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Author: Kenneth Ayotte
Publisher:
ISBN:
Category :
Languages : en
Pages : 38
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Book Description
In this paper we propose a theory of optimal property rights in a financial contracting setting. Following recent contributions in the property law literature, we emphasize the distinction between contractual rights, that are only enforceable against the parties themselves, and property rights, that are also enforeceable against third parties outside the contract. Our analysis starts with the following question: which contractual agreements should the law allow parties to enforce as property rights? Our proposed answer to this question is shaped by the overall objective of minimizing due diligence (reading) costs and investment distortions that follow from the inability of third-party lenders to costlessly observe pre-existing rights in a borrower's property. Borrowers cannot reduce these costs without the law's help, due to an inability to commit to protecting third-parties from redistribution. We find that the law should take a more restrictive approach to enforcing rights against third-parties when these rights are i) more likely to redistribute value from third-parties ii) less likely to increase efficiency, and iii) more costly for third-parties to discover. We find that these qualitative principles are often reflected in observed legal rules, including the enforceability of negative covenants; fraudulent conveyance; corporate veil-piercing; and limits on assignability.
Author: Kenneth Ayotte
Publisher:
ISBN:
Category :
Languages : en
Pages : 38
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Book Description
In this paper we propose a theory of optimal property rights in a financial contracting setting. Following recent contributions in the property law literature, we emphasize the distinction between contractual rights, that are only enforceable against the parties themselves, and property rights, that are also enforeceable against third parties outside the contract. Our analysis starts with the following question: which contractual agreements should the law allow parties to enforce as property rights? Our proposed answer to this question is shaped by the overall objective of minimizing due diligence (reading) costs and investment distortions that follow from the inability of third-party lenders to costlessly observe pre-existing rights in a borrower's property. Borrowers cannot reduce these costs without the law's help, due to an inability to commit to protecting third-parties from redistribution. We find that the law should take a more restrictive approach to enforcing rights against third-parties when these rights are i) more likely to redistribute value from third-parties ii) less likely to increase efficiency, and iii) more costly for third-parties to discover. We find that these qualitative principles are often reflected in observed legal rules, including the enforceability of negative covenants; fraudulent conveyance; corporate veil-piercing; and limits on assignability.
Author: Kenneth Michael Ayotte
Publisher:
ISBN:
Category : Contracts
Languages : en
Pages : 38
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Book Description
In this paper we propose a theory of optimal property rights in a financial contracting setting. Following recent contributions in the property law literature, we emphasize the distinction between contractual rights, that are only enforceable against the parties themselves, and property rights, that are also enforeceable against third parties outside the contract. Our analysis starts with the following question: which contractual agreements should the law allow parties to enforce as property rights? Our proposed answer to this question is shaped by the overall objective of minimizing due diligence (reading) costs and investment distortions that follow from the inability of third-party lenders to costlessly observe pre-existing rights in a borrower's property. Borrowers cannot reduce these costs without the law's help, due to an inability to commit to protecting third-parties from redistribution. We find that the law should take a more restrictive approach to enforcing rights against third-parties when these rights are i) more costly for third-parties to discover, ii) more likely to redistribute value from third-parties, and iii) less likely to increase efficiency. We find that these qualitative principles are often reflected in observed legal rules, including the enforceability of negative covenants; fraudulent conveyance; corporate veil-piercing; and limits on assignability.
Author: Felix Münnich
Publisher:
ISBN:
Category :
Languages : en
Pages : 42
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Book Description
In this paper, we investigate the impact of weak property rights on financial contracting between a researcher and her investor. Access to non-protected knowledge enables the investor to provide advice to a researcher while also allowing her to disclose that knowledge to competitors.We find that a convertible security can be used by the researcher to prevent such disclosure. This will be optimal only for intermediate levels of advice productivity and for strong levels of property right protection. When property right are too weak, low-powered incentive contracts, that do not grant access to research output to the investor, dominate. Disclosure is accommodated when advice productivity is too high. Less intense product market competition is associated with decreased use of financial contracts that prevent disclosure.
Author: Erik Berglöf
Publisher:
ISBN:
Category : Law
Languages : en
Pages : 228
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Book Description
Author: Oliver Hart
Publisher: Clarendon Press
ISBN: 0191521728
Category : Business & Economics
Languages : en
Pages : 244
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Book Description
This book provides a framework for thinking about economic instiutions such as firms. The basic idea is that institutions arise in situations where people write incomplete contracts and where the allocation of power or control is therefore important. Power and control are not standard concepts in economic theory. The book begins by pointing out that traditional approaches cannot explain on the one hand why all transactions do not take place in one huge firm and on the other hand why firms matter at all. An incomplete contracting or property rights approach is then developed. It is argued that this approach can throw light on the boundaries of firms and on the meaning of asset ownership. In the remainder of the book, incomplete contacting ideas are applied to understand firms' financial decisions, in particular, the nature of debt and equity (why equity has votes and creditors have foreclosure rights); the capital structure decisions of public companies; optimal bankruptcy procedure; and the allocation of voting rights across a company's shares. The book is written in a fairly non-technical style and includes many examples. It is aimed at advanced undergraduate and graduate students, academic and business economists, and lawyers as well as those with an interest in corporate finance, privatization and regulation, and transitional issues in Eastern Europe, the former Soviet Union, and China. Little background knowledge is required, since the concepts are developed as the book progresses and the existing literature is fully reviewed.
Author: Kenneth Ayotte
Publisher: Edward Elgar Publishing
ISBN: 184980897X
Category : Law
Languages : en
Pages : 417
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Book Description
Leading scholars in the field of law and economics contribute their original theoretical and empirical research to this major Handbook. Each chapter analyzes the basic architecture and important features of the institutions of property law from an economic point of view, while also providing an introduction to the issues and literature. Property rights and property systems vary along a large number of dimensions, and economics has proven very conducive to analyzing these patterns and even the nature of property itself. The contributions found here lend fresh perspectives to the current body of literature, examining topics including: initial acquisition; the commons, anticommons, and semicommons; intellectual property; public rights; abandonment and destruction; standardization of property; property and firms; marital property; bankruptcy as property; titling systems; land surveying; covenants; nuisance; the political economy of property; and takings. The contributors employ a variety of methods and perspectives, demonstrating the fruitfulness of economic modeling, empirical methods, and institutional analysis for the study of both new and familiar problems in property. Legal scholars, economists, and other social scientists interested in property will find this Handbook an often-referenced addition to their libraries.
Author: Dean V. Williamson
Publisher:
ISBN:
Category : Eminent domain
Languages : en
Pages : 54
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Book Description
Author: Richard Theodore Ely
Publisher:
ISBN:
Category : Contracts
Languages : en
Pages : 544
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Book Description
Author: Joseph T. Mahoney
Publisher: SAGE
ISBN: 1412905435
Category : Business & Economics
Languages : en
Pages : 273
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Book Description
The theoretical foundations of management strategy are identified and outlined in this text. Five theories are considered in the light of questions about how organisations operate efficiently, cost minimization, wealth creation, individual self-interest, and continued growth.
Author: Philippe Aghion
Publisher: Oxford University Press
ISBN: 0190259019
Category : Business & Economics
Languages : en
Pages : 224
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Book Description
The 1986 article by Sanford J. Grossman and Oliver D. Hart titled "A Theory of Vertical and Lateral Integration" has provided a framework for understanding how firm boundaries are defined and how they affect economic performance. The property rights approach has provided a formal way to introduce incomplete contracting ideas into economic modeling. The Impact of Incomplete Contracts on Economics collects papers and opinion pieces on the impact that this property right approach to the firm has had on the economics profession.
