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Principal (commercial law)

About: Principal (commercial law) is a research topic. Over the lifetime, 1579 publications have been published within this topic receiving 35379 citations. The topic is also known as: Principal (commercial law).


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Journal ArticleDOI
TL;DR: The European Economic Community Treaty as mentioned in this paper provides a new and important expansion of regulatory laws in this field, and the Commission created by the Treaty to act as the principal executive authority of the Community is given certain quasi-judicial functions in the enforcement of these rules.
Abstract: The supra-national control of restrictive business practices and concentrations provided for in the European Economic Community Treaty which came into effect in 1958' marks a new and important expansion of regulatory laws in this field. Business both in the Six2 member countries and outside of the European Community whose dealings bring them within the jurisdiction of the EEC Treaty are compelled to appraise the effect of this Treaty upon their plans and activities. Articles 85 to 90 under the title "Rules Governing Competition" contain many new and unfamiliar features. Their scope is open to speculation and the exact role of the Community agencies and their implementation is as yet undetermined. The Commission created by the Treaty to act as the principal executive authority of the Community is given certain quasi-judicial functions in the enforcement of these rules. It has in turn set up a special subcommittee on Competition composed of three members of the Commission,3 and in the administration there has been created a special division or bureau entitled "Understandings, Monopolies, Dumping and Discrimination" under Mr. Verloren van Themaat, formerly administrator of the Dutch agency dealing with restrictive practices. The machinery of the Community includes a Council authorized to promulgate Regulations governing the application of these Rules4 and a multi-national Court of Justice to hear appeals from the Commission's decisions with power to annul them if they violate the Treaty or any rule of law relating to its application and to hear cases brought by member states.

3 citations

Posted Content
TL;DR: In this paper, the authors consider the use of anti-abuse rules in the tax law, which are standards that override the literal words of a statute or regulation to require a reasonable tax result.
Abstract: This paper considers the use of so-called "anti-abuse rules" in the tax law. Anti-abuse rules are standards that override the otherwise applicable rules. They allow the government and only the government to override the literal words of a statute or regulation to require a reasonable tax result. The government may apply an anti-abuse rule if the taxpayer enters into or structures a transaction with a principal purpose of reducing tax liabilities contrary to the purposes of the statute or regulation, even if the transaction otherwise literally complies with the rules. The most important feature of anti-abuse rules is their substitution of standards for rules. The paper argues that standards provide a trade-off with a more traditional rule-bound approach to the tax law. The argument is that, at least in the tax law, rules must be systematically more complex than standards. Tax rules must be highly complex because mistaxation of even a rare transaction allows taxpayers to structure transactions to take advantage of the result. With rules, uncommon transactions become common. Standards allow the tax law to be less complex than rules because they need not specify in advance the results of uncommon transactions. Uncommon transactions stay that way. The trade-off is that standards are less certain than rules.

3 citations

Journal Article
TL;DR: Guttentag and Nagy as discussed by the authors argued that the entire tipper-tippee framework first laid out by the Supreme Court in Dirks, including the personal benefit test, has been rendered obsolete by subsequent common law and regulatory developments that have fundamentally transformed the U.S. insider trading enforcement regime.
Abstract: Professors Michael Guttentag and Donna Nagy have each offered arguments suggesting that the entire tipper-tippee framework first laid out by the Supreme Court in Dirks, including the personal benefit test, has been rendered obsolete by subsequent common law and regulatory developments that have fundamentally transformed the U.S. insider trading enforcement regime. These developments include: (1) the Supreme Court’s endorsement of the misappropriation theory in United States v. O’Hagan, (2) recent state court decisions offering more expansive accounts of what conduct constitutes a breach of fiduciary duty of loyalty in the corporate context, and (3) the SEC’s adoption of Regulation FD in 2000. Both Guttentag’s and Nagy’s arguments are erudite and quite creative. Such creativity is a virtue in law professors, but not in prosecutors. Exercising poetic license to expand criminal liability risks violating the time-honored principal of legality and leaving citizens without adequate notice of the crimes for which they may be charged. Insider trading law in the United States is already plagued by vagueness, and concern over prosecutors’ continued exploitation of this ambiguity to push the line of liability further and further out is part of what motivated the Second Circuit to push back in Newman. I share the Newman court’s concern. In this short article, I summarize what I take to be the most crucial aspects of Guttentag’s and Nagy’s arguments. I then offer some criticism. Specifically, I explain why I regard these interpretations as poetic expansions (rather than straightforward readings) of the law, a conclusion that was only strengthened by the Supreme Court’s recent decision in Salman.

3 citations

Journal ArticleDOI
TL;DR: In this paper, the authors model the shareholders-manager relationship as a principal-agent game in which the agent (the manager) alone observes the economic outcome, and show that the limited liability of the agent, defined as the agent's feasible minimum payment, might explain the demand for earnings management by the principal.
Abstract: Consider the following puzzle: If earnings management is harmful to shareholders, whydon't they design contracts that induce managers to reveal the truth? To answer this question, we model the shareholders-manager relationship as a principal-agent game in which the agent (the manager) alone observes the economic outcome. We show that the limited liability of the agent, defined as the agent's feasible minimum payment, might explain the demand for earnings management by the principal. Specifically, when the limited-liability level is high (low), a contract that induces earnings management may be less (more) costly than a truth revealingcontract. This finding offers a new explanation of the demand for earningsmanagement.

3 citations

Journal Article
TL;DR: In this article, the authors employ a new lens-the legal and behavioral literature on optimal contract specificity-to suggest why incentive pay is problematic and why the health care experience will be no different than other industries.
Abstract: Incentive-based pay is rational, intuitive, and popular. Agency theory tells us that a principal seeking to align its incentives with an agent's should be able to simply pay the agent to achieve the principal's desired results. Indeed, this strategy has long been used across diverse industries-from executive compensation to education, professional sports to public service-but with mixed results. Now a new convert to incentive compensation has appeared on the scene: the United States' behemoth health-care industry. In many ways, the incentive mismatch story is the same. Insurance companies and employers are concerned about constraining the cost of care, and patients are concerned about quality of care. Physicians lack an adequate financial incentive to pay attention to either. Health care's recent move away from the traditional fee-for-service compensation model to incentive pay is perhaps unsurprising. But there is a problem: mixed preliminary evidence and potential mal-effects on vulnerable third-party patients. This Article employs a new lens-the legal and behavioral literature on optimal contract specificity-to suggest why incentive pay is problematic and why the health-care experience will be no different than other industries. The use of incentive pay is a change in contractdrafting strategy, a decision to write a more detailed, control-based contract rather than one that relies on discretion. The contracts literature suggests that this strategy will only work well where simple compliance is the goal rather than creativity or innovation. The health industry will not succeed in implementing incentive pay better than other industries have. What it needs is to recognize the limits of incentive pay and implement it sparingly. The new Trump Administration may be particularly primed to heed this call.

3 citations


Performance
Metrics
No. of papers in the topic in previous years
YearPapers
20222
202130
202037
201953
201839
201755