only provided input along the way, but is the work’s sine qua non. 0002.KLASS 10/25/2007 11:02 AM contracting for cooperation in recovery
Structural shifts in the Chinese software industry

The Chinese commercial software industry, although lagging behind India's, has recently been undergoing major structural shifts that could make it the Asian industry leader. As in any economic sector, companies in the software industry need to realign and adapt to major technological and market changes. The Indian software industry doesn't seem to make efforts to realign and adapt to technology and market changes. On the other hand, the Chinese software industry is undergoing major interrelated structural shifts in many respects.
Grassroots Gay Rights: Legal Advocacy at the Local Level

I. Introduction 508II. Local Legal Authority 509A. Hunter v. Pittsburgh 509B. Dillon's Rule and Home Rule 510C. Local Legal Authority in the States 512III. Legal Rights for Gay Citizens in the States 514A. Relationship Recognition 515B. Second-Parent Adoption Rights 517C. Anti-discrimination Laws 518D. Gay "Climate" by State: A Survey 5241. Explanation of Chart 5242. Analysis of Chart 526IV. Local Governmental Initiatives 528A. Local Discrimination Laws 5291. Williams v. Blue Cross Blue Shield of North Carolina......530B. Domestic Partner Benefits 5341. Arlington County v. White 5352. National Pride at Work, Inc. v. Governor of Michigan.....5373. Diaz v. Brewer 5394. "Dependent" Challenges 543C. Local Contractor Laws 5451. Council of New York v. Bloomberg 547D. Resolutions 5481. Catholic League for Religious & Civil Rights v. City of San Francisco 549V. Conclusion 552I. INTRODUCTIONThis is a most perplexing time for gay rights advocates.1 On the one hand, people can be encouraged by any number of recent legal advancements that allow gay and lesbian citizens to participate fully in American life-from getting married, to adopting and raising children, to being employed without fear of discrimination or of being fired for being gay. On the other hand, however, there have been a number of recent legal setbacks for the gay community, including so-called "marriage amendments" to state constitutions that prohibit same-sex marriage, court decisions that have gone against same-sex partners attempting to adopt their children, and failures in efforts to add anti-discrimination clauses to existing laws.This myriad of results stems from our system of governance, which has its roots in the United States Constitution. In keeping with the Tenth Amendment, which states that "[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people[,]"2 the evolution of law regarding gay citizens has largely occurred in the states, not at the federal level.3 The advancements and setbacks referenced above are largely statewide and leave local governments in the position of dealing with the consequences of these decisions. From another perspective, however, local governments have a great deal of autonomy in creating or advocating for laws and ordinances that speak to the concerns of gay constituents, despite statewide setbacks or inaction regarding issues of importance to gay citizens. …
Weather, salience of climate change and congressional voting

Abstract Climate change is a complex long-run phenomenon. The speed and severity with which it is occurring is difficult to observe, complicating the formation of beliefs for individuals. We use Google search intensity data as a proxy for the salience of climate change and examine how search patterns vary with unusual local weather. We find that searches for “climate change” and “global warming” increase with extreme temperatures and unusual lack of snow. Furthermore, we demonstrate that effects of abnormal weather extend beyond search behavior to observable action on environmental issues. We examine the voting records of members of the U.S. Congress from 2004 to 2011 and find that members are more likely to take a pro-environment stance on votes when their home state experiences unusual weather.
Untangling the Causal Effects of Sex on Judging

We explore the role of sex in judging by addressing two questions of long-standing interest to political scientists: whether and in what ways male and female judges decide cases distinctly—“individual effects”—and whether and in what ways servingwithafemalejudgecausesmalestobehavedifferently—“paneleffects.”Whileweattendtothedominanttheoretical accounts of why we might expect to observe either or both effects, we do not use the predominant statistical tools to assess them. Instead, we deploy a more appropriate methodology: semiparametric matching, which follows from a formal framework for causal inference. Applying matching methods to 13 areas of law, we observe consistent gender effects in only one—sex discrimination. For these disputes, the probability of a judge deciding in favor of the party alleging discrimination decreases by about 10 percentage points when the judge is a male. Likewise, when a woman serves on a panel with men, the men are significantly more likely to rule in favor of the rights litigant. These results are consistent with an informational account of gendered judging and are inconsistent with several others.