The Path(s) of Corporate Law Scholarship

450px-Path_20_06_2006.jpgI’ve had a few conversations at the AALS this year revolving around the same topic: where is corporate law scholarship going? These conversations are naturally framed by being a (still relatively) junior scholar, not wanting to pick a research agenda or field that will be seen to be a dead-end in a few year’s time. Over these conversations, folks have suggested several different types of corporate law research agendas. Obviously, the categories overlap and over-simplify, but it seemed useful to me to list them here, with a few thoughts on the obvious promises and perils of each.

1. Market Quant-heads: Using Tobin’s Q and other quantitative methods to evaluate governance. Pros: still lots of low-hanging fruit, interesting results, multiple papers per data set. Cons: some barriers to entry if you aren’t afraid of being publicly wrong, severe barriers to entry if you are; co-authorship with finance folks is useful but quality proxies are unreliable; probably little connection with your day-to-day teaching responsibilities; unclear value-added over business school professors; not clear how easy it is to place this work in flagship mainstream law reviews, if your law school values this currency (which it shouldn’t).

2. Contract Quant-heads: Evaluating databases of agreements to shed light on private law-in-action. Pros: great work being done in entrepreneurial law, and huge areas of private corporations and LLCs are still basically unexplored; the learning curve, once you are familiar with STATA, is not steep; lawyer competencies are essential to the project. Cons: coding takes time, and projects can take >18 months to complete; finding appropriate data sources requires connections you likely do not have at the beginning of your career; you will almost certainly eventually want to get a grant, which creates its own set of bureaucratic issues.

3. Doctrinalists: Careful reading of Delaware cases, often informed by some L&E or BL&E theory. Pros: there are always new cases to write about; consulting gigs abound; lots of tie-in with teaching; influence over development of law; doctrine probably still places pretty well. Cons: in a globalizing economy, Delaware may be a declining stock to ride; elite law schools will likely not hire you; the “grand theory” field is very rich and possibly occupied.

4. Modelers and Historians: Using abstract models, or historical precedents, to illuminate aspects of the legal regime that doctrine obscures and the data fail to speak to. Pros: The field is pretty thin, so the fruit may hang low; cross-disciplinary work with economists and historians is likely to be very fruitful. Cons: hard to place both kinds of works in student-edited journals; relevancy critiques; probably harder to get elite jobs than it used to be for modelers.

5. Experimental Research: Organizational studies meets experimental behavioral law and economics: doing controlled experiments to test board and manager behavior under conditions of uncertainty. Pros: Almost no one does this, so the world is wide-open; lots of theories to test; value-added of lawyers to co-authored papers easy to see. Cons: If you are going to use real Board members as subjects, designing appropriate controls is not a trivial problem; cost; finding appropriate co-authors.

6. Qualitative Comparative Governance: Something like doctrinalism-without-borders, often without a quantitative element. Pros: Illuminating; easy to enter field; good travel opportunities; Cons: you are never going to know foreign systems that well unless you’ve practiced in them, and so you will face skeptical audiences; the market-quants are out in front on these problems, and are going to believe your work is largely not useful.

Does this about cover the field, or am I missing the gorilla for the trees?

(Image Source: Wikicommons)

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5 Responses

  1. Jeff Lipshaw says:

    Interesting. I realize you are merely cataloging and not evaluating. I’d look long and hard at any study that purports to assert a causal relationship (and I’m aware of many of them) between corporate governance metrics and financial performance.

    I’d also ask the question with respect to modeling or experimental research about board and manager behavior under conditions of uncertainty whether an actor looking at the results of any tested hypothesis would be inclined (or able) to shape an ex ante decision based on it.

    Personally, I’d steal a beat from the crits, and collect narrative from corporate insiders with respect to governance, M&A, compliance, role of lawyers, etc.

  2. Jeff Lipshaw says:

    I should clarify in the proceeding comment that I’m aware of the studies. I’m not yet persuaded of any causal relationships. (Attila the Hun with a differentiated platform technology still trumps Mother Teresa with commoditized products.)

  3. Lawrence Cunningham says:

    The legal academy could use several younger scholars in the intersection of law and accounting, especially in corporate and securities contexts.

    Many luminaries in corporate/securities law have occasionally written important articles on accounting aspects, including Bill Cary, Jack Coffee, Mel Eisenberg, Ed Kitch, Joel Seligman and Elliott Weiss.

    Others devoted a substantial portion of their scholarly agendas to accounting matters, especially Colorado’s Ted Fiflis, NYU’s Homer Kripke and later Stanley Siegel and Columbia’s Lou Lowenstein.

    Contemporary scholars who make sustained and extensive contributions to law and accounting include Bill Bratton, Jim Cox and Robert Prentice.

    Other important current figures include Matt Barrett, Cal Johnson, and George Mundstock, along with valuable contributions by, among others, Erik Gerding, Claire Hill, Sean O’Connor, Lynn Stout and Gilbert Warren.

    Pros: An amazingly rich field with many current and continuing opportunities, including learning about related fields ranging from administrative law, intellectual property, international law and comparative law. Cons: some technical knowledge required.

  4. A very useful and provocative post. As I commented over on my blog, the biggest problem I have with all the alternatives to what you’re calling doctrinalism is that of comparative advantage. Financial economists and business school types would seem to have a significant advantage in all the other areas. In contrast, L&E trained law professors have a comparative in advantage in arbitraging their work into doctrinal analyses.

  5. Fred Tung says:

    Hi David:

    Great post. As a Market Quant-head sympathizer, let me add a little ray of sunshine to your post re law professor/ lawyer value-added. You have it exactly right that the lawyer’s comparative advantage is in reading contracts and cases and interpreting what they mean. In effect, law-types are the experts on institutional detail–how legal constraints actually work. This is not a small thing for Market Quant-head research, however. Finance professors may sometimes venture into empirical corporate governance research unarmed with a law co-author, which can be perilous. I once watched two highly-trained young finance professors present a paper relying on state antitakeover statutes as a measure of the degree of management entrenchment across firms. The law-types in the room quickly shot down their major premise. While everyone in the room was very gracious, it was a bit awkward when it became clear that the results of the paper were literally meaningless. It was no coincidence that these finance scholars taught at universities with no law school–MIT and Princeton, if memory serves.

    It’s not hard to see how such a mistake could be made by non-lawyers. Statutes are easy to find and read. Understanding staggered boards and poison pills, by contrast, requires (or at the time, required) a little better grasp of institutional detail.

    I think a law co-author can affect the sophistication of the kinds of questions that Market quant-head research can answer. We can be important contributors to project design. We may also often have better intuitions about where to look for causation.