THE INCREASING ROLE OF EMPIRICAL RESEARCH IN CORPORATE LAW SCHOLARSHIP.docx

THE INCREASING ROLE OF EMPIRICAL RESEARCH IN CORPORATE LAW SCHOLARSHIP.docx

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THEINCREASINGROLEOFEMPIRICALRESEARCHINCORPORATELAWSCHOLARSHIP

窗体顶端

FOREDUCATIONALUSEONLY

92Geo.L.J.981

GeorgetownLawJournal

June,2004

BookReview

*981THEINCREASINGROLEOFEMPIRICALRESEARCHINCORPORATELAWSCHOLARSHIP

POLITICALDETERMINANTSOFCORPORATEGOVERNANCE:

POLITICALCONTEXT,CORPORATE

IMPACT.BYMARKROE,OXFORDUNIVERSITYPRESS,2003.PP.248.$44.50（HARDCOVER）

RandallS.Thomas[FNa1]

Copyright©2004byGeorgetownLawJournalAssociation;RandallS.Thomas

MarkRoeisoneoftheleadingAmericancorporatelawtheorists.Hisintellectualcontributionsarewidelyregardedaschangingthewayscholarsthinkaboutcorporategovernance,[FN1]regulatorycompetition,[FN2]bankruptcy,[FN3]andothersubjects.[FN4]Inhislatestbook,PoliticalDeterminantsofCorporateGovernance（hereinafterPoliticalDeterminants）,[FN5]ProfessorRoecontinueshisimportanttheoreticalcontributions,butalsoaddsanotherdimensiontohisscholarship--anempiricalone--thatreflectsbothhisowndevelopmentasascholarand,morebroadly,ashiftinthenatureofscholarshipinthecorporatefield.

Formanyyears,moderncorporatelawscholarshiphasbeensplitintotwobroadcategories,theoreticalandempirical,withlittleoverlapbetweenthem.Scholarsemployingawiderangeoftheoreticalapproaches,includingcontractarians,[FN6]communitarians,[FN7]teamproductionadvocates,[FN8]directorprimacyproponents,[FN9]andmanyothers,haveemployeddifferentperspectivestotrytogeneralizeabouttheorigins,currentstate,andfutureofcorporatelaw.Thesepiecesareprovocativeandilluminating,buttheyrarelyseektotestthetheoriesdeveloped*982againstempiricalevidence.Legalempiricists,ontheotherhand,havegenerallyeschewed"bigtheory"andfocusedtheireffortsonnarrower,testablehypotheses.Theirarticleslookmorelikethosepublishedineconomicsandfinancejournals,andthatisoftenwheretheyarefound.[FN10]

Inrecentyears,however,therehasbeenanexplosioninthenumberoftheoreticalarticlesthatcombinetheoreticalandempiricalelements.YoungerscholarssuchasJohnCoates,[FN11]GuhanSubramanian,[FN12]RobDaines,[FN13]andSteveChoi,[FN14]aswellasmoreseniorauthorslikeRobertaRomano,[FN15]BernardBlack,[FN16]andRobertThompson,[FN17]havepublishedmajorpiecesofscholarshipbothdevelopingandempiricallytestingtheories.Roe'sPoliticalDeterminantsmoveshimintothisgrowinggroupofempiricallyorientedcorporatelawtheorists.

YetRoe'smoveisnotwithoutperil.Quantitativelegalscholarsmustbeconsciousthattheyaretillingwell-plowedground.Thelegalacademy'ssometimeswhimsicalmarchintoempiricalresearchhasattractedstrongcriticismbysomeacademics[FN18]andequallyimpassioneddefensesbyothers.[FN19]Whilethese*983battleshavelargelyignoredcorporatelawscholarship,itbehoovescorporatescholarstoreflectonourempiricalworktoavoidsomeofthepitfallsidentified.[FN20]Alegitimateargumentcanbemadethatcorporatelawscholarshipneedsbettermethodologyandbettertestingofitstheoriesbeforeclaimingtohavesucceededinproving（ordisproving）anything.

Inthisregard,itisilluminatingtocompareProfessorRoe'sanalysisinPoliticalDeterminantswiththatemployedbyProfessorsLaPorta,Lopez-de-Silanes,Shleifer,andVishny（hereinafterLLSV）.Thesefourwell-knowneconomistshavedevelopedamajorcompetingtheoryaboutthedeterminantsofcorporategovernance.[FN21]Consistentwiththemethodologyofeconomicsscholarship,LLSVseektovalidatetheirtheorybythoroughempiricaltestingwithawell-specifiedmodelandlotsofdata.RoeisquitecriticalofLLSV'sworkonanumberofpersuasivetheoreticalgrounds,andfortheirunsophisticatedunderstandingoflegalinstitutions.Roealsoclaimsthattheirempiricalresultsdonotsupporttheirtheoreticalconclusions.ButLLSVcouldeasilyturnthetablesonProfessorRoeandattackhimforfailingtorigorouslytesthishypotheses.

Hereinliestheproblemforthenewempiricalcorporatelawscholarship:

Oncewebegintoclaimthatweareempiricists,wewillbehelduptothemethodologicalstandardsforempiricalresearchthathavebeendevelopedbygenerationsofsocialscienceresearchers,atleastwhenourworkisreadbyacademicsinthosefields.Inthisregard,LLSV'sempiricalmethodologyisareasonablebenchmarkagainstwhichlegalscholarscanmeasuretheirwork.

Atthesametime,whatlegalscholarscanbringtothepartythatotherdisciplineslackisourrichunderstandingoftheeconomic,political,andsocialforcesthatshapelaw,andlaw'seffectonthem.Thisdeepbackgroundshouldpermitlegallytrainedempiriciststoformulatehypothesesthattakeintoaccountmoreofthefactorsthataffectthecreationoflawanditseffectsandtodefinerichervariablethatdoabetterjobofcapturinglaw'simpact.Whenweaddtothisdeeptheoreticalskillsetarigorousquantitativeorientation,thenourresearchwillcarrymuchmoreweight--notonlyinlegalcircles,butelsewhereintheacademyaswell.

Thisbookreviewseekstoaccomplishtwogoals.First,inPartI,itsummarizesthetheoreticalargumentsmadeinPoliticalDeterminantsandcritiquestheempiricalsupportmarshaledbyProfessorRoeinsupportofthem.Then,inPartII,itdevelopsanalternativemodelthatcouldbeusedtotestbothProfessorRoe*984andLLSV'stheoriesaboutthedeterminantsofcorporategovernance.Finally,itoffersafewconcludingremarksaboutthefutureofempiricallegalscholarship.

I.THE"POLITICSMATTERS"THEORY

ThebasicthesisofPoliticalDeterminantsisthatpoliticsmattersindetermininghowacountry'scorporategovernancestructureevolvesovertime.The"politicsmatters"thesiscanbesimplystatedasfollows:

Socialdemocracies,[FN22]suchasthoseincontinentalEurope,pressurecorporatemanagerstoprotectworkersbyexpandingemploymentlevels,avoidingdownsizing,andbeingoverlyrisk-averseintheirinvestmentstrategies.[FN23]Atthesametime,thesecountries"denigratethemodernpro-shareholdertools--suchasincentivecompensation,hostiletakeovers,shareholderwealthmaximizationnorms,etc.--becauseitisnottheirpolicytopromotepurelyshareholdervalues."[FN24]Ownersofcapitalrespondbyconcentratingownershiptoensurethatmanagersactintheinterestsofthefirm'sownersratherthangiveawaythestoretoworkers.[FN25]

A.THEBASICTHEORY

Thissimplesummaryofthetheory,however,obscurestherealdepthofanalysisinPoliticalDeterminants.Theinitialportionofthebookexplorestheclaimthat"strongsocialdemocracieswidenthegapbetweenmanagersanddistantshareholders,andimpedefirmsfromdevelopingthetoolsthatwouldcloseupthatgap."[FN26]Roebeginsbynotingthatinamoderneconomy,apoliticalpredicateforlarge-scaleproductionissufficientsocialpeaceforfirmstoproduceandselltheirproducts.Tounderstandhowcountrieshaveachievedsuchpeace,heargues,wemustexaminethedealcutamongcapital,labor,andmanagers.[FN27]

Inanydemocraticsociety,Roeasserts,thegovernmentwillbepressuredbyvoterstoprotectlaboragainsttheeffectsofunbridledshareholderwealthmaximization.Insomecountries,notablytheEuropeansocialdemocracies,Roeclaimsthatthestatehassidedwithemployeesinordertoresolvesocialconflicts.Thesesocialdemocracieshavepushedfirmstostabilizeemployment,expandfirmsize,andavoidchangesthatwouldadverselyaffectthequalityoftheworkplace.[FN28]Butthesegoals,Roeobserves,aresimilartothoseofself-interestedmanagersactingwithoutconcernforshareholderinterests.Ineffect,thepoliticalpressuresfromasocialdemocracyreinforcemanagerialtendencies*985toactinaself-interestedway,therebyincreasingmanagerialagencycostsforshareholders.[FN29]

Thisleadsownersofcapitaltoseekwaysofreducingtheseagencycosts.Inparticular,RoeclaimsthatoutsidetheUnitedStates,ownersofcapitalhaveconcentratedtheirownershipofsecuritiesinordertoprotectcapital'sshareofthepieandpermitshareholderstomonitormanagersclosely,thuslimitingtheirdiscretion.Roebelievesthatsomeoftheotheralternativesforaligningshareholderandmanagerinterests,suchasthoseemployedtodayintheUnitedStates,wererejectedinthesesocialdemocraciesbecausetheyconflictedwithlaborgroups',andsometimesmanagers'interests.Forexample,incentivecompensationwasslowtodevelopinEuropebecauselaborvieweditbothascreatingunfairandinequitablecompensationdifferentialsbetweenworkersandmanagers,andastyingmanagerstoocloselytoowners.[FN30]Shareholderwealthmaximizationnormsweresupplantedbyastakeholderorientationthroughpressureexertedonmanagersbygovernments.Transparentaccountingwasnotvaluedbyowners,whopreferredthatemployeesnotgetafullpictureofthefirm'sfinancessothatthefirmcouldavoidhavingtopaythemmoremoneywhenitwasdoingwell.Nordidgovernmentspushforbettercorporatedisclosurerulesbecause,althoughsuchrulesmighthelplabor,theymightalsoleadtothedevelopmentofashareholder-orientedculture.Similarly,governmentsblockedhostiletakeoverstoprotectemployeesfromlosingtheirjobs,eventhoughcapitalownersmightreaptremendousgainsfromthem.[FN31]

Bycomparison,Roeargues,thesesocialdemocraticpressureswereweakerintheUnitedStates,andtheagencycoststhattheycreatedweresmaller.Managersfacedlesspressuretoprotectlabor'sinterests.Marketswerealsobiggerandmorecompetitive,sothatrentsevaporatedmorequickly.[FN32]Thesefactorsconstrainedmanagers'abilitytoshirktheirdutiestos