Common law

About: Common law is a research topic. Over the lifetime, 30135 publications have been published within this topic receiving 280701 citations. The topic is also known as: judicial precedent & judge-made law.

Toward a global model of venture capital

Abstract: While the U.S. still accounts for about two-thirds of the world's total private equity fund-raising and investment, other countries have been adopting American practices and are experiencing significant growth in their private equity markets. In fact, a case can be made that a global market for venture capital and private equity is emerging, at least in Western Europe and North America, where venture markets are seeing significant convergence in funding levels, investment patterns, and realized returns. To date, however, the European Union has had little success in establishing community-wide commercial laws, taxation regimes, or corporate governance policies, so each country's private equity funds are organized in segmented national markets, and investment also tends to be largely localized. The Asian markets are even more fragmented: venture capital shows no sign of taking root in Japan, and China lacks the basic legal infrastructure needed to support a vibrant venture capital market. Venture capitalists create value through their role as active investors, and government and business leaders around the world have come to realize that venture capital and private equity investing can be a significant force in promoting economic development and technological progress. In general, countries with English common law codes offer greater protection to inves-tors; the ratio of venture capital spending to GDP for common law countries is nearly double that in civil law countries. Government efforts to promote venture capital would probably be better focused on eliminating regulatory road-blocks, lowering taxes, and provid-ing a favorable investor climate. In the meantime, it appears that pri-vate equity fund-raising and invest-ment have hit their cyclical lows and are poised to surpass $250 billion globally within three or four years and to reach one-half trillion dollars by the end of the decade. The author also predicts that India, whose history as a former British colony has given it a common law framework as well as system of elite universities and technical institutes known for the quality of its gradu-ates, should become one of the five leading venture capital markets by the end of this decade.

Culture, Law, and Corporate Governance

Abstract: This article advances a new framework for investigating a simple yet fundamental question: In what ways does the law on the books reflect cultural values? We analyze relations between indices of investors' legal rights - as coded by La Porta et al. (LLSV) - and national cultural profiles. These indices correlate with cultural priorities that are consistent with societal acceptance of litigation. Indices of formalism in civil procedure exhibit similar correlations. Such societal stance may be related to a heritage of British rule. Grouping countries according to legal families - the cornerstone of LLSV's legal approach - provides only a partial depiction of the universe of corporate governance regimes. Our findings cast doubt on the alleged general supremacy of statutes in common law countries. These findings have implications for understanding diversity and convergence in corporate governance systems and for a systematic analysis of the interface between law and social institutions.

Privatization and Corporate Governance: The Lessons from Securities Market Failure

Abstract: This paper analyzes the comparative experiences of Poland and the Czech Republic with voucher privatization. Because of a number of similarities between these two transitional economies, it finds their comparative experience to provide a useful natural experiment, with the critical distinguishing variable being their different approaches to regulatory controls. However, while their experiences have been very different, their substantive corporate law was very similar. The true locus of regulatory differences appears then to have been the area of securities market regulation, where their approaches differed dramatically. Re-examining the work of LaPorta, Lopez-de-Silanos, Shleifer & Vishny, this paper submits that (1) the homogenity of both common law systems and civil law systems has been overstated; (2) common law systems in particular differ widely in terms of substantive corporate law, but have converged functionally at the level of securities regulation; (3) dispersed ownership will likely not persist under civil law systems that contemplate concentrated ownership and hence do not address or discourage rent-seeking corporate control contests or other forms of expropriation from minority shareholders; and (4) such "winner-take-all" control contests are probably most feasibly addressed through "self-enforcing" structural protections, such as (following the Polish model) the transitional use of state-created controlling shareholders. Reformulating the thesis originally advanced by LaPorta, et al., this article argues that civil law systems are not inherently unprotective of minority shareholders, but rather protect shareholders only against the forms of abuse that were well-known in systems of concentrated ownership (i.e., typically, abuse by a dominating parent) and not against the abuses that typically characterize systems of dispersed ownership (i.e., managerial expropriation and theft of the control premium). Ultimately, there is a conceptual mismatch between civil law systems and the dispersed ownership created by voucher privatization.

Contracts of Adhesion-Some Thoughts About Freedom of Contract

Abstract: WAith the development of a free enterprise system based on an unheard of division of labor, capitalistic society needed a highly elastic legal institution to safeguard the exchange of goods and services on the market. Common law lawyers, responding to this social need, transformed "contract" from the clumsy institution that it was in the sixteenth century into a tool of almost unlimited usefulness and pliability. Contract thus became the indispensable instrument of the enterpriser, enabling him to go about his affairs in a rational way. Rational behavior within the context of our culture is only possible if agreements will be respected. It requires that reasonable expectations created by promises receive the protection of the law or else we will suffer the fate of Montesquieu's Troglodytes, who perished because they did not fulfill their promises. This idea permeates our whole law of contracts, the doctrines dealing with their formation, performance, impossibility and damages. Under a free enterprise system rationality of the law of contracts has still another aspect.1 To keep pace with the constant widening of the market the legal system has to place at the disposal of the members of the community an ever increasing number of typical business transactions and regulate their consequences. But the law cannot possibly anticipate the content of an infinite number of atypical transactions into which members of the community may need to enter. Society, therefore, has to give the parties freedom of contract; to accommodate the business community the ceremony necessary to vouch for the deliberate nature of a transaction has to be reduced to the absolute minimum. Furthermore, the rules of the common law of contract have to remain Jus dispositivum-to use the phrase of the Romans; that is, their application has to depend on the intention of the parties or on their neglect to rule otherwise. (If parties to a contract have failed to regulate its consequences in their own way, they will be supposed to have intended the consequences envisaged by the common law.) Beyond that the law cannot go. It has to delegate legislation to the contracting parties. As far as they are concerned, the law of contract has to be of their own making.