Current Research.
My current projects include the following:
“Sticky Charters? The Surprisingly Tepid Embrace of Officer-Protecting Waivers in Delaware”
With Eric Talley
This article investigates the reaction to a much-heralded 2022 legal reform in Delaware that permitted a corporation’s charter to exculpate its officers from monetary exposure for breaching their fiduciary duty of care. To isolate reactions to this statutory reform, we make extensive use of generative AI tools to identify and interpret charter amendments that introduce officer-facing waivers. We find a surprisingly tepid rate of uptake among Delaware corporations through the end of the first post-reform year, notwithstanding widespread predictions that corporate entities would quickly storm the exculpation exits once permitted to do so.
Our study makes two contributions to the empirical study of law—one methodological and the other substantive. Methodologically, we develop a novel and powerful use case for deploying large language models as a tool for distilling and extracting technical provisions from legal texts (in this case corporate charters), allowing us to accelerate and streamline an endeavor that would have consumed substantial time and resources using traditional human-labeling protocols. Notably, and in a significant departure from previous machine learning tools, ChatGPT accomplishes this set of tasks without the need for training data specifically tailored for this purpose. Perhaps most impressive is the accuracy with which ChatGPT can operate: we perform several validation exercises, which generally indicate that our proposed method yields highly accurate results.
Substantively, we demonstrate that Delaware’s statutory invitation attracted few takers in its first year of effectiveness: specifically, we show that only a modest minority of eligible corporations amended their charters to include officer-facing waivers. This tepid rate of uptake, moreover, persists even in corporations that went public after the reform’s effective date, suggesting that transaction costs are unlikely to be the culprit for the listless response. Furthermore, we show that stock market investors also exhibited a muted response to the reform, raising doubts about whether firms feared amendments would trigger an adverse market reception. Our results seem more consistent with alternative explanations, ranging from the plausible irrelevance of Delaware’s reform, to a risk-averse reticence among corporate managers who rationally adopt a “wait and see” approach to gauge how such waivers are received by both courts and corporate stakeholders while keeping their options open.
“Declassifying Bylaws”
With Cathy Hwang, Yaron Nilli and Eric Talley
In this follow-up project to Cleaning Corporate Governance (170 University of Pennsylvania Law Review 1), we assemble a dataset containing the complete bylaws histories of ~3,000 publicly traded companies. We will use this dataset for various purposes, including replication studies in which we investigate the validity of several of the most cited studies in empirical law & finance.
“Incomplete Contracts and Future Data Usage”
With Talia Gillis and Dan Svirsky
Most major jurisdictions require websites to provide customers with privacy policies. While privacy policies' most important function is to provide consumers with a description of online service providers' current privacy practices, we argue that these policies also serve a second, often-overlooked function: they allocate among online services and consumers residual property rights over data, and along with this, the power to decide whether a service can modify its privacy practices and use consumer data in novel ways. We further argue that a central feature of the E.U.'s General Data Protection Regulation (GDPR), one of the most comprehensive and far-reaching privacy regulatory regimes, is to restrict privacy policies from allocating broad rights for future data usage to service providers. We provide a theoretical explanation for this type of regulatory intervention by adapting standard models of incomplete contracts to privacy policies. We then use the model to explain how U.S. firms reacted to the GDPR. We show that U.S. websites with E.U. exposure were more likely to change their U.S. privacy policies to have less stringent and more lenient modification rules. Among websites that do not have E.U. exposure, we see the opposite trend. These results suggest that websites sought to increase their share of residual rights over data usage in the wake of GDPR.