Judicial Efficiency Research Articles

The Effect of a Complex Ownership Structure and Judicial Efficiency on Leverage: Evidence from Pakistani Listed Companies

ABSTRACTWe explore the impact of complex ownership structure and judicial efficiency on firm leverage at Pakistani pyramid firms. Ratio of controlling to ownership rights is much higher at Pakistani firms than in other economies, which motivates us to study its impact on leverage. Our results reveal that complex internal structure at Pakistani pyramid firms is positively related to leverage. We find that the presence of efficient courts weaken the impact of complex ownership structure on leverage at pyramid firms. Contrary to the literature, we find that the political connections of pyramid firms in Pakistan are not related to corporate leverage.

The Efficiency of the Italian Judicial System: A Two Stage Data Envelopment Analysis Approach

During the last two decades there was great attention for improved performance in the public sector. We know how important a good judicial system is: it permits to keep the peaceful coexistence between the citizens of a nation and, above all, the rights and duties that are necessary for each. In this paper our aim is to examine the Italian judicial efficiency, to check any territorial differences. For this purpose we use a two stage data envelopment analysis (DEA) model. In the first stage we evaluate performance of the 140 Ordinary Courts by mean of DEA, while in the second stage we explore determinant of efficiency/inefficiency using fractional regression model. Before doing this, we will prepare the reader presenting the basic concepts of efficacy and efficiency, explaining the method DEA and its various applications and finally we will also talk about the literature on the efficiency of the judiciary, which is a topic in Italy, despite the numerous ISTAT data, it did not find the right recognition. A bit will also be carried out on the international literature on the subject. At the end of all this will be shown in practical terms what has been done.

Ownership structure, investors’ protection and corporate valuation: the effect of judicial system efficiency in family and non-family firms

Research on the effect of ownership structure on firm performance shows no convergent evidence concerning the sign and form of the above-mentioned relationship. Similarly, there is no homogeneous evidence documenting family ownership concentration is always positively or negatively correlated with firm value, or irrelevant. This paper analyses whether and how the de facto investor protection provided by the judicial system affects the relationship between corporate performance and ownership structure in 1314 firms operating in four European countries (Germany, France, Italy, and Spain) over a five-year period, 2010–2014. Moreover, we analyse whether judicial system efficiency influences if and how family firms in the controlling coalition collude for expropriating minority shareholders. Our findings show that the level of shareholder protection, derived from judicial efficiency, is relevant to the relationship between ownership structure and firm performance, thus corroborating literature in that institutional contexts matter in explaining such relations. The results suggest the need for more efficient external mechanisms of corporate governance to facilitate investment in equity capital, thus decreasing the country risk perceived by investors.

Determinants of Judicial Efficiency Change: Evidence from Brazil

AbstractJudicial efficiency matters for economic development. Nevertheless, the determinants of judicial productivity growth are not entirely understood. Using data of Brazil's state courts for the period of 2009 to 2014, this paper analyzes judicial productivity change and its possible determinants over time in a two stage approach. First, data envelopment analysis is used to calculate Malmquist productivity measures which are decomposed in: technical change (frontier-shift effect) and efficiency change (composed of pure efficiency change and scale efficiency change). In the second stage, fixed effect models are estimated to evaluate the associated factors with judicial productivity growth. The first stage results show a slight improvement in judicial productivity trend, which is defined mainly by efficiency change, since technical change deteriorated in the period. The second stage findings suggest the nonexistence of a trade-off between judicial quality and efficiency improvement. Moreover, judges’ remuneration, legal complexity and technological use are correlated with judicial productivity, however not always in the expected direction.

Measuring Efficiency of Brazilian Courts: One Decade Later

It is not uncommon for developing countries to present weak political institutions. These institutions usually lack credibility, independence, transparency and/or, especially, efficiency. Among the most scrutinized ones with regards to these deficiencies is the Judiciary. A lengthy literature shows empirical evidence of the manner by which judicial inefficiency impact economic and social outcomes. This paper aims to measure (in)efficiency of the Brazilian Judiciary and its dynamism in recent years (2009-2015), one decade after the National Council of Justice (CNJ) first made available the data necessary for this kind of investigation. We use DEA (Data Envelopment Analysis), and more specifically, the Malmquist index approach, to analyze the efficiency and productivity change in Brazilian courts during the recent period. The results of this current article may help evaluate whether these recent efforts were useful (somehow) to improve judicial productivity in Brazil. Besides discussing the DEA scores and the evolution of productivity change, we also digress on peer units and target outputs and inputs. We close with a important discussion relating judicial efficiency and judicial quality, and derivations for the creation of public policies to boost judicial efficiency.

'Making Bail': Limiting the Use of Bail Schedules and Defining the Elusive Meaning of 'Excessive' Bail

Every day in the United States, thousands of people are waiting in jail post-arrest prior to any trial or conviction. Thousands wait more than forty-eight hours to first appear in front of a judicial officer who determines their bail. Even more remain in jail unwilling to accept plea bargains or admit guilt but also unwilling or unable to afford bail. These people are often the country’s most poor and most undereducated—often minorities. These people are often arrested for crimes of vice—such as being intoxicated in public, or petty crimes—such as driving with a suspended license. Once arrested, they frequently face harsh conditions while they wait for their first appearance to be assigned bail. Once “heard,” bail is assigned through algebraic expressions hard to understand and in amounts even harder to pay. In an attempt at judicial efficiency and standardization, courts have overly relied on bail schedules while making those assignments, this has resulted in a failure to make individual-by-individual bail determinations and has caused a rise in pretrial detention. Overreliance of these schedules coupled with a lack of guiding precedent from the U.S. Supreme Court has resulted in an excessive bail epidemic. Arbitrary bail procedures in the United States are now so perverse that they have vitiated due process and a presumption of innocence and have defeated the purpose of having an Excessive Bail clause in the United States Constitution. The Supreme Court should take clear action to restore this fundamental right and help end the United States excessive bail epidemic.

О совершенствовании законодательства об уголовной ответственности за вождение в нетрезвом состоянии

With the advent of the risk society and the abolition of the labor education system in China, many misdemeanors have been prescribed in Criminal Code, and the structure of crimes and penalty changed greatly. A series of negative consequences have been triggered. The most typical phenomenon is the behavior of drunk driving is prescribed in the criminal code as the crime. Although this new provision has achieved the unity of social and legal effect, it also brings a series of problems. Firstly, at the legislative level, so many new misdemeanors are prescribed in the criminal code, which will expand the range of crimes and shake the existing criminal law system. Secondly, at the judicial level, many judicial resources are occupied. Four sets of data are obtained by actual investigation. These data indicated that the number of misdemeanor in China has increased sharply every year, and a large amount ofj udicial resources have been squeezed, which seriously affects judicial efficiency. Thirdly, at the social level, once the offender is labeled as «criminal», it means that the offender will be difficult to return to the society, and the recidivism rate will be greatly added. On the other hand, the «crime label» will have a «chain negative effect» on the offender ’s family and family members. In order to effectively solve the negative consequences of the misdemeanor represented by the crime of drunk driving, the corresponding suggestions are proposed as follow: felony and misdemeanors should be punished differently, the balance of criminalization and non-criminalization should be realized, and the crimes should be controlled within the reasonable range. The system of extermination of the criminal record should be constructed in order to eliminate negative consequences caused and to achieve the good operation of law.

Ask Me No Questions and I Will Tell You No Lies: The Insignificance of Leidos before the United States Supreme Court

What if the Supreme Court issued an opinion and no one cared? No one cared who won or lost. No one cared how the question presented was resolved. The prevailing party wouldn’t gain a cent from its victory and the losing party wouldn’t suffer one whit from its loss. Leidos, Inc. v. Indiana Public Retirement System, now pending before the Supreme Court, could be just that sort of case. Leidos asks whether a “pure omission,” an omission that does not render an affirmative statement false or misleading, is actionable under Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. With so much affirmative mandatory and voluntary disclosure in the public domain it is trivially easy for plaintiffs to allege that material omissions create half-truths that are fully actionable under established precedent. Half-truths expose defendants to liability identical to that arising from corresponding pure omission claims, and it makes no meaningful difference whether pure omissions are actionable as omissions or as half-truths. Leidos itself proves the point: there, a single omission causes an affirmative statement to become misleading and is also alleged as a “pure omission.” Leidos will be remanded to resolve the half-truth claim and, on remand, the probability that Leidos will be dismissed, and the amount for which Leidos settles if not dismissed, will not be materially affected by the Supreme Court’s decision. This is not to suggest that certiorari has been improvidently granted. There is virtue in semantic consistency. A clear opinion describing the scope of liability, if any, for pure omissions will contribute to judicial efficiency by eliminating complex briefing over rhetorical distinctions that don’t move the liability needle. As for the doctrinal question presented, the better interpretation of the law is that the relevant text, history, and precedent do not support Rule 10b-5 liability for pure omissions. A decision to the contrary would create substantial tension with Supreme Court precedent and generate unnecessary confusion over the application of the most important civil liability provision of the federal securities laws. The article also examines the potential for pure omission liability arising from the Sarbanes-Oxley Section 906 certification and concludes that neither the Commission nor private parties are likely to prevail on such a claim.

The European Court of Justice’s Financial Accountability

European Court of Justice – European Parliament – Accountability through the budgetary process – Fostering the European Court of Justice’s democratic legitimacy through financial accountability – Accountability for how the European Court of Justice organises the institution and conducts its procedures – Efficiency versus quality as yardsticks to assess the Court’s performance – The European Parliament’s ambivalent practice of focusing solely on judicial efficiency – Proposals how the Parliament could take the quality of the European Court of Justice’s judicial process into account when assessing the Court – A different use of judicial statistics – Inciting quality-oriented reforms such as the introduction of amicus curiae participation and bilingual (French/English) deliberations

Courts, scheduled damages, and medical malpractice insurance

We study how the functioning of the judicial system affects the availability and affordability of medical liability insurance, as proxied by the number of insurers and the premiums paid. We use two unique datasets collected in Italy from 2000 to 2010. Using the first dataset—insurance contracts for hospitals—we estimate the average treatment effect of schedules on insurers and premiums paid, conditional on judicial efficiency and proxied by different measures. Our identification rests on the partial overlap between healthcare districts and judicial districts, meaning that the caseload of a court and malpractice events at the healthcare provider level are not perfectly correlated. On average, the adoption of schedules does not produce any significant effect on insurers or on premiums paid. However, adopting schedules has a robust and significant effect on the number of insurers, but only in inefficient courts. We further investigate these findings using a second dataset comprising 17,578 malpractice insurance claims. We find evidence of a composition effect among claims that is triggered by higher levels of judicial inefficiency: As a court’s inefficiency increases, the likelihood for a case to not be decided on the merits decreases and the levels of reserve and recovery per claim decrease.

A cross-country comparison of the relationship between ownership concentration and firm performance: does judicial system efficiency matter?

PurposeThe purpose of this paper is to analyze the relationship between ownership structure and firm performance, including judicial system efficiency as a moderator to investigate the joint effects of both explanatory variables. Although prior studies have considered judicial system efficiency by examining de jure investor protection, this study identifies another useful proxy and explores de facto legal protection.Design/methodology/approachOrdinary least square multiple regression models were used to examine the influence of judicial efficiency, which was measured using the disposition time (DT) and legal origin, as a moderator of the relationship between ownership concentration and firm performance for a sample of 565 non-financial companies listed in Italy, France, Germany and Spain in 2013.FindingsThis paper shows that de facto investor protection ensured by an efficient judicial system is relevant to the relationship between firm performance and ownership structure. As a moderator variable, DT strengthens the intensity of this relationship in countries with low judicial efficiency, showing that ownership concentration leads to a better enhancement of firm performance and is, therefore, a more efficient governance mechanism in countries in which investor protection is weak.Originality/valueThe evidence presented expands the understanding of the link between firm performance and ownership structure. The institutional deficiencies suggest that internal governance mechanisms may substitute for external mechanisms in facilitating efficient governance. This study corroborates policymakers’ concerns regarding the efficiency of judicial systems and their role in protecting the rights of minority shareholders. The results suggest a need for more efficient external mechanisms of investor protection to facilitate investment in equity capital. Moreover, this study shows that DT is a more accurate measure of investor protection than the traditional measure of de jure legal protection.

The Italian Legal System and the Possible Implications of the Belgian Constitutional Court's Rulings on the Administrative Loop

The paper examines the possible implications of the ruling of the Belgian Constitutional Court on the Italian legal system. Even if the Italian judicial system does not have any provision similar to the Belgian administrative loop, the Belgian rulings can impact the ongoing Italian debate on judicial effectiveness and efficiency on three different issues. Firstly, concerning the formal obligation of administrative authorities to state reasons in their decisions and the consequences of the absence of such reasons. Secondly, the Belgian Court’s rulings provide insight on the so-called “self-annulment” power of the Italian administrative authorities. Finally, the Court discusses the principle of separation of powers and its implications on limiting the judges’ case-management power in the final settlement of a pending lawsuit. At present, the introduction of ADR mechanisms in administrative courts is of significant interest to Italian judicial policy. The Belgian rulings reiterate the requirements that must never be avoided in any dispute settlement procedure.

Judicial efficiency and capital structure: An international study

We investigate a particular aspect of creditor rights, judicial efficiency, and its influence on firms' corporate leverage in 69 countries. Increasing creditor rights makes credit more readily available due to greater loan supply, but firms use less leverage to avoid premature liquidation. We find that efficient judicial systems are associated with lower corporate leverage ratios. Managers perceive higher leverage in the presence of more efficient judicial systems as a serious threat to their jobs or private benefits continuing. Our results indicate that stronger creditor rights alone do not explain corporate leverage without taking into account efficient enforcement of these rights.

The Effect of Discretion on Procurement Performance

We run a regression discontinuity design analysis to document the causal effect of increasing buyers’ discretion on procurement outcomes in a large database for public works in Italy. Works with a value above a given threshold have to be awarded through an open auction. Works below this threshold can be more easily awarded through a restricted auction, where the buyer has some discretion in terms of who (not) to invite to bid. Our main result is that discretion increases the probability that the same firm wins repeatedly, and it does not deteriorate (and may improve) the procurement outcomes we observe. The effects of discretion persist when we repeat the analysis controlling for the geographical location, corruption, social capital, and judicial efficiency in the region of the public buyers running the auctions. Data and the online appendix are available at https://doi.org/10.1287/mnsc.2016.2628 . This paper was accepted by John List, behavioral economics.

The Inherent Power of Reconsideration in Recent ICSID Case Law

The present article deals with the issue of the power of reconsideration of ICSID tribunals. In 2014, the majority in ConocoPhillips v. Venezuela rejected Respondent’s Request for Reconsideration, ruling that an interim decision had res judicata effect. However, in a powerful dissent in that case, Professor Abi-Saab argued that the tribunal in fact possessed an inherent power of reconsideration. The following year, the ICSID tribunal in Perenco v. Ecuador unanimously endorsed the reasoning of the majority in ConocoPhillips. While judicial economy is potentially undermined if interim decisions can later be revisited, the question is how to strike the proper balance between judicial efficiency and fundamental fairness. As this article shows, the most sensible position, recently taken by the ICSID tribunal in SCB HK v. TANESCO – and one that still promotes judicial economy – is to recognize a limited power of reconsideration during the period until a final judgment has been rendered.

Undervaluing the Right to an Interpreter: How Societal and Judicial Interests Threaten the Fairness of Multilingual Criminal Proceedings

By its very nature, the right to a fair trial involves a balancing of competing interests. This paper examines how such a balancing process has undermined one particular fair trial right: the right to an interpreter under international law. In order to do so, the paper sets out the current contours of the right, highlighting and analysing the numerous trade offs that have been made in its development. The resulting analysis concludes that courts often prioritize judicial efficiency and economic frugality at the expense of the right to an interpreter with little or no understanding of the impact these decisions have on the effectiveness of the right. The end result is a balance that neuters the practical application of the right and undermines the fairness of criminal proceedings involving defendants who do not speak the language of the court.

Justice Delayed vs. Justice Denied: The Civil Justice Reform Act and the Cost of Judicial Efficiency

Justice Delayed vs. Justice Denied: The Civil Justice Reform Act and the Cost of Judicial Efficiency

Importance of Judicial Efficiency in Capital Structure Decisions of Small Firms: Evidence from Pakistan

Empirical evidence to identify factors that are responsible for the sluggish development of bond and capital markets in Pakistan remains scanty. This paper is a step forward in this direction. Specifically, this paper draws on the recent developments in the area of law and finance to formulate several propositions on how judicial efficiency can have a differential impact on corporate capital structures of small and large firms. These propositions are tested using data of 370 firms listed at the Karachi Stock Exchange (KSE) and 27 districts high courts of Pakistan. The results indicate that leverage ratio decreases, when judicial efficiency decreases; however, this relationship is not statistically significant. This is due to the composition effect. Allowing judicial efficiency to interact with the included explanatory variables, the results show that worsening judicial efficiency increases leverage ratios of large firms and decreases leverage ratios of small firms, which is an indication of the fact that creditors shift credit away from small firms to large firms in the presence of inefficient judicial system. Results also indicate that the effect of inefficient courts is greater on leverage ratios of firms that have fewer tangible assets as percentage of total assets than on leverage ratios of firms that have more tangible assets. The results indicate that under inefficient judicial system creditors reduce their lending to small firms and firms with little collateral and redistribute the credit to large firms. This is why judicial inefficiency does not change volume of credit, but changes distribution of the credit. These results highlight the importance of judicial efficiency for small firms in the determination of their capital structures. JEL Classification: G10, G21, G32 Keywords: Judicial Efficiency, Leverage, KSE, Capital Market Development, Law and Finance.

Brief of Amici Curiae Professors Simona Grossi, Allan Ides, Et Al.--No. 16-2653

The district court’s application of Rule 23 is fundamentally at odds with the philosophy of the Federal Rules and their intended mission to promote “the just, speedy, and inexpensive determination of every action and proceeding.” It frontloads the merits and discards the case before it can be fully developed. In essence, the district court opinion transforms a motion for certification into a motion for summary judgment. This treats the Federal Rules as independent obstacle to litigation process. But the Federal Rules must be read as outlining a system of procedure that is holistic and designed to give each case its rightful and thorough consideration. It is true that this more aggressive approach to access of justice might promote efficiency, help clear the docket, and provide solace to a wide array of institutional defendants. But judicial efficiency is only a legitimate value to the extent that it advances the project of justice; and a clear docket is not necessarily a just one. In this brief, we show how the district court’s reading and application of Rule 23 provides a crude method through which to dispose of a case, for it exalts case management considerations and the formality of procedure over substantive rights, and it does so without consideration of countervailing costs and consequences. The standard imposed by the district court is also in deep tension with the judicial obligation to provide a forum for the vindication of individual claims of right and with our constitutional commitment to the rule of law. Thus, we argue, the district court’s ruling demands reversal.

Does weak contract enforcement affect firm size? Evidence from the neighbour’s court

Poor contract enforcement can importantly affect firms’ incentives to grow. We investigate the causal effect of the weakness of contract enforcement on average firm size across Italian municipalities, exploiting spatial discontinuities in court jurisdictions for identification. Italy provides an ideal environment for this exercise, as it displays wide variation in judicial efficiency across courts, while the allocation of municipalities to jurisdictions is a historical legacy and does not overlap with other political or economic discontinuities. Our estimates indicate that reducing the length of judicial proceedings (i.e. improving contract enforceability) by 10% at court level leads to a 2% increase in average size of local firms. The outcome on turnover growth is of the same magnitude, suggesting that the effect operates at the intensive margin.