Should managers be liable for ill-conceived business decisions? One answer is given by U.S. courts, which almost never hold managers liable for their mistakes. In this paper, we address the question in a theoretical model of delegated decision making. We find that courts should indeed be lenient...

Civil liability of rating agencies has to strike a balance between over-deterrence and overly lax behavior control. The resulting problems of a capital market freeze and difficulties of proof, as they become apparent in most legal systems and the European Commission's Draft Proposal to amend the...

Fiduciary remedies are notoriously potent. Fiduciaries who profit from their disloyalty are liable to be ordered to disgorge all of their gains. It is widely understood that disgorgement deters disloyalty by threatening removal of gains, the prospect of which might incentivize wrongdoing....

Professor John P. Anderson's article, What's the Harm in Issuer-Licensed Insider Trading?, argues that my “Law of Conservation of Securities” has no moral relevance to the question whether to allow such trading.The Law of Conservation of Securities demonstrates that each stock market insider...

One of the core features of modern corporate law is the partitioning of the corporation's assets and the shareholders' (private) assets affirmatively and defensively in the sense that the claims of a corporation's creditors are prior to those of shareholders' personal creditors with respect to...

This paper argues that a mitigated strict liability regime can incentivize Credit Rating Agencies (CRAs) to produce ratings as accurate as the available forecasting technology allows. A damage cap based on objective factors is introduced in order to avoid crushing liability. Moreover, CRAs are...

Firms that do not have enough assets to cover potential tort liability have a reduced incentive to take safety precautions. Large firms can take advantage of this by compartmentalizing their most dangerous activities into smaller subsidiaries. Under current law it is difficult to reach the...

If one deceives another in a manner that profits the deceiver and harms the victim, it is fraud, a crime and a tort. However, if one deceives a great number of people in a manner that profits the deceiver and harms the public, it is generally neither a crime nor a tort. It is often legal to...

How can the global shipping industry play its part in the fight to stop climate damage? Shipping accounts for around 90% of all international trade, and for 2.5% to 4% of all global greenhouse gas emissions, which damage the Earth’s climate. The shipping industry is also heavily concentrated....