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http://hdl.handle.net/2451/26000
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| Title: | Trust Law, Corporate Law, and Capital Market Efficiency |
| Authors: | Sitkoff, Robert H |
| Issue Date: | 1-Jan-2003 |
| Series/Report no.: | CLB-06-027 |
| Abstract: | In both the publicly-traded corporation and the private donative trust a
crucial task is to minimize the agency costs that arise from the
separation of risk-bearing and manage-ment. But where the law of
corporate governance evolved in the shadow of capital- market checks on
agency costs, trust governance did not. Thus, even more than that of
close corporations, the law and study of private trusts offers an
illuminating counterfac-tual—a control, as it were—for a
playful thought experiment about the importance of capital market
efficiency to the law and study of public corporations. The animating
idea for this essay is that many of the differences on the agency costs
frontier between the public corporation and the private donative trust
can be roughly attributed to their relative positions in modern capital
markets and the related disparity in their residual claimants’
ease of exit. Among other things, this approach reveals a correlation
between the trust law model and the views of corporate law scholars who
doubt the ECMH and its implica-tions for corporate governance. The essay
also discusses the use of market data for as- sessing breach and damages
in corporate and trust litigation and for empirical evaluation of
theoretical scholarly analysis in both fields. More generally,
comparison of the gov-ernance of the public corporation and the private
donative trust brings into view the im-portance of relative price
efficiency for the modern approach to corporate governance. |
| URI: | http://hdl.handle.net/2451/26000 |
| Appears in Collections: | NYU Pollack Center for Law & Business Working Papers
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