Empirical Legal Studies

"georoute"--Measuring Distance and Time Between Two Points

While requiring a user-download, a new--albeit quirky--command, "georoute", allows researchers to compute "travel distance and travel time between two points defined by their addresses or their geographical coordinates." Or, more specifically:

"calculates the georouting distance between two addresses or two geographical points identified by their coordinates. It uses the HERE API (https://developer.here.com) to retrieve distances in two steps. In the first step, addresses are geocoded and their geographical coordinates (latitude and longitude) are obtained. In the second step, the georouting distance between the two points is obtained. The user can also provide directly geographical coordinates, which will bypass the first step."

Such a program may prove useful, e.g., to researchers exploring various "access to justice" research papers that seek to exploit/explore data on physical distance. A brief discussion is found here.

For those interested, to download this program, from within Stata, type: ssc install georoute

Incorporation & the "Delaware Trap"

In The Delaware Trap: An Empirical Analysis of Incorporation Decisions, Robert Anderson (Pepperdine) engages with, as he notes, "One of the most significant debates in corporate law," namely "whether the United States system of corporate law federalism leads to a race to the bottom or a race to the top. Race-to-the-bottom theorists argue that because insiders of companies must initiate incorporation decisions, jurisdictions compete to provide legal rules that favor insiders, allowing them to extract private benefits at the expense of the corporation or its shareholders. Race to-the-top theorists argue that market constraints prevent insiders from favoring such jurisdictions and that jurisdictions actually compete to provide efficient legal rules that enhance shareholder value. Although the dichotomous framing as a 'race' to the 'top' or 'bottom' is a bit of an oversimplification of a more nuanced debate, that version of the debate has dominated discussions of corporate law for decades.” And to this classic research question Anderson brings a fresh set of under-explored data: "filings made with the Securities and Exchange Commission under Regulation D. Regulation D is probably the most commonly used exemption from the Securities Act of 1933; it is used for private capital-raising and is relied on by over 10,000 public and private companies each year.”

Anderson's findings emphasize "“demographic markers of sophistication, such as choice of law firm and headquarters location, predict the jurisdictional choice about as well as state law or the business attributes of companies. Companies with more demographic markers of sophistication tend to choose Delaware incorporation, and companies with fewer demographic markers of sophistication tend to choose home-state incorporation.” And these findings persist after including many of the obvious controls.

Anderson interprets these results to imply that "the choice of legal representation is an important missing variable in models of incorporation decisions. The fact that the choice of law firms drives the jurisdictional choice has far broader implications. If law firms drive the jurisdictional choice they may steer companies toward states that serve the law firms’ own interests without regard to the quality of legal rules or the needs of the client. When the state chosen is Delaware, as it often is, there are few alternative jurisdictions that shareholders and managers can agree on. As a result, companies inadvertently fall into a 'governance trap' from which reincorporation out of state is nearly impossible. This interpretation would suggest that Delaware’s carefully calibrated positioning in the charter market has largely eliminated meaningful competition among the states for the quality of corporate law."

Prof. Frank R. Cross (1955-2019)

It is with sadness and a widely-shared sense of loss that I pass along the following note (from Prof. Stephen Griffin) on Frank Cross' passing.

"I wanted to record the passing of my wonderful friend Frank Cross, a longtime faculty member at the University of Texas, Austin. Other obituaries will recall that he was one of the best (NDT) college debaters of the 1970s and a gifted teacher. I wish to highlight the tremendous loss to academia and legal scholarship. Frank contributed enormously by continually challenging himself. Already a UT faculty member, he embarked on a course of study in statistics that transformed his work and gave us new insights. He began an extraordinary run of publication in leading law reviews with an article that questioned work that downplayed the contribution of lawyers to the economy. He published many noteworthy books including Decision Making in the U.S. Courts of Appeals (2007); Measuring Judicial Activism (2009)(with Stefanie A. Lindquist); The Failed Promise of Originalism (2012); The Theory and Practice of Statutory Interpretation (2012); and Constitutions and Religious Freedom (2015). Frank contributed as long as he could. Robert Prentice, his friend on the UT faculty, said in his obituary: 'Frank bravely battled adrenoleukodystrophy his entire adult life. This cruel disease slowly robbed Frank of his ability to move, but never took away his love of life or sense of humor. ALD ultimately defeated Frank, but it did not define him.' Everyone who knew Frank will miss him. He had this rare gift: an independent mind and an independent heart."

Model Options For Log-Transformed Dependent Variables

This month's Stata News (34:2) includes a quite helpful (and instructional--with examples and coding) discussion about some classic challenges that arise from a log-transformed dependent variable. First, the need to log-transform dependent variables is exceedingly common in ELS (e.g., punitive damages models). Second, when log transformations are necessary interpretation challenges arise as few among us think in terms of, e.g., "log punitive damages" or "log wages." The essay walks readers through various model options (regression and poisson) and how to exploit the margins command to assist with interpreting results even further.

How to Deal with an Ordinal Dep Var When You Need/Want to Include Fixed Effects?

A recent question posed on StataList has stimulated an interesting discussion (here) as well as a call for FE ordinal models. The specific question:

"So to sum up my question: Is it possible to 'argue' that my ordinal dependent variables can be treated as continuous and I can therefore use FE for them as well? If yes - could you point me towards the appropriate literature/methodology? Or is this not possible and I need to use logit/probit for the ordinal dependent variables?"

The core of the question--can an ordinal dependent variable be treated as "continuous"--comes up most frequently in the survey context where a response involves a Likert Scale (typically a 5- or 7-point scale -- or an even-numbered scale that pushes respondents off a mid-point response). While reasonable minds can--and do--differ on what modeling options may plausibly exist, at the very least, and as a first step, a researcher would need to closely examine how any ordinal dependent variable distributes as this may itself limit model selection options.