While empirical work continues to proliferate across an growing array of legal "silos," lawyers (and some law professors) increasingly need to engage with these studies to understand their implications for legal practice and policy implications. This is especially true for corporate governance scholars (and practitioners). As empirical corporate governance work reaches a wider audience, the work intersects with an ever-increasing number of individuals "not trained in econometrics and statistical methods."
This is a problem, and a recent paper endeavors to contribute to a solution. In A Lawyer's Guide to Empirical Corporate Governance, Ofer Eldar (Duke) sets out to provide a general guide that overviews "key empirical strategies for evaluating the relationship between governance and shareholder value, and to demonstrate to lawyers how they can engage with their weaknesses." Critically, the paper identifies a set of three key comparisons that dominate empirical corporate governance scholarship: "(1) comparing firms with and without the governance provisions, (2) evaluating the value of firms before and after adoptions or removals of governance provisions, and (3) evaluating what happens to shareholder value after a legal change."
While papers like these may not be standard empirical legal scholarship, they nonetheless contribute to the field more generally by helping to make empirical scholarship a bit more accessible to those lacking formal empirical training. The abstract follows.
"Empirical studies in corporate law have proliferated in the last two decades, and have had a major impact on legal practice and policy relating to corporate governance. As a result, lawyers increasingly engage with these studies in order to understand their implications for legal practice and policy. This is often challenging because most lawyers are not trained in econometrics and statistical methods, and thus, there is a risk that they misinterpret these studies and their implications. These studies, while critical for evaluating different corporate governance regimes, suffer from well-known weaknesses. The purposes of this guide are to provide an overview of the key empirical strategies for evaluating the relationship between governance and shareholder value, and to demonstrate to lawyers how they can engage with their weaknesses. The main theme of the guide is that largely all empirical strategies are based on three key intuitive comparisons: (1) comparing firms with and without the governance provisions, (2) evaluating the value of firms before and after adoptions or removals of governance provisions, and (3) evaluating what happens to shareholder value after a legal change. By identifying these basic comparisons and the roles they play in the key methodologies for evaluating shareholder value, lawyers will be better positioned to assess empirical studies and evaluate their implications for legal policy."
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