Re-examining the law and economics of the business judgment rule: notes for its implementation in non-US jurisdictions

Gurrea‐Martínez, Aurelio

doi:10.1080/14735970.2017.1412688

Cited by 13 publications

(11 citation statements)

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“…In contrast, liability can ensure that decisions are made on a more informed basis, especially concerning cost, benefits, and risk. In particular, decisions must be documented concerning the process and assumptions so that an ex post review under the conditions valid at the time of the decision to avoid hindsight bias (Fischhoff, 1975) can occur (e.g., Follert et al, 2021; Gurrea‐Martinez, 2019). To the extent that ex post reviews of the information underlying a decision and its evaluation are possible, political actors must exempt themselves from personal liability by proving that they apply an adequate standard of care in the context of their decision.…”

Section: Decision‐making and Liability: A Synthesis Of The Corporate ...mentioning

confidence: 99%

“…In this regard, a strict standard of care seems to be generally incompatible with managerial decision‐making, as the peculiarities of entrepreneurial activity should be considered (Gurrea‐Martinez, 2019). Entrepreneurial activity is inconceivable without a willingness to innovate and take risks, which is why principals also have an interest in encouraging agents to see not only the risks but also, in appropriate consideration, the corresponding opportunities when entering into business transactions (e.g., Gurrea‐Martinez, 2019; Olbrich & Rapp, 2013; Sharfman, 2017). In this respect, courts recognize that decisions in a business context, owing to omnipresent uncertainty, can prove erroneous from an ex post view.…”

Section: Decision‐making and Liability: A Synthesis Of The Corporate ...mentioning

confidence: 99%

“…A structural difference is whether the business judgment rule is formulated as a “presumption” or as a “safe harbor” (e.g., Gurrea‐Martinez, 2019). However, based on long‐standing practices in the United States, formulation of other laws, and economic evaluation of the decision situation, several features can be identified (e.g., Sharfman, 2017).…”

Section: Decision‐making and Liability: A Synthesis Of The Corporate ...mentioning

confidence: 99%

“…Finally, the question arises whether the regulation should be designed as a “presumption” or as a “safe harbor” (see Gurrea‐Martinez, 2019). While US law assumes the former, a safe harbor, as in German stock corporation law, requires political actors to prove that it has fulfilled these characteristics.…”

Section: Decision‐making and Liability: A Synthesis Of The Corporate ...mentioning

confidence: 99%

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Learning from corporate governance: First conceptualization of a liability for political decision‐making

Follert

2023

Kyklos

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The institution of liability serves to mitigate the lack of care in almost all areas, whether private or business. However, we have not yet found such an institution in political decision‐making. Surprisingly, the literature has not discussed a specific institution that subjects political actors who fail to exercise due diligence in their decision‐making regarding personal liability. Hence, this paper aims to fill this gap and derive the necessity of internalizing the negative effects resulting from the imperfections of the market for political services in general and the democratic process, particularly by a liability rule. To design the new institution, we draw on the findings of corporate governance, combining economic thinking in incentives and legal knowledge expressed in the law of the corporation. In this respect, this paper is the first to make a concrete proposal for political liability accompanied by a political judgment rule. However, it is important to emphasize that the aim is not to punish a wrong decision but to provide strong incentives to prevent it ex ante. Political liability must be understood as a process‐oriented institution that considers uncertainty and decision‐making complexities. By proposing and analyzing this new institution, this work contributes to a broader discussion of incentive structures in the political process of modern democracies and shows how the political sphere can learn from the corporate world.

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Section: Decision‐making and Liability: A Synthesis Of The Corporate ...mentioning

confidence: 99%

Section: Decision‐making and Liability: A Synthesis Of The Corporate ...mentioning

confidence: 99%

Section: Decision‐making and Liability: A Synthesis Of The Corporate ...mentioning

confidence: 99%

Section: Decision‐making and Liability: A Synthesis Of The Corporate ...mentioning

confidence: 99%

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Learning from corporate governance: First conceptualization of a liability for political decision‐making

Follert

2023

Kyklos

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“…This trust occurs if the party who initially controls and owns an object or settlor then surrenders the ownership of the object to another party in form of trustee for the benefit of a third party as beneficiary, even though the trustee becomes the legal owner of the object, the trustee is only in the management's position, manager and storage of the item. Meanwhile, benefits or uses must be given to third parties as beneficiary (Prasetio, 2014;Johnson, 2005;Sharfman, 2017;Gurrea-Martínez, 2018;Engert and Goldlücke, 2017;;Onyshchuk et al, 2020).…”

Section: Trusts In the Indonesian Code Of Civil Lawmentioning

confidence: 99%

Implementation of the Equity-based Trust in the State-Owned Enterprises in Indonesia

Anggriani¹,

F.X.²,

Nanik³

2020

IJEBA

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Purpose: State-owned enterprise directors in Indonesia function as management and as the representation of the company based on the principle of fiduciary duty in good faith and trust. The director also function as public official, where mistakes in actions that could harm the state finance can be categorized as corruption. In this role ambiguity, this study seeks to investigate the implementation of the concept of trust in the legal system in Indonesian stateowned enterprises. Approach/Methodology/Design: The research in this study uses the doctrinal method, known as the normative research method, to explain the role of the director in the implementation of trust in a state-owned enterprise. Findings: The results showed that the implementation of trust can be done through equity, in which a person has an object for the benefit of the other party. Equity requires the fulfilment of obligations based on trust, which makes the person who has the object in the law as the legal owner, to the beneficial owner. Practical Implications: The The application of the concept of trust in SOE directors as a public official needs to be clarified because state-owned enterprises are state-owned legal entities which must also be financially accountable. Originality/value: The study first analyze the trust in SOEs in relation with the function of board of directors in carrying out the obligations as stipulated in the LLC Law, and being responsible for the management of the company, with the aim of generating profits with the good corporate governance.

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Economic Analysis of Corporate Law

Gindis

Petrin

2020

Encyclopedia of Law and Economics

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Anatomy of corporate law; Corporate law and economics; Economic structure of corporate law; Economics of corporate law; Functions of corporate law Definition The economic analysis of corporate law applies the concepts and tools of microeconomics to the study of the legal rules, regulations, and practices that govern the formation and operation of business corporations, most notably as regards to the rights and duties of directors, officers, shareholders, and creditors. The literature has focused mostly on publicly-traded corporations, but the analytical framework extends to the simpler cases of close corporations and limited liability companies and the more complex case of corporate groups.

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Re-examining the law and economics of the business judgment rule: notes for its implementation in non-US jurisdictions

Cited by 13 publications

References 0 publications

Learning from corporate governance: First conceptualization of a liability for political decision‐making

Learning from corporate governance: First conceptualization of a liability for political decision‐making

Implementation of the Equity-based Trust in the State-Owned Enterprises in Indonesia

Economic Analysis of Corporate Law

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