ProfessorBainbridge.com

A Game of Thrones question

Rewatching Game of Thrones on HBO got me to wondering about the books. Specifically, how can George RR Martin possibly (1) bring Jon Snow back to life, (2) have the Others become a major plot element (presumably by attacking the Wall), (3) get Daenerys onto the Iron Throne and her dragons up to the Wall in time to defeat the Others, not to mention wrapping up a couple of hundred other plot elements in just two more volumes? Given how slowly his plots move, that looks like at least 5 volumes worth of material to me. If Martin really is going to pull a Robert Jordan on us, maybe he should start prepping Brandon Sanderson to finish the series in case something happens to Martin? 

Veasey on Bainbridge on In-House Lawyers

In an article in the latest Business Lawyer (68 Bus. Law. 57, 62-63), former Delaware Supreme Court Chief Justice E. Norman Veasey has some very nice things to say about yours truly's book Corporate Governance after the Financial Crisis:

Professor Bainbridge has put his finger on the “go along to get along” problem. In a chapter entitled “The Gatekeepers” in his recent book, he carefully analyzes the tension the corporate lawyer experiences between gatekeeping and job security:

The gatekeepers failed rather miserably during the dotcom era. Enron was primarily an accounting scandal, little different from the 150-plus other accounting fraud cases that the SEC investigates in most years. Indeed, this was true not just of Enron, but also most of the dotcom era corporate scandals ....

.... There is little doubt that lawyers played an important role in the scandals. Sometimes their negligence allowed management misconduct to go undetected. Sometimes lawyers even acted as facilitators and enablers of management impropriety ....

.... The nature of the legal market gives lawyers--both in-house and outside counsel--strong incentives to overlook management wrongdoing. As to the former, even if the board of directors formally appoints the in-house general counsel, his tenure normally depends mainly on his relationship with the CEO ....

.... Both the general counsel and outside lawyers necessarily have access to a wide range of information, including but hardly limited to information relating to law compliance by the organization. Because the management-attorney relationship tends to become the focus of the attorney's relationship with the firm, however, lawyers have strong incentives to help management control the flow of information to the board of directors. Worse yet, attorneys may be tempted to turn a blind eye to managerial misconduct or even to facilitate such misconduct .... 

While these excerpts highlight the anxieties and temptations that may face in-house counsel, the entirety of Professor Bainbridge's book paints a balanced picture of the temptations as well as the integrity of in-house lawyers.

Zywicki on Skeel on Dodd-Frank

Todd Zywicki reviews David Skeel's book The New Financial Deal: Understanding the Dodd-Frank Act and Its (Unintended) Consequences at considerable length. Here's the teaser:

Those looking for a roadmap that lays out the basic ideas that animate Dodd-Frank and its key provisions should turn to David Skeel’s book, The New Financial Deal: Understanding the Dodd-Frank Act and Its (Unintended) Consequences.  Skeel summarizes Dodd-Frank in 200 readable pages that leads the reader through the basic provisions of the historic legislation and its consequences, both intended and unintended.

During the final debates over the passage of Dodd-Frank, Texas Republican CongressmanJeb Hensarling observed that “There are at least three unintended consequences on every page of this legislation.”  Quite a few for a bill that ran to 2,319 pages.  Skeel picks up on this theme and after starting by explaining the intended goals of Dodd-Frank and the ways in which the legislation attempts to implement them, concludes that in fact Dodd-Frank will have negative unintended consequences that will vastly exceed the beneficial intended effects of the legislation.

Go read the review, but be sure to buy the book. It's a great read.

Free Choice to Work

Apropos the debate (and growing specter of violent protest by unions and their liberal allies) in Michigan over right to work legislation, let me direct your attention to Free Choice for Workers: A History of the Right to Work Movement, by George Leef, which may be the single best thing I've read on the subject.

As Harry Hutchison explains in his review, Compulsory Unionism as a Fraternal Conceit?, 

With the publication of Free Choice for Workers: a History of the Right-to-work Movement, George Leef offers a prudential basis tied to experience, coupled with informal logic, implicating ultimate values in order to reexamine compulsory labor unions and to contest the justification offered in support of labor laws. Leef’s perspective delegitimizes compulsory unionism on ethical and empirical grounds. … Demonstrating that statutory compulsion fails to direct society down the pathway to progress, the book reveals that the road to serfdom can often be paved by bureaucratic regulation. Carefully examining history and contemporary events, this book contributes to the richly textured debate about the normative role of unions in a putatively free society. … Leef’s book provides a historical appraisal that assists society in learning from the past. The book explicates the capacity of principled ideals, embedded in fearless individuals, to trump historical tendencies favoring privileged and entrenched autocracies. Aptly appreciated, George Leef’s reassessment offers an essentially contractarian and liberal model of labor relations that rests on a vision of individual rights which have a clearly defined, independent existence predating society. From this perspective, Leef specifies liberty as a desirable good in and of itself which is placed in harm’s way by progressive ideals and constructs. In the essay that follows, … I contend that Leef supplies a strongly theoretical (if incomplete) as well as a highly pragmatic argument against the tendency to see government as the solution to the “labor problem.”

"Corporate Governance After the Financial Crisis" reviewed

Karen I. Heusel in Keeping Up with New Legal Titles, 104 Law Library Journal 579 (2012):

¶1 In his latest book, Corporate Governance After the Financial Crisis, Professor Stephen M. Bainbridge asserts that, in the wake of the significant economic setbacks of the past decade, Congress abandoned its traditional reticence on the matter of corporate governance, yielded to emotionally charged mainstream political demands, and enacted a deeply flawed set of corporate reforms. Specifically, Bainbridge objects to the various corporate governance provisions included in the Sarbanes-Oxley Act of 20021 and in 2010’s Dodd-Frank Act.2 Soundly denouncing both laws, he rejects these purported reforms as “quackery . . . lack[ing] strong empirical or theoretical justification” (p.15) and submits that the offending “provi- sions erode[] the system of competitive federalism that is the unique genius of American corporate law by displacing state regulation with federal law” (id.).

¶2 A prolific author and blogger and a self-proclaimed “Burkean conservative,”3 Stephen M. Bainbridge serves as the William D. Warren Distinguished Professor of Law at UCLA where he teaches courses on business associations, corporations, and corporate governance. In the past few years, Bainbridge has written several law review articles and books addressing the law and governance of public corporations.4

¶3 In Corporate Governance After the Financial Crisis, Bainbridge argues that Congress blundered badly with both of its recent efforts to regulate in these areas, in each case reacting hastily to a postcrisis atmosphere dominated by anticorpo- rate sentiment and passing legislation that usurps state corporations laws (most critically those of Delaware) and effects federal control over significant aspects of corporate governance. In the late 1990s and early 2000s, the bursting of the dot- com bubble and the massive corporate and accounting fraud uncovered at companies like Enron and Worldcom prompted populist pleas for federal intervention, pleas that soon led to the Sarbanes-Oxley Act. In 2007–08, as the collapse of the housing bubble and the subprime mortgage meltdown were followed in quick succession by the failures of Bear Stearns and Lehman Brothers and the ensuing credit crisis, federal legislators received similar pleas and reacted again, this time with the Dodd-Frank Act. Bainbridge sees a pattern here: “scandals and economic reversals” (p.38)5 regularly mark the aftermath of economic boom times, leading Congress to intervene in corporate governance with reactive bubble laws that are passed quickly under rising political pressures provoked “by populist anti-corpo- rate emotions” (p.16). This cycle, according to Bainbridge, “tends to result in flawed legislation” (id.).

¶4 Bainbridge presents his argument in a straightforward fashion, defending his position chapter by chapter and provision by provision, and he employs a scholarly style well suited for legal and academic audiences with preexisting knowledge of basic corporations law and economic theory. The book’s title, Corporate Governance After the Financial Crisis, however, is something of a misnomer; Bainbridge devotes far more space to detailing the faulty corporate governance provisions in Sarbanes-Oxley than he does to discussing Dodd-Frank, legislation actually passed in response to what is commonly known as “the financial crisis.” (As Bainbridge admits, it may yet be too early to fairly assess the full effects of Dodd-Frank.) Throughout the book, Bainbridge assiduously champions the views of Roberta Romano, a Yale law professor who maintained in a partisan 2005 article that the federal legislative process typically—in the case of Sarbanes-Oxley, specifically—produces “quack corporate governance.”6 Bainbridge specifies in rather redundant terms how both Sarbanes-Oxley and Dodd-Frank meet the cri- teria that define such legislation, but his arguments are less than completely per- suasive, and his persistent allusions to “quack” governance impart a polemical tone to what is otherwise a thoughtful treatise.

¶5 Bainbridge’s analysis of federal legislative responses to economic crises is generally well presented, and his position is bolstered by a variety of academic studies. However, many of Bainbridge’s arguments can be and are countered by authors with similar credentials citing equally credible studies in support of their assertions. Columbia law professor John C. Coffee, who dubs Bainbridge, Romano, and similarly disposed academics the “Tea Party Caucus,”7 suggests in a recent article that even flawed federal legislation is better than nothing and proffers, in direct response to the caucus, that with time and reflection most statutory defects will be corrected.8 With respect to Sarbanes-Oxley, scholars Robert A. Prentice and David B. Spence, both with the University of Texas at Austin’s McCombs School of Business, reject the notion that the act interferes unduly with state authority, argu- ing convincingly that it more accurately represents “a congressional attempt to shore up a federal system of securities regulation that has generally served the nation well.”9 They further assert that the very “empirical evidence that [Sarbanes- Oxley’s] critics believe Congress ignored strongly indicates that vigorous securities regulation is necessary for capital markets to reach their potential.”10

¶6 Ultimately, it is Bainbridge’s evident concern over the “creeping federalization of corporate governance” (p.19) that delineates his position within the wider political context. Federal versus state, reform versus free market, shareholder versus management, main street versus Wall Street—these are the constructs that make up the overarching themes of this book. These topics are also particularly relevant in light of today’s highly divisive political climate, and despite some weaknesses, Cor- porate Governance After the Financial Crisis is a worthy contribution to the debate. It is recommended for academic libraries, particularly those associated with schools of law or business, and to anyone interested in corporate governance practices. 

1. Sarbanes-Oxley Act of 2002, Pub.L.No.107-204,116 Stat. 745 (codified as amended in scattered sections of 15 & 18 U.S.C.).

2. Dodd-Frank Wal Street Reform and Consumer Protection Act,Pub.L.No.111-203,124Stat. 1376 (2010) (codified as amended in scattered sections of 7, 12, 15, 18, 22, 31 & 42 U.S.C.).

3. Stephen Bainbridge@ProfBainbridge, Twitter, http://twitter.com/profbainbridge (last visited Aug. 14, 2012).

4. Stephen M. Bainbridge, Response, Director Primacy and Shareholder Disempowerment, 119 hARv. L. Rev. 1735 (2006); Stephen M. Bainbridge, Dodd-Frank: Quack Federal Corporate Governance Round II, 95 Minn. L. Rev. 1779 (2011).

5. Quoting MarkJ.Roe,Washington and Delaware as Corporate Lawmakers, 34DeL.J.Corp.L. 1, 8 (2009).

6. Roberta Romano, The Sarbanes-Oxley Act and the Making of Quack Corporate Governance, 114 Yale L.J. 1521 (2005).

7. John C. Coffee, Jr., The Political Economy of Dodd-Frank: Why Financial Reform Tends to Be Frustrated and Systemic Risk Perpetuated, 97 Cornell L. Rev. 1019, 1024 (2012).

Super Hero Law

Bill: "As you know, l'm quite keen on comic books. Especially the ones about superheroes. I find the whole mythology surrounding superheroes fascinating."

So Bill would probably enjoy The Law of Superheroes. I suspect I will too. A while back, for example, I pondered that:

Remember the main car chase in Batman Begins? 

Just how many millions of dollars in property damage did Batman inflict on Gotham in that one night? And how are those poor property owners going to explain things to their insurance company?

Plus, if the mob runs the construction business and unions in Gotham, Batman's rooftop drives are helping subsidize organized crime.

And what if some of those crumbling roofs had fallen through the ceiling of the top floor apartment and crushed some poor guy trying to get a good night's sleep?

In the WSJ, Jonathan Last opines that:

Suppose Superman catches Lex Luthor while he's robbing a bank. In the tussle Superman burns Luthor with his heat vision and accidentally breaks his arm. Once Luthor is in jail, could he file a civil lawsuit against Superman for assault? In "The Law of Superheroes," James Daily and Ryan Davidson unpack this—and many other—important questions. ...

"The Law of Superheroes" fits two bills nicely; it's both a highly readable survey of basic legal theory and an entertaining exploration of the comic book canon.

"The Redistribution Recession"

Tyler Cowen offers a qualified endorsement of a book I'm reading and enjoying very much, Casey Mulligan's The Redistribution Recession: How Labor Market Distortions Contracted the Economy:

The contributions of this book include:

1. Using data from seasonal cycles and seasonal changes to better understand supply-demand relationships during the Great Recession.  These sections are excellent and highly original.

2. Showing that the normal laws of supply and demand still held and that we were not living in anything resembling wrong-ways sloping AD curves.

3. Calculation of various implicit marginal tax rates during the Great Recession and showing their relevance for labor supply decisions.

By no means am I fully on board.  I believe he specifies the aggregate demand view incorrectly and significantly under-measures the impact of aggregate demand.  I don’t think the AD view has to imply sticky prices or completely inelastic labor demand, for instance, although one version of that view does (p.208).  I see Mulligan as underestimating labor supply composition effects and overestimating productivity growth during the period under consideration.  There are other points one can complain about and overall he ends up overstating the size of the effects he is measuring.

Still, there are only a few readable books which integrate actual empirical research with a look at the Great Recession.  This is by no means the whole story, but this is a book which anyone seriously interested in the topic should read.  People still will be consulting it after the invective against it has long since died away.

The WSJ's review opines that:

Mr. Mulligan's thesis is that, in addition to thwarting recovery with unprecedented levels of spending, the Obama administration and Congress have made unemployment much higher than it might otherwise be. To take an obvious example, Congress increased the cost of labor—and thus decreased the number of jobs—by raising the minimum wage. (In fact, it has done so three times since 2007.) On a grander scale, Mr. Obama and his policy advisers have added to government benefits in various ways—in essence paying would-be workers for staying out of the workforce. Mr. Mulligan, an economist at the University of Chicago, estimates that about half the precipitous 2007-11 decline in the labor-force-participation rate, as well as in hours worked, can be put down to such misguided generosity. ...

In short, businesses drove up productivity by shedding workers. Why? "Businesses perceive labor to be more expensive than it was before the recession began," Mr. Mulligan writes. The reason for the added cost was that easier requirements for benefits—even as the government was pumping "stimulus" money into the economy—unwittingly reduced the supply of workers. As output began to rise, firms hired fewer workers. National unemployment has stayed so high for so long because of the government's policies, not in spite of them.

By the way, Mr. Mulligan doesn't challenge the claim that a surge in unemployment benefits, food stamps and other subsidies may have been desirable to prevent hunger or severe poverty for out-of-luck families or unemployable people traumatized by the recession. He simply and inconveniently notes that, though increasing subsidies may be compassionate in the short term, it comes with costs in the long term that eventually cause more hardship rather than less.

Friday with Decoy and SF

I'm breaking in my new Kindle Paperwhite by rereading one of my favorite recent SF novels, Charles Stross' Saturn's Children, which in large part is an homage to one of my favorite classic Robert Heinlein novels, Friday. How appropriate that I'm enjoying it on a Friday night with a glass (or three) of my favorite tawny port and my favorite cigar. (Bonus points for knowing the names of said Port and cigar).

The evening began with steak au poivre et frites from Cheebo and a lovely Decoy 2009. The Decoy was medium-bodied, with flavor associations that included cherries, raspberries, and licorice. Grade: B+

John Scalzi on Amazon Author Rankings and Who They Actually Benefit

John Scalzi writes:

Amazon has started ranking authors by total sales via Amazon, updated hourly. This is certain to make a whole bunch of authors begin to freak out as they constantly refresh their Amazon author pages to see where they stand in the rankings, and, independently, give a whole bunch of people who have their own hobby horses about the state of the industry a bunch of ammunition to make proclamations about how the industry is changing in exactly the way they want it to change, so there, ha ha!

So, on this subject, some thoughts for people to consider when they look at these rankings.

via whatever.scalzi.com

Famed and highly successful SF writer John Scalzi critiques the ranking system. Scalzi makes some really good points, but it reminds me a bit of criticisms of the US News law school rankings and scholar citation counts. There's never going to be a perfect ranking system in any field, I suspect.

The critique that seems most pertinent to me is Scalzi's observation that "it helps to promote Kindle-only (or Kindle-majority) writers, many of whom move large numbers of books for free or for reduced cost relative to authors with publisher ties." Now that Amazon has become a major player (the major player?) in the burgeoning self-publishing field, Amazon has incentives to promote its self-publishing clients at the expense of those with regular publishers. The trouble is that Sturgeon's law understates the percentage of self-published titles on Amazon that are pure crap. As a result, we readers now must wade through the slush pile instead of leaving that task to the publishers. Amazon's rankings system won't help us do that (indeed, Amazon has an incentive to structure the ranking system so as to make that job harder).

Q&A on Corporate Governance After the Financial Crisis Part 6: "The past decade has witnessed a gradual narrowing of the scope of boards of directors and an increasing reliance on director independence"

The latest issue of the UCLA Lawyer magazine has a series of Q&As with yours truly about my book Corporate Governance after the Financial Crisis. I'm reprinting the Q&As in this series of blog posts. As the article intro explains, the book argues "that federalizing corporate governance impinges on state sovereignty, hobbles corporate efficiency and shortchanges both investors and the American taxpayer .... Professor Bainbridge offers an incisive analysis of the landscape-altering Sarbanes-Oxley and Dodd-Frank acts, responses to the near-cataclysmic economic downturns of the last decade," which "advances a critical dialogue about the limits of crisis-driven public policy."

Q: The past decade has witnessed a gradual narrowing of the scope of boards of directors and an increasing reliance on director independence. Why is this not a panacea for the ills of corporate governance?

A: This is such an important question that I devoted an entire chapter to the ever-increasing reliance on independent directors. In it, I argue that director independence rules not only failed to prevent the financial crises of the last decade, but may well have contributed to them. I admit that’s a provocative claim, but I’m confident it’s correct.

The strict conflict of interest rules embedded in the new definitions of independence made it difficult for financial institutions to find independent directors with expertise in their industry. A survey of eight U.S. major financial institutions, for example, found that two thirds of directors had no banking experience. Given the inherent information asymmetries between insiders and outsiders, the lack of board expertise significantly compounded the inability of financial institution boards to effectively monitor their firms during the pre-crisis period. More expert boards could have done more with the information made available to them and, moreover, would have been better equipped to identify gaps therein that needed filling.

In addition, the need to find independent directors put an emphasis on avoiding conflicted interests at the expense of competence. In other words, the problem was not just that the new definition of independence excluded many candidates with industry expertise. It was also that the emphasis on objective indicia of conflicts dominated the selection process to the exclusion of indicia of basic competence and good judgment. The financial crisis thus appears, in part, to have been an unintended consequence of the Sarbanes-Oxley Act. 

Q&A on Corporate Governance After the Financial Crisis Part 5: "What is the link between shareholder involvement and corporate performance?"

The latest issue of the UCLA Lawyer magazine has a series of Q&As with yours truly about my book Corporate Governance after the Financial Crisis. I'm reprinting the Q&As in this series of blog posts. As the article intro explains, the book argues "that federalizing corporate governance impinges on state sovereignty, hobbles corporate efficiency and shortchanges both investors and the American taxpayer .... Professor Bainbridge offers an incisive analysis of the landscape-altering Sarbanes-Oxley and Dodd-Frank acts, responses to the near-cataclysmic economic downturns of the last decade," which "advances a critical dialogue about the limits of crisis-driven public policy."

Q: What is the link between shareholder involvement and corporate performance? Does an increase in the former always trigger an improvement in the latter?

A: Actually, the bulk of the evidence is that shareholder involvement does not—outside a few special cases—improve firm performance. I review the evidence at length in Chapter 7 of Corporate Governance after the Financial Crisis. While there is little evidence that activism has benefits for investors as a class, there is considerable evidence for the proposition that activist shareholders can profit through private rent seeking.

This result is not surprising, of course. First, the high costs and low success rate of activism suggest that its net gains are substantially lower than many proponents of shareholder activism claim. Second, if activism increases the target firm’s stock price, all of its shareholders can free ride on the activist’s efforts. It makes no sense for an activist to expend substantial resources when the bulk of the gains from doing so will be captured by others. Instead, we would expect activists to pursue an agenda of private rent seeking rather than altruistic public service. And that’s exactly what we tend to see. 

Q&A on Corporate Governance After the Financial Crisis Part 4: "In what ways does an expanded federal regulatory role in corporate governance potentially exacerbate the very problems it purports to solve?"

The latest issue of the UCLA Lawyer magazine has a series of Q&As with yours truly about my book Corporate Governance after the Financial Crisis. I'm reprinting the Q&As in this series of blog posts. As the article intro explains, the book argues "that federalizing corporate governance impinges on state sovereignty, hobbles corporate efficiency and shortchanges both investors and the American taxpayer .... Professor Bainbridge offers an incisive analysis of the landscape-altering Sarbanes-Oxley and Dodd-Frank acts, responses to the near-cataclysmic economic downturns of the last decade," which "advances a critical dialogue about the limits of crisis-driven public policy."

Q: In what ways does an expanded federal regulatory role in corporate governance potentially exacerbate the very problems it purports to solve?

A: Bubble laws like Sarbanes-Oxley and Dodd-Frank tend to be adopted in a hurry. As we have seen, the pressure of time tends to give advantages to interest groups and other policy entrepreneurs who have prepackaged purported solutions that can be readily adapted into legislative form. Hence, for example, many of both statutes’ provisions were recycled ideas that had been advocated for quite some time by corporate governance “reformers.” Unfortunately, because these so-called reformers tend to be critics of markets and corporations, both statutes imposed regulations that penalize or outlaw potentially useful devices and practices and more generally discourage risk-taking by punishing negative results and reducing the rewards for success. 

Q: When it comes to regulating corporations, what is the problem with a one-size-fits-all approach?

A: Anybody who has ever shopped for a Speedo knows that “one size fits all” simply isn’t true. Like people, not all corporations are the same. 

Q&A on Corporate Governance After the Financial Crisis Part 3: "You argue against the conventional wisdom that problems of corporate governance led to the financial crisis of 2008. Why?"

The latest issue of the UCLA Lawyer magazine has a series of Q&As with yours truly about my book Corporate Governance after the Financial Crisis. I'm reprinting the Q&As in this series of blog posts. As the article intro explains, the book argues "that federalizing corporate governance impinges on state sovereignty, hobbles corporate efficiency and shortchanges both investors and the American taxpayer .... Professor Bainbridge offers an incisive analysis of the landscape-altering Sarbanes-Oxley and Dodd-Frank acts, responses to the near-cataclysmic economic downturns of the last decade," which "advances a critical dialogue about the limits of crisis-driven public policy."

Q: You argue against the conventional wisdom that problems of corporate governance led to the financial crisis of 2008. Why? 

A: There is little evidence that poor corporate governance practices contributed to either the economic turmoil of the last decade in general or the declining competitiveness of U.S. capital markets. In the wake of the tech stock bubble, Bengt Holmstrom and Steven Kaplan published a comprehensive review of U.S. corporate governance that concluded the U.S. corporate governance regime was “well above average” in the global picture. Even when the fallout from the bubble was taken into account, returns on the U.S. stock market equaled or exceeded those of its global competitors during five time periods going back as far as 1982. Likewise, U.S. productivity exceeded that of its major Western competitors. In general, the trend with respect to major corporate governance practices had been toward enhanced management efficiency and accountability. Pay for performance compensation schemes, takeovers, restructurings, increased reliance on independent directors and improved board of director processes all tended to more effectively align management and shareholder interests.

As far as the economic crisis following the bursting of the housing bubble, “[a] striking aspect of the stock market meltdown of 2008 is that it occurred despite the strengthening of U.S. corporate governance over the past few decades and a reorientation toward the promotion of shareholder value.” A recent report commissioned by the New York Stock Exchange reached the same conclusion, finding that “the current corporate governance system generally works well.”

In the mail: Research Handbook on Executive Pay

Today's post brought a copy of Research Handbook on Executive Pay, edited by two outstanding legal scholars Randall Thomas and Jennifer Hill.

Research on executive compensation has exploded in recent years, and this volume of specially commissioned essays brings the reader up-to-date on all of the latest developments in the field. Leading corporate governance scholars from a range of countries set out their views on four main areas of executive compensation: the history and theory of executive compensation, the structure of executive pay, corporate governance and executive compensation, and international perspectives on executive pay.

The authors analyze the two dominant theoretical approaches - managerial power theory and optimal contracting theory - and examine their impact on executive pay levels and the practices of concentrated and dispersed share ownership in corporations. The effectiveness of government regulation of executive pay and international executive pay practices in Australia, the US, Europe, China, India and Japan are also discussed.

On a quick scan, many of the articles look quite useful. Todd Henderson's chapter on insider trading and executive compensation looks typically excellent. I'm already deep into Kevin Murphy's chapter on the politics of pay and his expertise and clarity make it a great read. In sum, this looks like an essential addition to the library of toilers in the compensaton vineyard.

Q&A on Corporate Governance After the Financial Crisis Part 1: "How do you define 'quack' corporate governance laws or regulations?"

The latest issue of the UCLA Lawyer magazine has a series of Q&As with yours truly about my book Corporate Governance after the Financial Crisis. I'll reprint the Q&As in this series of blog posts.

In his new book, Corporate Governance after the Financial Crisis (Oxford University Press, 2012), William D. Warren Distinguished Professor of Law Stephen Bainbridge proves expert at turning conventional wisdom on its head. His argument—that federalizing corporate governance impinges on state sovereignty, hobbles corporate efficiency and shortchanges both investors and the American taxpayer—advances a critical dialogue about the limits of crisis- driven public policy. Professor Bainbridge offers an incisive analysis of the landscape-altering Sarbanes-Oxley and Dodd-Frank acts, responses to the near-cataclysmic economic downturns of the last decade. By crystallizing the connection between federal intervention and bad public policy, he makes a strong case for the need for smart corporate governance reform.

Professor Bainbridge, who joined the UCLA Law faculty in 1997 and has been named one of the 100 most influential people in the field of corporate governance, is a renowned teacher and scholar whose expertise includes the law and economics of public corporations.

Q: How do you define “quack” corporate governance laws or regulations?

A: Unwise federal laws or SEC rules that meet these criteria: (1) The law was supported by a powerful interest group coalition, which used a financial crisis such as the post-Lehman Bros. credit crunch in 2007-2008 to achieve longstanding policy goals essentially unrelated to the causes or consequences of the financial crisis. (2) The new law or rule lacks strong empirical or theoretical justification. To the contrary, there are theoretical and empirical reasons to believe that each is bad public policy. (3) The new law or rule erodes the system of competitive federalism that is the unique genius of American corporate law by displacing state regulation with federal law.