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It's an interesting mix of law professors and business professors, empirical projects, and the opposite.  And bitcoin!  Ranked by most downloads since being filed in the last 60 days.

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It has been some time since we've done a download list, and it does seem that SSRN has gone off the boil a bit as a source of both downloads, and a source of good information about interesting new articles.  Still, these below do look like they could deserve a look!

RECENT TOP PAPERS for all papers first announced in the last 60 days  
14 Mar 2014 through 13 May 2014

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By now, the risk that a distressed European nation such as Greece might leave the Eurozone and thereby spark global economic calamity is well known. Regular readers of this blog may even privately relish the prominence of the issue. Not since the days of the gold standard has international monetary policy come so close to being a socially acceptable topic of dinner conversation.

As I noted in my first post, observers rightly perceive the Eurozone sovereign debt crisis to be driven by political and economic forces. But many consequences of a euro breakup would be determined by law, including sources of American (specifically New York) private law.

This is a complex issue. I try to address it more fully in a new article, "Boilerplate Shock," which I've just posted on SSRN.

In brief, and to continue picking on Greece, one key question in the event of a euro breakup would be: would a court recognize an attempt by Greece to convert its euro-denominated debt into its new currency, or would it instead insist that Greece pay in euros, the currency of contract? The answer is important because, as a practical matter, requiring payment in euro would be tantamount to forcing a default.

That's the familiar narrative, anyway. And I agree. But I believe that the ubiquity of boilerplate terms in these bonds—specifically, clauses selecting governing law (usually foreign) and currency of payment (euro)—is likely to make any dispute over redenomination even more damaging than this suggests.

In the article, I argue that the sparse literature on the question of redenominating sovereign bonds overlooks some sources—especially cases interpreting New York contract law and private international law—that, if extended to Eurozone sovereign bonds, could surprise the market and cause serious global repercussions. I argue that the reason for this is not only that the dominant view overlooks what are likely controlling sources of law. It is that standardization of contract terms across the Eurozone sovereign lending market makes the stakes of surprise that much higher.

If Greece's attempt to redenominate its bonds is declared a default, then the fact that the operative terms in Italian, Spanish, Irish, etc. sovereign bonds are the same or similar makes markets likely to demand unsustainable premiums from those countries. Capital and investor flight could be very rapid. We have seen several previews of this movie over the past few years in the Eurozone, and each time official-sector bailout institutions have saved the day. But the European Union/European Central Bank and IMF probably do not have the resources to stop a broad-based bank run of this nature, to say nothing of the political support necessary to attempt it.

Maybe none of that will happen. Nevertheless, the potential for uniform contract terms to create risk not just to individual third parties but to securities markets seems likely to grow at least as fast as those markets. Using Eurozone sovereign bonds as a case study, I introduce the term "boilerplate shock" to describe the potential for standardized contract terms—when they come to govern the entire market for a given security—to transform an isolated default on a single contract into a threat to the market of which it is a part, and, possibly, to the economy in general. My larger objective here is to foster a discussion of the potential for securities law and private-sector securities lawyers to manage (or alternatively, to contribute to) systemic risk.

I've posted an abstract below and will be returning to the subject. I look forward your comments.

Boilerplate Shock abstract:

No nation was spared in the recent global downturn, but several Eurozone countries arguably took the hardest punch, and they are still down. Doubts about the solvency of Greece, Spain, and some of their neighbors are making it more likely that the euro will break up. Observers fear a single departure and sovereign debt default might set off a “bank run” on the common European currency, with devastating regional and global consequences.

What mechanisms are available to address—or ideally, to prevent—such a disaster?

One unlikely candidate is boilerplate language in the contracts that govern sovereign bonds. As suggested by the term “boilerplate,” these are provisions that have not been given a great deal of thought. And yet they have the potential to be a powerful tool in confronting the threat of a global economic conflagration—or in fanning the flames.

Scholars currently believe that a country departing the Eurozone could convert its debt obligations to a new currency, thereby rendering its debt burden manageable and staving off default. However, this Article argues that these boilerplate terms—specifically, clauses specifying the law that governs the bond and the currency in which it will be paid—would likely prevent such a result. Instead, the courts most likely to interpret these terms would probably declare a departing country’s effort to repay a sovereign bond in its new currency a default.

A default would inflict damage far beyond the immediate parties. Not only would it surprise the market, it would be taken to predict the future of other struggling European countries’ debt obligations, because they are largely governed by the same boilerplate terms.  The possibility of such a result therefore increases the risk that a single nation’s departure from the euro will bring down the currency and trigger a global meltdown.

To mitigate this risk, this Article proposes a new rule of contract interpretation that would allow a sovereign bond to be paid in the borrower’s new currency under certain circumstances. It also introduces the phrase “boilerplate shock” to describe the potential for standardized contract terms drafted by lawyers—when they come to dominate the entire market for a given security—to transform an isolated default on a single contract into a threat to the broader economy. Beyond the immediate crisis in the Eurozone, the Article urges scholars, policymakers, and practitioners to address the potential for boilerplate shock in securities markets to damage the global economy.

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We haven't had a download list in a while; let's rectify that with the SSRN 60 days securities law article ranking.  Your mileage may, of course, vary, but here's what's intriguing that crowd these days:

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The 2011 symposium edition of the Berkeley Business Law Journal on Dodd-Frank is out.  I would like to thank the editors and the Berkeley Center for Law, Business and the Economy for inviting me to a great conference.  My contribution, Credit Derivatives, Leverage, and Financial Regulation’s Missing Macroeconomic Dimension is now up on ssrn.  Here is the abstract:

Of all OTC derivatives, credit derivatives pose particular concerns because of their ability to generate leverage that can increase liquidity - or the effective money supply - throughout the financial system. Credit derivatives and the leverage they create thus do much more than increase the fragility of financial institutions and increase counterparty risk. By increasing leverage and liquidity, credit derivatives can fuel rises in asset prices and even asset price bubbles. Rising asset prices can then mask mistakes in the pricing of credit derivatives and in assessments of overall leverage in the financial system. Furthermore, the use of credit derivatives by financial institutions can contribute to a cycle of leveraging and deleveraging in the economy.

This Article argues for viewing many of the policy responses to credit derivatives, such as requirements that these derivatives be exchange traded, centrally cleared, or otherwise subject to collateral or 'margin' requirements, in a second, macroeconomic dimension. These rules have the potential to change – or at least better measure – the amount of liquidity and the supply of credit in financial markets and in the 'real' economy. By examining credit derivatives, this Article illustrates the need to see a wide array of financial regulations in a macroeconomic context. 

Understanding credit derivatives’ macroeconomic effects has implications for macroprudential regulatory design. First, regulations that address financial institution leverage offer central bankers new tools to dampen inflation in asset markets and to fight potential asset price bubbles. Second, even if these regulations are not used primarily as monetary or macroeconomic levers, changes in these regulations, including changes in the effectiveness of these regulations due to regulatory arbitrage, can have profound macroeconomic effects. Third, the macroeconomic dimension of credit derivative regulation and other financial regulation argues for greater coordination between prudential regulation and macroeconomic policy.

Comments by e-mail are always welcome.

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I recently saw the movie, Margin Call, which is currently playing in theaters and is available on demand at Comcast. There are curretly 34 reviews of it by viewers at imdb, where it has a rating of 7.3 out of 10.

I also just finished reading this paper, Fear, Greed, and Financial Crisis: A Cognitive Neuroscience Perspective, prepared for a forthcoming handbook on systemic risk. This chapter is by finance professor Andrew Lo, who is the director of the MIT laboratory for financal engineering. He also wrote another excellent paper which Glom readers are likely to find of interest, namely Reading About the Financial Crisis: A 21-Book Review, that was prepared for the Journal of Economic Literature.

In the interests of full disclosure, I taught at Temple law school a seminar titled Law, Emotions, and Neuroscience and co-taught at Yale law school with professor Dan Kahan a seminar titled Neuroscience and the Law. The seminars covered some basic materials about affective,cognitive, and social neuroscience before analyzing the potential and limits of applications to business law, conflict resolution, criminal law, ethics,  evidence, morality, paternalism, and social policy. Media coverage of neuroscience and law has a tendency to focus almost exclusively on such controversial issues as free will and responsibility in the criminal law context. Glom readers are more likely to focus on neuroeconomics and neurofinance, two nascent fields that ask how human brains engage in JDM (Judgment and Decision Making) in general and over time and under risk in particular.

Also, as cognitive neuroscientist Michael Gazzaniga recently stated: responsibility, like generosity, love, pettiness, and suspiciousness, is a strongly emergent property, which although being derived from biological mechanisms, has fundamentally distinct properties, just like the case of ice and water. The press and the public also seem to be fascinated with very colorful fMRI brain scans because they like the idea of being as the Wall Street Journal science writer, Sharon Begley, calls them: cognitive papparazi.

My system 1 believes in synchronicity, so this post, as evidenced by its title's homage to Lo's chapter, approaches the movie Margin Call from a cognitive neuroscience perspective informed by Lo's chapter. Lo provides a brief history of what we know about brains. He then explains how fear and the amygdala can exacerbate financial crises. He also demonstrates how the reward of money appears to share the same neural system and the release of the neuortransmitter dopamine into the nucleus accumbens as these rewards do: beauty, cocaine, food, music, love, and sex.

Lo proceeds to discuss a neurophysiological explanation for Kahneman and Tversky's experiment demonstrating people's aversion to sure loss. Lo proposes a neuroscientifically informed view of rationality that differs very much from an economic rational expectations conception, with the key difference being the role that emotion plays in JDM. Lo extends his analysis from individuals to groups by explaining the neurophysiology of mirror neurons, theories of mind, social interactions, and the efficient markets hypothesis. He concludes his neuroscience survey by describing the marvels and limits of the human prefrontal cortex, also known as the "executive brain." Of particular interest to Glom readers is decision fatigue, documented recently among judges rendering favorable parole decisions around 65% of the time at the start of and close to 0% by the end of each of 3 daily sessions that were separated by 2 food breaks (a late morning snack and lunch). This empirical finding that parole rates increased after food breaks is consistent with recent experimental research finding that glucose can reverse decision fatigue and the common adage to not make important decisions when tired. 

Lo provides several practical and reasonable suggesions based upon cognitive neurosciences about how policymakers can engage in financial reform to deal with systemic risk. He concludes by advocating that financial economists utilize the great recession to re-conceptualize, rethink, and revamp neoclassical economics by forging a consilience between the neurosciences and financial economic theory. Building a deeper and better understanding of economic phenomena through improved economic models and intellectual frameworks can and should lead to a more appropriate financial regulatory infrastructure.

And now onto a few comments about the movie Margin Call. Without giving away the plot for those who may want to see it without any knowledge of its ending, this movie raises ethical and moral questions about individual versus social optimality, trading on the basis of private information, panic selling, professional codes or norms of behavior, and the costs a company may impose on society and pay to others to survive. There is certainly lots of fear and greed on display in this film. Set over the course of a day and sleepless night in NYC, the movie viscerally illustrates various forms of JDM and how individuals and groups of individuals can persevere under stress and time pressures. It is a movie that can and should provoke discussion about what could have been done differently by individuals, financial firms, and regulators. It is a film that I'm going to put on the list of movies at the start of the chapter about business law in the text, Law and Popular Culture: Text, Notes, and Questions (LexisNexis Matthew Bender, 2007) by David Ray Papke, Melissa Cole Essig, Christine Alice Corcos, Lenora P. Ledwon, Diane H. Mazur, Carrie Menkel-Meadow, Philip N. Meyer, Binny Miller, and myself that we are revising for a second edition.

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Last week, Christine and I were deluged with emails announcing our appearance on various SSRN top ten lists for various of our articles.  I evinced some surprise that there were so many of these lists, and that they didn't appear to be too selective, especially given their seeming affection for the humble work of the likes of me, who has made a new year's resolution to actually pass that online remedial grammar class I keep retaking (the most selective and elite lists in the world would still clearly accomodate my co-blogger).

Anyway, you can't say that the Glom can't get results.  We'll let SSRN explain, as they did in a recent email to me:

We apologize for sending you one or more incorrect email messages last week. While testing some new functionality, our servers sent "Top Ten" emails to the top one hundred downloaded papers in certain ejournals instead of the top ten.

Heck, I'm surprised I made so many top hundreds.  We'll see if SSRN amends that to a top ten thousand next week.

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To get on this list, you'd need to add the corporate law key designation K22, which I, for one, never do.  But you'll note that other than Lucian Bebchuk and Roberta Romano, the authors are economists, and only some of the articles look interesting, depending on how you feel about accounting standards  Without further ado, the top 11:

Date Posted: September 21, 2004
Last Revised: April 17, 2009
Accepted Paper Series
16009 downloads

International Corporate Governance
ECGI - Finance Working Paper No. 05/2003; and Tuck-JQFA Contemporary Corporate Governance Issues II Conference
Diane K. Denis and John J. McConnell
Purdue University - Krannert School of Management and Purdue University
Date Posted: July 30, 2002
Last Revised: April 30, 2003
Working Paper Series
13522 downloads

Remuneration: Where We've Been, How We Got to Here, What are the Problems, and How to Fix Them
Harvard NOM Working Paper No. 04-28; ECGI - Finance Working Paper No. 44/2004
Michael C. Jensen , Kevin J. Murphy and Eric G. Wruck
Harvard Business School , University of Southern California - Marshall School of Business and Econalytics
Date Posted: July 5, 2004
Last Revised: September 23, 2004
Working Paper Series
12177 downloads

Board Models in Europe - Recent Developments of Internal Corporate Governance Structures in Germany, the United Kingdom, France, and Italy
ECGI - Law Working Paper No. 18/2004, European Company and Financial Law Review, pp. 135-168, 2004, Company & Securities Law Review, Vol. 1, pp. 217-245, 2005, VOC 1602-2004: 400 YEARS OF COMPANY LAW, Ella Gepken-Jager, Gerard van Solinge, Levinus Timmerman, eds., Deventer (Kluwer), 2005
Klaus J. Hopt and Patrick C. Leyens
Max Planck Institute of Foreign Private and Private International Law and University of Hamburg - Institute of Law and Economics, Faculty of Law
Date Posted: January 20, 2004
Last Revised: February 28, 2006
Accepted Paper Series
11398 downloads

The Sarbanes-Oxley Act and the Making of Quack Corporate Governance
NYU, Law and Econ Research Paper 04-032; Yale Law & Econ Research Paper 297; Yale ICF Working Paper 04-37; ECGI - Finance Working Paper 52/2004
Roberta Romano
Yale Law School
Date Posted: September 27, 2004
Last Revised: July 23, 2005
Working Paper Series
7394 downloads

Corporate Governance and Earnings Management
Sonda Marrakchi Chtourou , Jean Bédard and Lucie Courteau
University of Sfax , Université Laval - École de comptabilité and Free University of Bozen-Bolzano - School of Economics
Date Posted: June 29, 2001
Last Revised: May 22, 2003
Working Paper Series
6805 downloads

Audit Committee, Board of Director Characteristics, and Earnings Management
NYU, Law and Economics Research Paper No. 06-42
April Klein
New York University - Department of Accounting, Taxation & Business Law
Date Posted: November 22, 2000
Last Revised: April 30, 2008
Working Paper Series
6244 downloads

Agency Costs of Overvalued Equity
ECGI - Finance Working Paper No. 39/2004, Harvard Business School NOM Working Paper No. 04-26, Financial Management, Vol. 34, No. 1, Spring 2005
Michael C. Jensen
Harvard Business School
Date Posted: March 29, 2004
Last Revised: May 6, 2009
Accepted Paper Series
6109 downloads

Mandatory IFRS Reporting Around the World: Early Evidence on the Economic Consequences
ECGI - Finance Working Paper No. 198/2008, Chicago GSB Research Paper No. 12
Holger Daske , Luzi Hail , Christian Leuz and Rodrigo S. Verdi
University of Mannheim , University of Pennsylvania - The Wharton School , University of Chicago - Booth School of Business and Massachusetts Institute of Technology (MIT)
Date Posted: October 25, 2007
Last Revised: September 8, 2008
Working Paper Series
6098 downloads

The Case for Increasing Shareholder Power
Harvard Law Review, Vol. 118, No. 3, pp. 833-914, January 2005, Harvard Law and Economics Discussion Paper No. 500
Lucian A. Bebchuk
Harvard University - Harvard Law School
Date Posted: March 17, 2003
Last Revised: April 28, 2009
Accepted Paper Series
5693 downloads

Economic Consequences of Financial Reporting and Disclosure Regulation: A Review and Suggestions for Future Research
Christian Leuz and Peter D. Wysocki
University of Chicago - Booth School of Business and University of Miami School of Business Administration
Date Posted: March 13, 2008
Last Revised: May 7, 2008
Working Paper Series
5587 downloads

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Open source and peer production ideas can also improve law teaching. There have been some very helpful trends already in this direction. Many legal scholars post articles on teaching and even some suggested exercises on SSRN. Larry Cunningham (GW) edits the SSRN 'Law Educator' e-Journal. In addition, there has been some sharing of syllabi on the AALS New Law Profess listserv.

It might be time to think about a separate non-commercial website devoted just to sharing teaching materials. SSRN is great, but the disadvantages are that teaching materials can get lost in the mass of scholarly papers, and professors might appreciate a password-protected site that students can’t access. But a new website could have many advantages of SSRN. For example, download counts could be used as one metric of the success of teaching materials. This could be enhanced with a system for tracking how many professors adopted materials. These aren't the only metrics for what makes a good teacher, but they could help.

Of course, professors need to take care not just to cut and paste from materials. I remember a story from about two years ago of a state bar disciplining an adjunct for cutting and pasting from old exams.

Perhaps there is a site already out there of which I'm not aware.

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My colleague Andrea Matwyshyn noticed that a couple of her papers up on SSRN had been retagged as published during the EFMA 2003 Helsinki Meetings.  So has one of mine.  So has one of Gordon's.  So, as of this writing, has one of Bernard Black's.  Neither Andrea nor I were at the EFMA 2003 Helsinki meetings, so we can't say whether we would have seen Bernie or Gordon there, but we are beginning to think something fishy is going on.

Emails sent to SSRN.  No explanation yet about our surprising yen for the Helsinki of 2003.

UPDATE:  Here's a response from Gregg Gordon of SSRN:

SSRN has not been hacked. We are posting corrections to our new Simple Submission Beta system and have an error in our Oracle PIP table. I am very sorry for the inconvenience and appreciate your patience while we correct the problem. If you have any questions please email me directly. There is no problem with any data, we just posted one fix, and I promise that we will not sleep until the error is corrected. Gregg Gordon

[email protected]

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Steve Bainbridge has joined my appeal for SSRN to develop an RSS feed. When I contacted SSRN in May, I was told that they were working on "RSS journal subscription feed functionality" but Steve correctly notes that this would merely replicate emails in the feed reader. As a result, we would still get too much redundant content. Steve's demand:

In sum, instead of reading dozens of emails a week, I want to have a single RSS feed I can browse in Google Reader. Now.

This would be great. I hope SSRN is listening.

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I spent some time paring my bloated subscription list on SSRN today after receiving way too many emails that I simply deleted. SSRN is a great service, but I am tired of the email delivery system. Scrolling through email after email -- many with overlapping content -- is too cumbersome. SSRN provides RSS feeds for individual author pages, but other subscriptions are not available via RSS. I wrote to SSRN and mentioned this, and I was told

Unfortunately, at this time, we only provide RSS feeds for author pages. We do plan to add RSS journal subscription feed functionality in future development.

Hope springs.

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So begins Tracey George's post over at ELS, where she's guest blogging this week.  She reminds us that few topics produce more downloads than a paper on law school rankings, and especially one that introduces a new ranking system.  Last year, Tracey wisely wrote such a paper, ranking schools based on their empirical legal scholarship (ELS).  860 downloads as of today.  Hmmm, not bad.  I remember Emory doing relatively well in that ranking, so I circulated the abstract among my faculty when the paper first came out.  Tracey has now revised the paper (and assured me that Emory would do even better in this revised version) and set up a tantalizing schedule of upcoming blogging episodes.  Over the course of the week, she'll be discussing her three measures of institutional ELS success--professors with social science doctorates, professors with second appointments in social science departments, and articles in ELS-oriented publications.  In the spirit of reality TV everywhere, she's going to make us wait until Friday to see the revised rankings.  Stay tuned.

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As promised yesterday, my "branding effects" paper is now available on SSRN. Here.

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