Fall 2019 Workshops

Center for Law & Economic Studies
Fall 2019 Workshops

September 23, 2019 (Monday)
4:20 - 6:10 PM
John J. Donohue III

  • C. Wendell and Edith M. Carlsmith Professor of Law,
    Stanford Law School

Location: Case Lounge (Jerome Greene Hall room 701)

Topic: The Swerve: A Legal and Empirical Evaluation of the Move to “Guns Everywhere”

Abstract: Over the past forty years, there has been an astonishing shift in the American legal landscape on the issue of carrying of concealed handguns outside the home. At the start of that period most states -with strong Republican backing -- either prohibited or at least tightly regulated the practice. Today, the large majority of states confer the "right-to-carry" with little or no restriction, and many argue, with limited but increasing judicial support, that there is an individual right under the 2d Amendment to carry guns outside the home. One argument used to justify this development was that good guys with guns would quickly thwart mass shootings in the U.S., yet since the end of the federal assault weapons ban in 2004, deaths from mass shootings have been rising sharply- even as lawful gun toting has increased substantially. Moreover, a growing body of evidence suggests that allowing expanded gun access outside the home has elevated violent crime. This paper discusses the empirical evidence on these issues and argues that courts considering constitutional decisions that may impose large social costs in terms of increased gun massacres and violent crime should reflect on this evidence in interpreting the Second Amendment.

 

October 7, 2019 (Monday)
4:20 - 6:10 PM
Douglas W. Diamond

  • Merton H. Miller Distinguished Service Professor of Finance,
    University of Chicago Booth School of Business

Location: Case Lounge (Jerome Greene Hall room 701)

Topic: Liquidity and the Structure of Intermediation

Abstract: In the run up to the financial crisis, the essential functions financial intermediaries played seemed to become less important. Commercial and industrial loans, as well as residential mortgages, the quintessential banking products, were securitized and sold. At the same time, the “skin in the game” intermediaries held in their activities (such as securitizations) diminished, while their leverage increased. Some have suggested these developments stemmed from rising agency problems in the financial sector. Instead, we attribute them to rising liquidity in real asset markets. Under a variety of circumstances, prospective liquidity tends to enhance firm leverage, which crowds out both internal and external corporate governance as supports to debt. This tends to make debt returns more skewed. We develop a general theory of the interaction between intermediary activities, intermediary capital structure, and real asset market liquidity.

 

October 21, 2019 (Monday)
4:20 - 6:10 PM
Jennifer H. Arlen

  • Norma Z. Paige Professor of Law,
    New York University School of Law

Location: Case Lounge (Jerome Greene Hall room 701)

Topic: The Law of Corporate Investigations and the Global Expansion of Corporate Criminal Enforcement

Abstract: The United States model of corporate crime deterrence, developed over the last two decades, couples an extremely broad rule of corporate criminal liability with a practice of reducing sanctions, and often withholding conviction, for firms that assist enforcement authorities by detecting, reporting, and helping prove criminal violations. This model has recently attracted more interest among reformers in overseas nations that have sought to increase the frequency and size of their enforcement actions. In both the U.S. and abroad, insufficient attention has been paid to how laws controlling the conduct of corporate investigations are critical to the operation of regimes of corporate criminal liability and public enforcement. Doctrines governing self-incrimination, employee rights, data privacy, and legal privilege, among other areas, largely determine the relative powers of governments and corporations to collect and use evidence of business crime, and thus the incentives of enforcers to offer settlements that reward firms for private efforts to both prevent and disclose employee misconduct. This Article demonstrates the central role that the law controlling corporate investigations plays in determining the effects of enforcement policies. It then argues that discussions underway in Europe and elsewhere about expanding corporate criminal liability and settlement policies—as well as nascent conversations about changes to the U.S. system—must account for the effects of differences in investigative law if effective incentives for reducing corporate crime are, as they should be, a principal goal.

November 4, 2019 (Monday)
4:20 - 6:10 PM
Andrea Cann Chandrasekher

  • Professor of Law,
    University of California, Davis, School of Law

Location: Case Lounge (Jerome Greene Hall room 701)

Topic: Empirically Investigating the Source of the Repeat Player Effect in Consumer Arbitration

Abstract: Abstract: Policymakers, courts, and scholars have long been interested in whether repeat players enjoy an advantage in forced arbitration. Sophisticated empirical studies of consumer and employment awards reveal that there is indeed a repeat player effect: even controlling for other factors, companies that arbitrate more than once boast higher win rates than one-shot firms.  However, researchers have not yet tried to determine whether this repeat player effect is a product of experience within the arbitral forum (the “experience” hypothesis) or characteristics of the repeat playing companies themselves (the “defendant-specific” hypothesis). This Article begins to address this issue by analyzing 4,570 consumer arbitration awards from the American Arbitration Association. Using a unique regression specification that includes both discrete and continuous random variables (a combination of functional forms not used in previous literature), it finds that the repeat player effect is more consistent with the defendant-specific hypothesis than it is with the experience hypothesis. Indeed, to the extent that repeat-playing businesses enjoy an advantage in arbitration, it likely emanates from company-specific characteristics.

 

November 18, 2019 (Monday)
4:20 - 6:10 PM
Jonah B. Gelbach

  • Professor of Law, University of California, Berkeley School of Law

Location: Case Lounge (Jerome Greene Hall room 701)

Topic: Machine Learning and Predicted Returns for Event Studies in Securities Litigation

Abstract: We investigate the use of machine learning (ML) and other robust-estimation techniques in event studies conducted on single securities for the purpose of securities litigation. Single-firm event studies are widely used in civil litigation, with billions of dollars in settlements hinging on the outcome of the exercise. We find that regularization (equivalently, penalized estimation) can yield noticeable improvements in both the variance of event-date excess returns and signicance-test power. Thus we think there is a role for ML methods in event studies used in securities litigation. At the same time, we find that ML-induced performance improvements are smaller than those based on other good practices. Most important are (i) the use of a peer index based on returns for firms in similar industries (how this is computed appears to be less important than that some version be included), and (ii) for significance testing, using the SQ test proposed in Gelbach, Helland, and Klick (2013), because it is robust to the considerable non-normality present in excess returns.

 

December 2, 2019 (Monday)
4:20 - 6:10 PM
Elizabeth Pollman

  • Professor of Law, Loyola Law School, Los Angeles (current)
  • Professor of Law, University of Pennsylvania Law School (as of spring 2020)

Location: Case Lounge (Jerome Greene Hall room 701)

Topic: Private Company Lies

Abstract: Rule 10b-5’s antifraud catch-all is one of the most consequential pieces of American administrative law and most highly developed areas of judicially-created federal law. Although the rule broadly prohibits securities fraud in both public and private company stock, the vast majority of jurisprudence, and the voluminous academic literature that accompanies it, has developed through a public company lens.

This Article illuminates how the explosive growth of private markets has left increasingly large portions of U.S. capital markets with relatively light securities fraud scrutiny and enforcement. Some of the largest private companies by valuation grow in an environment of extreme information asymmetry and with the pressure, opportunity, and rationalizing culture that can foster misconduct and deception. Further, this Article identifies potential responses to this underappreciated problem, including increasing SEC enforcement, adjusting the public-private line, and implementing alternative mechanisms for accountability. It ultimately concludes that although some arguments exist for continuing the status quo, potential harm to vulnerable stakeholders warrants additional oversight and enforcement at minimum and perhaps bolder action.