上海交通大学：《外国法专题（比较公司法）》课程教学资料（学生展示）Enforcement（CAI Mengqi）

ENFORCEMENT Part One CAI Mengqi 5/30/2014

Part One CAI Mengqi 5/30/2014 ENFORCEMENT

Enforcement Investor protection requires both law and the effective enforcement of law. Academic research underscores the importance of enforcement. Page·2

Page  2 Enforcement  Investor protection requires both law and the effective enforcement of law.  Academic research underscores the importance of enforcement

Division of Public Enforcement and Private Enforcement Public enforcement is usually defined by a system in which the law enforcers will investigate violations and prosecute violators as government employees. Under private enforcement,private individuals and firms would investigate violations,apprehend violators,and conduct legal proceedings to redress violations. Page3

Page  3 Division of Public Enforcement and Private Enforcement  Public enforcement is usually defined by a system in which the law enforcers will investigate violations and prosecute violators as government employees.  Under private enforcement, private individuals and firms would investigate violations, apprehend violators, and conduct legal proceedings to redress violations

Relative Value of Public Enforcement and Private Enforcement Becker and Stigler Landes and Posner ■LLS Howell E.Jackson and Mark J.Roe Reference: Becker,G.S.,Stigler,G.J.(1974).Law enforcement,malfeasance,and compensation ofenforces. Landes,W.M.,Posner,R.(1974).The private enforcement of law. Porta,R.,Lopez-de-Silanes,F.,&Shleifer,A.(2006).What works in securities laws?. Jackson,H.E.,Roe,M.J.(2009).Public and private enforcement of securities laws:Resource- based evidence. Page4

Page  4 Relative Value of Public Enforcement and Private Enforcement  Becker and Stigler  Landes and Posner  LLS  Howell E.Jackson and Mark J.Roe Reference:  Becker, G. S., & Stigler, G. J. (1974). Law enforcement, malfeasance, and compensation of enforces.  Landes, W. M., & Posner, R. (1974). The private enforcement of law.  Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2006). What works in securities laws?.  Jackson, H. E., & Roe, M. J. (2009). Public and private enforcement of securities laws: Resource- based evidence

Relative Value of Public Enforcement and Private Enforcement Becker and Stigler In the public enforcement,the enforcer is rewarded by a fixed,flat wage. o The essence of private enforcement is compensation of enforcers on performance,or by a piece-rate or a bounty, instead of by a straight salary. Page5

Page  5 Relative Value of Public Enforcement and Private Enforcement  Becker and Stigler  In the public enforcement, the enforcer is rewarded by a fixed, flat wage.  The essence of private enforcement is compensation of enforcers on performance, or by a piece-rate or a bounty, instead of by a straight salary

Relative Value of Public Enforcement and Private Enforcement Becker and Stigler A private enforcement system is to be preferred because it (a)reduces the cost of monitoring public enforcers; (b)avoids the need to pay them high wages; (c)removes the risk of malfeasance. Page·6

Page  6 Relative Value of Public Enforcement and Private Enforcement  Becker and Stigler  A private enforcement system is to be preferred because it (a) reduces the cost of monitoring public enforcers; (b) avoids the need to pay them high wages; (c) removes the risk of malfeasance

Relative Value of Public Enforcement and Private Enforcement -Landes and Posner Optimal public enforcement is defined as a social planner's unconstrained social-welfare-maximizing problem through the optimal choice of fines and the probability of apprehension and conviction. Private enforcement regime will result in overinvestment in law enforcement. Page·7

Page  7 Relative Value of Public Enforcement and Private Enforcement  Landes and Posner  Optimal public enforcement is defined as a social planner's unconstrained social-welfare-maximizing problem through the optimal choice of fines and the probability of apprehension and conviction. Private enforcement regime will result in overinvestment in law enforcement

Relative Value of Public Enforcement and Private Enforcement LLS Highlight the significance of private enforcement c We examine the effect of securities laws on stock market development in 49 countries.We find almost no evidence that public enforcement benefits stock markets,and strong evidence that laws facilitating private enforcement through disclosure and liability rules benefit stock markets. Page8

Page  8 Relative Value of Public Enforcement and Private Enforcement  LLS  Highlight the significance of private enforcement  We examine the ef ect of securities laws on stock market development in 49 countries. We find almost no evidence that public enforcement benefits stock markets, and strong evidence that laws facilitating private enforcement through disclosure and liability rules benefit stock markets

Relative Value of Public Enforcement and Private Enforcement Howell E.Jackson and Mark J.Roe oIn principle,both enforcement mechanisms could have serious defects and strong advantages. Howell E.Jackson and Mark J.Roe constructed two categories of resource-based public enforcement intensity.Resources are measured by staffing levels(per million of population)and budgets(per billion US$of GDP). Public enforcement correlated significantly with key financial outcomes,such as stock market capitalization,trading volumes,the number of domestic firms and IPOs. Page9

Page  9 Relative Value of Public Enforcement and Private Enforcement  Howell E. Jackson and Mark J. Roe In principle, both enforcement mechanisms could have serious defects and strong advantages.  Howell E. Jackson and Mark J. Roe constructed two categories of resource-based public enforcement intensity. Resources are measured by staffing levels (per million of population) and budgets (per billion US$ of GDP).  Public enforcement correlated significantly with key financial outcomes, such as stock market capitalization, trading volumes, the number of domestic firms and IPOs

Relative Value of Public Enforcement and Private Enforcement Howell E.Jackson and Mark J.Roe Public enforcement is no less valuable for financial market outcomes than private enforcement such as disclosure. o Liability-based private enforcement is perhaps less important,given the weak results for private enforcement's liability measure. Page10

Page  10 Relative Value of Public Enforcement and Private Enforcement  Howell E. Jackson and Mark J. Roe  Public enforcement is no less valuable for financial market outcomes than private enforcement such as disclosure.  Liability-based private enforcement is perhaps less important, given the weak results for private enforcement's liability measure