Volume 157, Issue 5 
May 2009

The Elusive Quest for Global Governance Standards

Lucian A. Bebchuk & Assaf Hamdani

In The Elusive Quest for Global Governance Standards, Professors Lucian Bebchuk and Assaf Hamdani argue that the currently available metrics for assessing the governance of public companies around the world suffer from a basic shortcoming. The impact of many key governance arrangements, they argue, depends considerably on companies' ownership structure: measures that protect outside investors in a company without a controlling shareholder are often irrelevant or even harmful when it comes to investor protection in companies with a controlling shareholder, and vice versa. Consequently, governance metrics that purport to apply to companies regardless of ownership structure are bound to miss the mark with respect to one or both types of firms. In particular, Bebchuk and Hamdani attempt to show that the influential metrics used extensively by scholars and shareholder advisers to assess governance arrangements around the world—the Corporate Governance Quotient (CGQ), the Anti-Director Rights Index, and the Anti-Self-Dealing Index—are inadequate for this purpose. They suggest that going forward, the quest for global governance standards should be replaced by an effort to develop and implement separate methodologies for assessing governance in companies with and without a controlling shareholder. The professors identify the key features that these separate methodologies should include and discuss how to apply such methodologies in either country-level or firm-level comparisons.

Deliberation and Strategy on the United States Courts of Appeals: An Empirical Exploration of Panel Effects

Pauline T. Kim

Recent studies have established that the decisions of a federal court of appeals judge are influenced not only by the preferences of the judge, but also by the preferences of her panel colleagues. Although the existence of these “panel effects” is well documented, the reasons that they occur are less well understood. Scholars have proposed a number of competing theories to explain panel effects, but none has been established empirically. In Deliberation and Strategy on the United States Courts of Appeals: An Empirical Exploration of Panel Effects, Professor Pauline Kim reports an empirical test of two competing explanations of panel effects—one emphasizing deliberation internal to a circuit panel, the other hypothesizing strategic behavior on the part of circuit judges. The latter explanation posits that court of appeals judges act strategically in light of the expected actions of others and that, therefore, panel effects should depend upon how the preferences of the Supreme Court or the circuit en banc are aligned relative to those of the panel members. Analyzing votes in Title VII sex discrimination cases, she finds no support for the theory that panel effects are caused by strategic behavior aimed at inducing or avoiding Supreme Court review. On the other hand, the findings strongly suggest that panel effects are influenced by circuit preferences. Both minority and majority judges on ideologically mixed panels differ in their voting behavior depending upon how the preferences of the circuit as a whole are aligned relative to the panel members. This study provides evidence that panel effects do not result from a dynamic wholly internal to the three judges hearing a case, but are influenced by the environment in the circuit as a whole as well.

How Should Punitive Damages Work?

Dan Markel

In Retributive Damages: A Theory of Punitive Damages as Intermediate Sanction, Professor Dan Markel argued that the purpose of punitive damages should be to advance—in part—the public’s interest in retributive justice. These “retributive damages” should be an expressly intermediate sanction, independent of other remedial or penal options. Markel provided the basic structure of these retributive damages; however, the theoretical nature of the proposal did no more than touch on how they would operate in practice.

In How Should Punitive Damages Work?, Markel addresses the next question: how should punitive damages, including retributive damages, work? This question is especially timely in light of the Supreme Court’s recent decision in Philip Morris USA v. Williams, which held that juries may not consider the harms to nonparties in determining punitive damages awards.

To make punitive damages work, Markel argues that we must first separate retributive damages from other extracompensatory damages meant to achieve cost internalization or to vindicate the victim’s dignity interests. Because these three purposes are distinct, conflating them carries the danger of both under- and overprotection of various defendants. Once we understand these purposes and the distinctions between them, we should be able to map them on to our existing institutional design for civil damages. Markel begins, first, by explaining why and how defendants should enjoy certain procedural protections depending on which purpose the damages serve, and second, by addressing two critical implementation issues associated with this pluralistic scheme of extracompensatory damages: insurance and settlement.


Sticks and Stones: The Ability of Attorneys to Appeal from Judicial Criticism

Matthew Funk

Language, National Origin, and Employment Discrimination: The Importance of the EEOC Guidelines

Andrew J. Robinson

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