Three and a Half Minutes Silicon Flatirons三分半钟硅烙铁.pptVIP

Three and a Half Minutes Robert E. Scott Mitu Gulati Theories of Contract Stickiness (How Academics Talk) Faithful Lawyer Nervous/ Lazy/Faithless Lawyers LearningExternalities NetworkExternalities Negative Signal Loss Aversion Nervous Nellies Firm Routines Elliott v. Peru (2000) The Sovereign Debt Enforcement Problem (1750-2000) “The bonds rank pari passu [in payment] with all External Debt” Peru’s Bradies; Prior Commentary Brussels Court: Means you can collect from Other Creditors Wide Agreement – Bad Interpretation 2000 (Peru) – settle 01 (Congo) – settle 02 (Congo) – loss 03 (Nicaragua) – loss 04 (Argentina) – loss/current 07 (Congo) – settle 09 (Ecuador) Why Didn’t the Clauses Change? (What Lawyers Said) 100 Plus Interviews (75 lawyers) Initial Answer: Explanations for Meaning (old) i. Ex Post Expropriation/Subordination ii. Secured Bonds (in 1890s) iii. Chinese Bonds in 1800s iv. Blindly Copied from Corporates in late 80s How Sticky? 350 N.Y. Bonds (1985-2007):8-12 versions 37 changes (20 pre shock; 16 post) 300 U.K. law Bonds (1985-2007):4 versions 12 changes (9 pre shock; 3 post) 80 German law Bonds (1985-2000):2 versions Zero changes Negative price effect for “Elliott/payment” bonds (until 04); no size, country; reg effects Lawyer Explanations Negative Signal (Price Penalty) Negative Court Effect Likely Hiding Info From Clients Misbehaving Clients (Ibanks Sovs) False Maybe (inconsistent with cases) False (clients know –and no 144A effect) Maybe Implications/Insights Special Value to Old and Vague Clauses – Evolutionary Model Lawyer Unwillingness to Invest in long-term RD (despite interest) – Cap Structure? Effect of Too Much Attention? Sovereigns are Different? Lawyer Feedback on Project (Quotes) Waste of Public Resources (we had a grant) Aren’t you using a Hammer to crush an ant? I’m not allowing my son to apply to Duke Law Is this really what law professors spend their time on? * * *