A popular research design identifies the effects of corporate governance by (changes in) state laws, clustering standard errors by state of incorporation. Using Monte-Carlo simulations, this paper shows that conventional statistical tests based on these standard errors dramatically overreject:...

Economists have documented pervasive correlations between legal origins, modern regulation, and economic outcomes around the world. Where legal origin is exogenous, however, it is almost perfectly correlated with another set of potentially relevant background variables: the colonial policies of...

The standard narrative of the meltdown of Bear Stearns and Lehman Brothers assumes that the wealth of the top executives of these firms was largely wiped out along with their firms. In the ongoing debate about regulatory responses to the financial crisis, commentators have used this assumed fact...

We review experimental research on judicial decision-making with a focus on methodological issues. First, we argue that only experiments with relatively high realism, in particular real judges as study subjects, plausibly generalize to judicial decision-making in the real world. Most...

Experimental research on judicial decision-making is hampered by the difficulty of recruiting judges as experimental participants. Can students be used in judges’ stead? Unfortunately, no. We ran the same high-context 2×2 factorial experiment of judicial decision-making focused on legal...

This paper exposits a model of parallel trading of corporate securities (shares, bonds) and derivatives (TRS, CDS) in which a large trader can sometimes profitably acquire securities with their corporate control rights for the sole purpose of reducing the corporation's value and gaining on a net...