ILE Annual Report 2005-2006 by Penn Law

ILE 14 INSTITUTE for LAW and ECONOMICS

14 ANNUAL REPORT 2005â&#x20AC;&#x201C;2006 A Joint Research Center of the Law School, the Wharton School, and the Department of Economics in the School of Arts and Sciences at the University of Pennsylvania

Institute for Law and Economics

COVER PHOTOS Top row, left to right:

Board of Advisors

Message from the Chair

1 Corporate Governance Dinner following Chancery Court Program on Toys ”R” Us: Panelist Robin M. Rankin, Credit Suisse First Boston; ILE board member Joseph B. Frumkin, Sullivan & Cromwell (see page 18).

Message from the Dean

Message from the Co-Directors

7 8 9 10 12 14 15 16 17 18

Roundtable Programs Deal Day in Israel, Spring 2006 Deal Day in New York, Spring 2005 Corporate Law, Spring 2006 Labor Law, Fall 2005 Corporate Law, Spring 2005 Corporate Law, Fall 2004 Private Equity in London, Spring 2004 Corporate Law, Spring 2004 Chancery Court Programs & Corporate Governance Dinners

20 21 22 22

Symposia Penn/NYU Joint Conference, Spring 2006 NYU/Penn Joint Conference, Spring 2005 Corporate Control Transactions, Spring 2003

23 24 27

Lectures Law and Entrepreneurship Distinguished Jurist

Seminars and Workshops

Publications and Papers

Associate Faculty

2 Court of Chancery in Georgetown, Delaware.

40 Institute Investors

3 Law and Entrepreneurship Lecturer Michael J. Biondi (right), Lazard Ltd, chats with students from the audience (see page 24). 4 New York Stock Exchange. 5 Corporate Law Roundtable, Spring 2006. Front row: Simon M. Lorne, Millennium Management; Harvey Goldschmid, Columbia Law School. Back: James D. Cox, Duke University School of Law; Robert B. Thompson, Vanderbilt University Law School; Merritt B. Fox, Columbia Law School (see page 10). Bottom row: 6 Chancery Court Panel on “Technicolor.” From left, Hon. Leo E. Strine, Jr., Vice Chancellor, Delaware Chancery Court; Michael L. Wachter, University of Pennsylvania Law School; Hon. William T. Allen, NYU Law School and former Chancellor, Delaware Chancery Court; Hon. William B. Chandler III, Chancellor, Delaware Chancery Court (see page 18). 7 Silverman Hall internior, with entrance to ILE offices at top of stairs. 8 Law and Entrepreneurship Lecturer Marcia Greenberger, National Women’s Law Center (right), talks with Penn faculty at the reception following the lecture. Left to right: Janice F. Madden, Susan M. Wachter, and Demie Kurz (see page 24). 9 University of Pennsylvania Law School, Silverman Hall.

INSTITUTE for LAW and ECONOMICS

University of Pennsylvania Law School, Tanenbaum Hall (top); The Wharton School, Steinberg Hall-Dietrich Hall.

ounded in 1980, the Institute for Law and Economics at the University of Pennsylvania has an ambitious agenda that is more timely than ever. The study of law and economics remains the most rapidly growing movement in legal scholarship and jurisprudence. Under the sponsorship of the Law School, the Wharton School, and the Department of Economics in Pennâ&#x20AC;&#x2122;s School of Arts and Sciences, the Institute has played a leading role in this expanding field. Cross-disciplinary research, the cornerstone of the ILE, seeks to influence the national policy debate by analyzing the impact of law on the global economy, spotlighting the significant role that economics plays in fashioning legal policy. Our innovative roundtables and conferences, launched in 1985, complement these goals by provoking in-depth and, frequently, ground-breaking examinations of critical issues. These and other programs highlighted in this Annual Report have helped the Institute to stay on the leading edge of this cross-discipline. The Institute for Law and Economics has unique advantages. We draw on the research and teaching strengths of the Law School, the Wharton School, and the Department of Economics. Our geographic location is optimal, allowing us to bring together participants from Washington and New York for full-day meetings with everyone still getting home in time for dinner. We have been able to call on the expertise of Penn Law School alumni who occupy key positions in law, business, and government. And, critically, we have an extraordinarily distinguished cadre of board members and sponsors who are willing to give of their time and expertise to make our programming a success. In each area, from our public lectures through our closeddoor roundtables to our more academically oriented faculty workshops, we are driven by the same mission: to use the tools of economics to understand the law. In a world in which complex legal rules govern economic relationships, the tools of economics provide a way of asking whether the law creates appropriate incentives to encourage actors to maximize social welfare. Funding for the ILE comes from a diverse group of corporations, law firms, foundations, and individuals who endorse our work each year. Over the past decade, the Institute has more than tripled its donor base to provide ongoing support for the programs discussed in this Annual Report. A list of Institute Investors for 2005â&#x20AC;&#x201C;2006 appears on page 40.

BOARD OF ADVISORS

Barry M. Abelson Pepper Hamilton LLP James H. Agger Chair, 1994–2001 Retired Senior Vice President, General Counsel and Secretary Air Products and Chemicals, Inc. Alan Alpert Managing Partner

M&A Transaction Services Deloitte Tax LLP William D. Anderson Managing Director Goldman, Sachs & Co. Roger W. Arrington Vice President and Assistant General Counsel E. I. du Pont de Nemours & Company, Inc.

Pamela Craven Senior Vice President, General Counsel and Secretary Avaya Inc.

Robert A. Lonergan Vice President and General Counsel Rohm and Haas Company

Kenneth C. Frazier Senior Vice President and General Counsel Merck & Co., Inc.

Simon M. Lorne Vice Chairman and Chief Legal Officer Millennium Management, LLC

Joel E. Friedlander Bouchard Margules & Friedlander

Michael E. Lubowitz Weil, Gotshal & Manges LLP

Robert L. Friedman Chair, 2001– Senior Managing Director Chief Administrative Officer and Chief Legal Officer The Blackstone Group L.P.

J. Anthony Messina Buchanan Ingersoll & Rooney PC

Michael J. Biondi Co-Chairman,

Perry Golkin Member Kohlberg Kravis Roberts & Co.

James A. Ounsworth Business Consultant [Former Senior Vice President and General Counsel, Safeguard Scientifics, Inc.]

Randall J. Boe Executive Vice President and General Counsel AOL LLC W. Douglas Brown Vice President, General Counsel and Secretary Air Products and Chemicals, Inc.

Leon C. Holt, Jr. Retired Vice Chairman and Chief Administrative Officer Air Products and Chemicals, Inc. William B. Johnson Chairman Emeritus Whitman Corporation

Charles I. Cogut Simpson Thacher & Bartlett LLP

Cynthia B. Kane Special Assistant to the Secretary of State Delaware Department of State

Isaac D. Corre Senior Managing Director Eton Park Capital Management

Paul S. Levy Senior Managing Director JLL Partners

Howard L. Shecter Morgan, Lewis & Bockius LLP

David M. Silk Wachtell, Lipton, Rosen & Katz

William M. Goldstein Drinker Biddle & Reath LLP

John G. Harkins, Jr. Chair, 1980–1990 Harkins Cunningham LLP

John F. Schmutz Chair, 1990–1994 Retired Senior Vice President and General Counsel E. I. du Pont de Nemours & Company, Inc.

John E. Osborn Executive Vice President,

Marshall B. Babson Hughes Hubbard & Reed LLP

Fred Blume Chairman Emeritus Blank Rome LLP

Rothschild North America

G. Daniel O’Donnell Dechert LLP

General Counsel and Secretary

Lazard Ltd

Chief Executive Officer

Robert C. Sheehan Executive Partner Skadden, Arps, Slate, Meagher & Flom LLP

Joseph B. Frumkin Sullivan & Cromwell LLP

Investment Banking

Gerald Rosenfeld

Cephalon, Inc.

Bruce L. Silverstein Young Conaway Stargatt & Taylor, LLP A. Gilchrist Sparks III Morris, Nichols, Arsht & Tunnell

Morton A. Pierce Dewey Ballantine LLP

Hon. Leo E. Strine, Jr. Vice Chancellor Delaware Court of Chancery

Myron J. Resnick Retired Senior Vice President and Chief Investment Officer Allstate Insurance Company

Nancy Straus Sundheim Senior Vice President, General Counsel, and Corporate Secretary Unisys Corporation

Robert H. Rock Chairman and Publisher Directors & Boards

Jere R. Thomson Jones Day

John D. Rogers Managing Director Arden Asset Management LLC

E. Norman Veasey [Chief Justice, Supreme Court of Delaware, 1992–2004] Weil, Gotshal & Manges LLP

Marianne Rosenberg Gide Loyrette Nouel

Donald J. Wolfe, Jr. Potter Anderson & Corroon LLP

board of advisors

1 Gil Sparks (left) and Joe Frumkin 2 Barry Abelson 3 Bruce Silverstein 4 Jerry Rosenfeld 5 Marshall Babson

20 Sy Lorne

6 Don Wolfe 7 Bob Lonergan 8 Joel Friedlander 9 Marianne Rosenberg 10 Casey Cogut 11 Doug Brown 12 Paul Levy 13 Bill Anderson and Nancy Sundheim 14 Howard Shecter 15 Lee Holt 16 Dan Oâ&#x20AC;&#x2122;Donnell (left) and Jim Agger 17 David Silk 18 Bob Sheehan 19 Pam Craven

MESSAGE FROM THE CHAIR

he business environment has been characterized by unprecedented changes over the past several years, a trend that is likely to continue. Several landmark factors are at work. Following the bursting of the market bubble in 2001 and the adoption of Sarbanes-Oxley, the changes in corporate governance and in accounting rules are now becoming better understood and integrated into the way businesses are managed. The increase in concentrated stock ownership resulting principally from the growth of hedge funds, as well as the stepped-up activities of private equity firms, is rewriting the workings of the decades-old principles of the separation of ownership. Finally, the internationalization of financial markets is altering the nature of the multinational firm. These fundamental developments challenge us to rethink accepted doctrine and to accept innovation and change as key elements of any corporate plan. More than ever we need institutions whose primary business is studying and critiquing the changes in our corporate environment. To me, no institution does a better job of addressing these challenges than Penn’s Institute for Law and Economics. The ILE bridges departments and schools of law, business and economics in a manner that others can only seek to emulate. The Institute’s programs bring together a true mix of scholars from these three disciplines, not only from Penn but from other universities as well. Even more critically, our programs allow corporate managers, investment bankers, corporation lawyers and judges to interact with each other and with the mix of academic scholars who are closely associated with ILE. The Institute enjoys an international reputation for the excellence of its roundtable conferences, where leaders in business, financial management, doctrinal development and academic scholarship are exposed to each other’s critical thinking in highly spirited sessions on cutting-edge issues. On behalf of our Board, I want to express our gratitude to all of you who have helped the Institute during this past year, whether through your financial contributions or by participation in ILE conferences. We have an overarching goal of broadening and diversifying the Institute’s base, both in terms of the firms that support us and the individuals who take part in our programs, and once again this year we have served that goal well. I am delighted to report on some terrific additions to our Board of Advisors during the past year. We are pleased to welcome the following new members: Joel E. Friedlander (Bouchard Margules & Friedlander); Simon M. Lorne (Millennium Management, LLC); Morton A. Pierce (Dewey Ballantine); Gerald Rosenfeld (Rothschild North America); and Donald J. Wolfe, Jr. (Potter Anderson & Corroon). These accomplished people will greatly enhance the work of the Institute and broaden the backgrounds and expertise represented on our Board. The fact that in each of the past several years we have been able to add a number of outstanding new members to the ILE board says a great deal about the strength of ILE’s reputation in the national

business and legal communities and the importance and broad appeal of its program offerings. I am very grateful for the work of my fellow Board members. Very special thanks must be given to my fellow ILE Benefactors— Lee Holt, Paul Levy, Skadden, Arps, Slate, Meagher & Flom LLP (through Bob Sheehan) and Wachtell, Lipton, Rosen & Katz (through David Silk). Their extraordinary level of financial support enables the Institute to continue to grow its programs, and I want to express our sincere appreciation to each of them. Recognizing the important contributions of our Board members, supporters and program participants, ILE would not and could not be the vital organization it is today were it not for the commitment, dedication and hard work of its two co-directors, Ed Rock and Michael Wachter. Ed and Michael have done a superb job of designing the Institute’s signature programs, attracting the best talent from all constituencies to maximize the value of each and every ILE program and working ceaselessly to build the Institute’s base of financial support and broaden the composition of its Board.

Robert L. Friedman Senior Managing Director, Chief Administrative Officer and Chief Legal Officer, The Blackstone Group L.P. Chair, Board of Advisors, Institute for Law and Economics September 2006

MESSAGE FROM THE DEAN

enn Law has created cross-disciplinary programs that are unrivaled among the leading law schools. Recognizing that the lawyers of the future will be well-versed not only in legal tradition but also in the broader fields of our society, Penn Law has embraced its relationship with the finest array of graduate and professional programs in the nation. The Institute for Law and Economics (ILE) is at the intellectual center of this cross-disciplinary focus. Its programs provide a model for how to build bridges between disciplines by building ties between schools, between faculty members, between students and between experts in and out of academia, from Penn and around the world. ILE’s secret is to combine Penn’s great strengths in the Law School, the Wharton School and the Department of Economics with a focus on the substantive intersection of law, business and economics. ILE demonstrates that when you bring the right people together— judges, deal-makers, regulators, business leaders, lawyers, bankers, policymakers and academics—wonderful insights are generated. The topics the Institute addresses are as exciting as they are relevant. Figuring out how to set the right incentives, the appropriate role of legal regulation in structuring governance and transactions, and whether current regulation needs to be supplemented or is adequate to the task are all burning questions illuminated by a law and economics analysis. Indeed, no significant business issue can be addressed without paying attention to the underlying economics or the structure of legal regulation. Practitioners, judges, policymakers and academics all benefit from the greater understanding such analysis affords. The by-invitation roundtables—the Institute’s signature events— bring together distinguished members of the bar, judiciary, government, business world and academia for candid discussion and intellectual exploration. ILE’s public lectures by leading jurists, executives and entrepreneurs attract participants from all sectors of the University, both students and faculty, and from the wider business, legal and judicial communities. During the last year the outstanding talks, workshops and conferences organized by the Institute covered a wide range of business-related topics and programs, from corporate finance and corporate governance to private equity and investing, hedge funds and labor law, to entrepreneurship in nonprofits and litigation in technology mergers. The Institute’s highly successful seminar series— now expanded to include sessions jointly sponsored with Wharton’s Finance Department—provides a forum for cutting-edge academics at Penn and from around the country to present their work and receive feedback from the whole Penn community. The Institute’s efforts are supported by a number of very generous contributors who understand the importance of what we do and the unique position the Institute holds. Many of our contributors also serve as members of the Institute’s Board of Advisors, helping to formulate programmatic directions and lending their expertise as panelists and commentators for Institute events. Bob Friedman has my particular thanks, as we review the Institute’s activities and accomplishments during his third year as chair of the ILE Board, for his many exceptional

contributions and his proactive role in engaging new participants and supporters. Like all of the executives who serve as advisors for ILE, Bob contributes his very valuable time and the benefit of his expertise as a corporate specialist, as well as his wide contacts in the legal and financial communities. We are also extremely grateful to him for his leadership support as an Institute Benefactor. We extend the deepest appreciation to all ILE supporters and participants for their commitment and investment during the past year. As we look to the future, what the Institute can do is limited only by its financial resources. We welcome others to join in participation and support of this extremely worthwhile endeavor.

Michael A. Fitts Dean, University of Pennsylvania Law School Bernard G. Segal Professor of Law September 2006

MESSAGE FROM THE CO-DIRECTORS

his past year saw important developments in corporate law and in the securities markets, with the result that our supporters were busier than ever. And, because our supporters are the key participants in many of our program, our events reflected the excitement of the evolving law and financial markets. We are also delighted to have added five wonderful new members to the board, and we welcome them as new ILE Investors: Joel Friedlander (Bouchard Margules & Friedlander); Sy Lorne (Millennium Management); Mort Pierce (Dewey Ballantine); Jerry Rosenfeld (Rothschild North America); and Don Wolfe (Potter Anderson & Corroon). This annual report documents a very busy year. The ever-increasing prominence of hedge funds—and attempts to regulate them—was the focus of the Spring Corporate Roundtable (see page 10 for more details). Our Chancery Court programs continued with a focus on appraisal (see pages 18–19). Our Fall Corporate Roundtable addressed the key labor relations issues faced in cross-border mergers (pages 12–13). In addition, we had two fascinating Law and Entrepreneurship lectures (page 24). In the fall, Marcia Greenberger, founder and Co-President of the National Women’s Law Center, spoke about creating and building a public-interest law firm as an exercise in entrepreneurship. In the spring, board member Michael Biondi regaled an overflow audience of Law and Wharton students on how he went from being an associate at Skadden to Co-Chairman of Investment Banking at Lazard (with a few intermediate steps along the way). The Honorable Vaughn Walker, Chief Judge of the U.S. District Court for the Northern District of California, spoke about hearing the Oracle-PeopleSoft merger case and the difficulties of market definition in technology mergers (page 27). Finally, in May, a number of members participated in a “Deal Day” program in Tel Aviv, which we organized in cooperation with the Delaware Secretary of State’s office and its Delaware incorporation mission to Israel (page 8). Our more “academic” programs also flourished. Our Law and Finance series, joint with Wharton’s Finance Department, continued with presentations by Raghuram Rajan (Director of Research at the IMF, on leave from the University of Chicago) and Roberta Romano (Yale Law) (pages 30–31). In February, we hosted the second annual Penn/NYU Law and Finance Conference, a joint venture of Penn Law, Wharton Finance, NYU Law and Stern Finance (pages 20–21). And, to top it all off, scholars from around the country came to present papers in the Law and Economics seminar series, co-organized this year by Penn Law professor Polk Wagner (pages 30–31). This range of programs provides extraordinary cross-fertilization. For the Corporate Law and Finance Roundtables, we gather together academics, judges, business leaders, lawyers, investment bankers, private equity fund managers, hedge fund managers and policymakers for intensive discussion of critical current issues. In our programs with the Delaware Chancery Court, we are able to focus on key issues arising in Delaware corporate law in a condensed format with active participation of the students, followed by dinners at which the conversation continues informally. Our Labor Law Roundtables draw the sitting members of the NLRB, numerous past members, labor leaders, labor lawyers and

academics from the U.S. and abroad. Our “Deal Day” series taps the expertise of our supporters in yet another format. In our two series of public lectures, we continue to recognize leading figures who have played important roles in fashioning law, economic policy and business strategy. Our Law and Entrepreneurship speakers are usually law graduates who have developed their careers in unique ways, outside of the usual boundaries associated with particular degrees and professions. As a consequence, these lectures have wide appeal throughout the University, drawing students and faculty from all sectors as well as members of the ILE Advisory Board and of the larger community. Our Distinguished Jurist series allows us to bring to Penn judges who are working at the cutting edge of the regulation of business. Finally, our academic programs build our relationships with the Wharton Finance Department, bring leading scholars from around the country to Penn, and—with the new joint conference with NYU—build a larger law and finance community. In conclusion, we must acknowledge that the Institute’s strength lies in the quality of our supporters and their active, enthusiastic participation in our programs. Our Board members and sponsors make our programs possible, as key participants as well as financial supporters. We also want to specially acknowledge the critical role played by our Board chair, Bob Friedman of the Blackstone Group, for his dedicated and enthusiastic work in building ILE’s support base and assuring that it is sustained at the current high level. We extend our heartfelt thanks to all of you for bringing your perspective, your ideas, your experience and your expertise to all that we do. In your participation lies the essential realization of our purpose and objectives, making our job as Institute directors immensely satisfying and worthwhile.

Edward B. Rock Co-Director, Institute for Law and Economics Saul A. Fox Distinguished Professor of Business Law september 2006

Michael L. Wachter Co-Director, Institute for Law and Economics William B. Johnson Professor of Law and Economics

ROUNDTABLE PROGRAMS

t the heart of the Institute’s work is the Roundtable series, which brings together members of the Institute’s Associate Faculty and other academics with corporate executives, practicing attorneys, judges, public policymakers and students. Each roundtable provides a forum for the lively discussion of current issues that emerge from the research and teaching of ILE. Over the years, the Institute has sponsored roundtables on a broad range of topics—including labor law and bankruptcy as well as corporate law, governance and finance—engaging the interest and participation not only of scholars but also of leaders in the business and public sectors. The high caliber of the participants guarantees that each day-long affair is intense and informative. ILE’s longstanding off-the-record policy for the roundtables is often the impetus for an energetic and wide-ranging exchange of ideas among some of the nation’s most accomplished scholars, attorneys and business people. As a variant on the full-day roundtable format, the Institute introduced Corporate Governance Dinners as an evening forum for candid, unrecorded discussion of current issues in corporate law and business. The Chancery Court Programs, first organized in 2003 (see pages 18–19), are yet another spinoff from the Roundtable Programs, bringing together M&A lawyers, investment bankers and experts in appraisal for discussion of valuation principles in corporate litigation.

roundtable programs

Deal Day

Deal Day in Israel

spring 2005 and spring 2006

1 Saul A. Fox, Fox Paine & Company.

In the Spring of 2004, ILE inaugurated its “Deal Day” series in order to delve deeply into the guts of specific deals including: the business, financing and legal challenges; the strategy behind the deal; and the plans going forward. The first program was held in London, with London members of the Blackstone Group and Kholberg Kravis Roberts & Co. each presenting one of their European private equity deals (see p. 14). Deal Day 2005 was held on May 23, 2005, at the Penn Club in New York City. Deal presentations were organized by Paul S. Levy of JLL Partners and Michael J. Biondi of Lazard Ltd. The 50 attendees included members of the Institute for Law and Economics board, academics from Penn Law, Wharton, and other university schools of law and business, attorneys from law firms and corporations, deal advisors, and bankers. Deal Day 2006 was held in Tel Aviv, in cooperation with the Delaware Secretary of State’s “Incorporation Mission” and the Kiryat Ono College of Law. During the morning, Saul Fox presented Fox Paine’s 2002 acquisition of Paradigm Geophysical, an Israeli graphical imaging oil field services company. The afternoon started with a Delaware style moot court, featuring Donald Wolfe and David McBride and presided over by Vice Chancellor Stephen Lamb, followed by a panel discussion on specialty corporate courts with Hon. Myron Steele, Chief Justice of Delaware, Hon. Aharon Barak, President of the Israeli Supreme Court, Moshe Teri, chair of Israel’s Securities Authority, and Ted Mirvis of Wachtell Lipton. Deal Day allows us to tap the expertise of our board and sponsors to examine in-depth current opportunities and challenges. Looking at complex transactions always raises interesting issues at the intersection of law, finance, governance and operations.

DEAL DAY in ISRAEL 25 May 2006 Tel Aviv, Israel

2 Hon. Aharon Barak, President, Israel Supreme Court; and Hon. Myron T. Steele, Chief Justice, Delaware Supreme Court.

Co-Sponsored by Institute for Law and Economics Kiryat Ono College of Law Office of the Delaware Secretary of State

3 From left: Theodore H. Mirvis, Wachtell, Lipton, Rosen & Katz; Donald J. Wolfe, Jr., Potter Anderson & Corroon; David C. McBride, Young Conaway Stargatt & Taylor; Zohar Goshen, Columbia Law School and Academic College, Kiryat Ono; Hon. Myron T. Steele, Delaware Supreme Court; Cynthia B. Kane, Delaware Department of State; Hon. Stephen P. Lamb, Delaware Chancery Court. 4 Theodore H. Mirvis, Wachtell, Lipton, Rosen & Katz; Hon. Myron T. Steele, Delaware Supreme Court; Moshe Teri, Israel Securities Authority; Hon. Aharon Barak, Israel Supreme Court.

Moderators Zohar Goshen Columbia Law School and Academic College, Kiryat Ono Edward B. Rock University of Pennsylvania Law School Morning Session What Are American Private Equity Firms Looking for in Israeli Companies? The 2002 Acquisition of Paradigm Geophysical by Fox Paine Presentation by Saul A. Fox Fox Paine & Company, LLC (California) Mitchell S. Presser Wachtell, Lipton, Rosen & Katz (New York) Eldad Weiss Paradigm Geophysical (Israel)

Afternoon Session From Delaware to Israel The Role of a Specialized Business Court Delaware-Style Moot Court Hon. Stephen P. Lamb Vice Chancellor Delaware Chancery Court David C. McBride Young Conaway Stargatt & Taylor (Delaware) Donald J. Wolfe, Jr. Potter Anderson & Corroon LLP (Delaware) Panelists Hon. Aharon Barak President Supreme Court of Israel Hon. Myron T. Steele Chief Justice Supreme Court of Delaware Hon. Moshe Teri Chair Israel Securities Authority Theodore N. Mirvis Wachtell, Lipton, Rosen & Katz (New York)

deal day, spring 2005

DEAL DAY in NEW YORK 23 May 2005 The Penn Club of New York Moderator Edward B. Rock Saul A. Fox Distinguished Professor of Business Law

Commentators Joseph B. Frumkin Sullivan & Cromwell LLP Joseph D. Gatto Managing Director Goldman, Sachs & Co. Robert E. Spatt Simpson Thacher & Bartlett

Afternoon Session The Creation of Advance PCS (through the Merger of Advance Paradigm and PCS) and its Subsequent Merger into Caremark, to Create the Largest PBM in America Presentation by Paul S. Levy Senior Managing Director JLL Partners

Morning Session Lazard’s Representation of the Special Committee in the Battle for Hollywood Entertainment (Movie Gallery/Blockbuster/Leonard Green Partners/Icahn)

Commentators Alan Alpert Managing Partner, Global Transaction Services Deloitte Tax LLP Michael S. Knoll Professor of Law and Real Estate University of Pennsylvania Law School John E. Osborn Senior Vice President and General Counsel Cephalon, Inc

Presentation by Michael J. Biondi Co-Chairman of Investment Banking Lazard Ltd

Deal Day in New York 1 Michael J. Biondi, Lazard Ltd; left, Joseph D. Gatto, Goldman, Sachs & Co. 2 Front, from left: Morton A. Pierce, Dewey Ballantine; Michael C. Bond, Avaya Inc.; Pamela F. Craven, Avaya Inc. Background: John S. Stroebel, Rohm and Haas Company; Simon M. Lorne, Millennium Management.

3 Paul S. Levy, JLL Partners; right, Alan Alpert, Deloitte Tax. 4 John E. Osborn, Cephalon, Inc. 5 From left: Hulya K. Eraslan, The Wharton School; Anthony Noble, JD’05, University of Pennsylvania Law School; Wendy H. Miller, JD’05, University of Pennsylvania Law School.

roundtable programs

Hedge Funds in Corporate Governance and Corporate Control Marcel Kahan New York University School of Law Edward B. Rock University of Pennsylvania Law School

Corporate Law 28 april 2006

Welcome Michael A. Fitts Bernard G. Segal Professor of Law Dean, University of Pennsylvania Law School

Afternoon Session

Morning Session

Moderators Edward B. Rock Saul A. Fox Distinguished Professor of Business Law

Hedge Funds in Corporate Governance and Corporate Control Marcel Kahan George T. Lowy Professor of Law New York University School of Law Edward B. Rock Saul A. Fox Distinguished Professor of Business Law University of Pennsylvania Law School Commentators William D. Anderson, Jr. Managing Director Goldman, Sachs & Co. Eric L. Talley The Law School, University of Southern California Vote Trading and Information Aggregation Christopher Geczy Assistant Professor of Finance The Wharton School University of Pennsylvania David K. Musto Associate Professor of Finance The Wharton School University of Pennsylvania Commentators Henry T. C. Hu Alan Shivers Chair in the Law of Banking and Finance The University of Texas Law School Hon. Leo E. Strine, Jr. Vice Chancellor Delaware Court of Chancery

Panel Discussion on Regulating Hedge Funds to Protect Investors?

Michael L. Wachter William B. Johnson Professor of Law and Economics University of Pennsylvania Law School Panelists Thomas H. Bell Simpson Thacher & Bartlett LLP Isaac Corre Senior Managing Director Eton Park Capital Management Harvey Goldschmid Dwight Professor of Law Columbia University School of Law Simon M. Lorne Millennium Management, LLC Robert Plaze Associate Director Division of Investment Management Securities and Exchange Commission

Hedge funds have become critical players in both corporate governance and corporate control. The paper documents and examines the nature of hedge fund activism, how and why it differs from activism by traditional institutional investors, and its implications for corporate governance and regulatory reform. It argues that hedge fund activism differs from activism by traditional institutions in several ways: it is directed at significant changes in individual companies (rather than small, systemic changes); it entails higher costs; and it is strategic and ex ante (rather than intermittent and ex post). The reasons for these differences may lie in the incentive structures of hedge fund managers as well as in the fact that traditional institutions face regulatory barriers, political constraints, or conflicts of interest that make activism less profitable than it is for hedge funds. But the differences may also be due to the fact that traditional institutions pursue a diversification strategy that is difficult to combine with strategic activism. Although hedge funds hold great promise as active shareholders, their intense involvement in corporate governance and control also potentially raises two kinds of problems: the interests of hedge funds sometimes diverge from those of their fellow shareholders; and the intensity of hedge fund activism imposes substantial stress that the regulatory system may not be able to withstand. The resulting problems, however, are relatively isolated and narrow, do not broadly undermine the value of hedge fund activism as a whole, and do not warrant major additional regulatory interventions. The sharpest accusation leveled against activist funds is that activism is designed to achieve a short-term payoff at the expense of long-term profitability. Although this is a potentially serious problem that arguably pervades hedge fund activism, a sufficient case for legal intervention has not been made. This conclusion results from the uncertainties about whether short-termism is in fact a real problem and how much hedge fund activism is driven by

excessive short-termism. But, most importantly, it stems from the fact that market forces and adaptive devices taken by companies individually are better designed than regulation to deal with the potential negative effects of hedge fund short-termism while preserving the positive effects of hedgefund activism.

Vote Trading and Information Aggregation Susan E. K. Christoffersen McGill University Christopher Geczy The Wharton School University of Pennsylvania David K. Musto The Wharton School University of Pennsylvania Adam V. Reed The University of North Carolina If shareholders could trade their voting rights, what would they do? The standard analysis of corporate governance is that shareholders vote in the ratios that firms choose, such as one-share-one-vote. But if the cost of unbundling and trading votes is sufficiently low, then shareholders vote in the ratios that they themselves choose. The economic, legal and finance literatures all offer theoretical analyses of corporate vote trading, but aside from anecdotes, no empirical evidence on what actually occurs. This paper is the first to provide such evidence and then to offer and test an explanation for what is found. The paper documents an active market for votes within the equity-loan market, where it turns out that the average vote sells for zero. The authors hypothesize that asymmetric information motivates these vote reallocations, and find support for this view in the cross section of votes: there is more trade for higher spread firms and more for poor performers, especially when the vote is close. The authors also find that the vote reallocations correspond to support for shareholder proposals and opposition to management proposals. The ultimate significance of the vote trade lies in how the votes are cast. While this cannot be directly observed, one can observe how vote trading relates, in the cross section, to outcomes. The authors find that the relation is consistently against management: vote trading correlates with support for shareholder proposals and opposition to management proposals, both in the fraction of votes cast and in the likelihood that the proposal wins.

corporate law, spring 2006

1 Front row, left to right: Gerald Rosenfeld, Rothschild North America; Jedd Wider, Morgan Lewis; John Schmutz, ILE Board of Advisors; Jennifer Adams, Jones Day. Back: Adam Reed, University of North Carolina; Susan Christoffersen, McGill University; Christopher Geczy, The Wharton School; David Musto, The Wharton School.

2 David McBride, Young Conaway Stargatt & Taylor; Eileen Nugent, Skadden, Arps, Slate, Meagher & Flom. Back: Eric Talley, The Law School, University of Southern California; William D. Anderson, Jr., Goldman Sachs; Bruce Silverstein, Young Conaway Stargatt & Taylor. 3 Front row: Christopher Karras, Dechert; David McBride, Young Conaway Stargatt & Taylor; Eileen Nugent, Skadden, Arps, Slate, Meagher & Flom. Back: William D. Anderson, Jr., Goldman Sachs; Bruce Silverstein, Young Conaway Stargatt & Taylor; Hon Leo E. Strine, Jr., Delaware Court of Chancery.

4 Simon Lorne, Millennium Management; Harvey Goldschmid, Columbia Law School. 5 Thomas Bell, Simpson Thacher & Bartlett; Robert Plaze, Securities and Exchange Commission.

6 Front: Thomas Bell, Simpson Thacher & Bartlett; Robert Plaze, Securities and Exchange Commission. Back: Donald Langevoort, Georgetown University Law Center; Robert Rasmussen, Vanderbilt University Law School; Sean Griffith, University of Connecticut School of Law. 7 Donald J. Wolfe, Jr., Potter Anderson & Corroon; David Silk, Wachtell, Lipton, Rosen & Katz; Robin Sampson, Drinker Biddle & Reath. 8 Simon Lorne, Millennium Management; Harvey Goldschmid, Columbia Law School. Background: Robert Thompson, Vanderbilt University Law School; Merritt Fox, Columbia Law School.

roundtable programs

Labor Unions: A Corporatist Institution in a Competitive World Michael L. Wachter University of Pennsylvania Law School

Labor Law 11 november 2005

Welcome Michael A. Fitts Bernard G. Segal Professor of Law Dean, University of Pennsylvania Law School

Afternoon Session Panel Discussion on Bargaining Before Recognition in a Global Market: How Much Will It Cost?

Morning Session Decline of Labor Unions in the United States Michael L. Wachter William B. Johnson Professor of Law and Economics University of Pennsylvania Law School

As mergers and acquisitions have become increasingly international, a set of critical issues arise when foreign companies acquire U.S. businesses with unionized complements of employees, or when U.S. firms acquire foreign businesses with unionized complements of employees. A number of legal issues recur: allegedly unlawful prehire agreements in the form of contracts or “understandings” regarding terms of employment; the lawfulness or enforceability of neutrality agreements and agreements to extend recognition based upon union authorization cards; the applicability or propriety of “afteracquired” clauses or recognition agreements; and company favoritism or support for a particular union.

Commentators Charles I. Cohen Partner, Labor and Employment Morgan, Lewis & Bockius LLP Cynthia Estlund Isidor and Seville Sulzbacher Professor of Law Columbia Law School

A Reduction in the Disadvantages of British Unionism? John T. Addison Hugh C. Lane Professor of Economic Theory Moore School of Business, University of South Carolina and Universidade de Coimbra, Portugal Commentators Paul Davies Cassel Professor of Commercial Law London School of Economics John Wilhelm President, Hotel Division UNITE HERE

Moderators Marshall B. Babson Hughes Hubbard & Reed LLP Edward B. Rock Saul A. Fox Distinguished Professor of Business Law University of Pennsylvania Law School Panelists James A. Gross Professor of Labor Policy & Labor Arbitration School of Industrial and Labor Relations, Cornell University Jonathan P. Hiatt General Counsel AFL-CIO Peter Hurtgen Morgan, Lewis & Bockius LLP (former chairman, National Labor Relations Board) Hon. Wilma Liebman Member, National Labor Relations Board

This paper presents an alternative explanation that the fortune of unions depends on a political decision as to how the economy is best organized. Labor unions became a strong force in the United States with the New Deal and the decision of the Roosevelt administration to adopt a corporatist policy. Corporatism views free competition as a destructive force that has to be both controlled and channeled through institutions that practice “fair” competition under the mediating power of the government. Corporatist policies were in effect not only during the 1930s but also during World War II and the Korean War. The United States’ experiment with corporatism offered a coherent theory. Labor, antitrust and corporate laws were all to pull in the same direction. Fair union wages were favored, which meant that wages were to be above competitive levels. Fair wages were to be paid out of fair prices. Key industries were regulated and prices were set above competitive levels, enabling industries to pay high union wages. Directors of corporations would be asked to consider the interest of stakeholders such as workers, in addition to shareholders. The decline of unions began with the end of the Korean War as the United States adopted a policy of free competition. The decline has taken this long because the legacies of the corporatist past were only gradually replaced. Many of the major changes occurred in the late 1970s and early 1980s. Key industries were deregulated and prices fell to competitive levels. Corporate law clarified that the goal of directors was to maximize the value of the corporation and thus shareholders’ residual share. In this environment, the goal of unions—to take wages out of competition— became less and less in touch with the structure of the economy.

British Evidence on Unionism and Firm Performance John T. Addison University of South Carolina and Universidade de Coimbra (Portugal) In 1979, after a period of substantial growth, there were 13.2 million unionized workers in Britain, representing 53 percent of all workers. Today, there are 7.4 million unionized workers representing 28 percent of all workers. Correspondingly, there has also been a sharp fall in the share of employees whose wages are set by collective bargaining. The effects of this change have been profound, including a diminution of union effects on wages, financial performance of firms and productivity through time. Specifically, the ability of unions to push up wages has all but disappeared, except in those few sectors where unions have remained strong. As a result there has been an improvement in the profitability of firms, with the gains tied to union derecognition, the decrease in the number of establishments recognizing unions, and the trend away from joint to separate bargaining at the industry level. According to Addison, the degree of efficiency improvement stemming from these changes cannot be quantified. Arguably the economic effects have been small, Addison says, but he inclines to the view that more than redistribution from workers to firms has been involved. However, certain unfavorable effects of unions persist— for example, slower employment growth. Overall Addision concludes that there has been a reduction in the economic disadvantages of unions rather than a reversal. Finally, he has found little direct support for the revisionist notion that the reduction in union power is responsible for worse labor market outcomes. He finds that it is “pushing things too far” to argue that unions have to be strong to be an effective vehicle of pro-productive voice and to act as an authoritative agent.

labor law, fall 2005

1 From left: Pamela Craven, Avaya Inc; Hon. Wilma B. Liebman, Member, National Labor Relations Board; Jonathan Hiatt, AFL-CIO. 2 Front: Hon. Wilma B. Liebman, National Labor Relations Board; Jonathan Hiatt, AFL-CIO; Willis Goldsmith, Jones Day. Background: Regina Austin, University of Pennsylvania Law School; Jeremy Sherman, Seyfarth Shaw.

3 John Wilhelm, UNITE HERE. 4 Andrew Zelman, Klein, Zelman, Rothermel & Dichter; Andrew Strom, SEIU Building Service Local 32BJ; Richard S. Meyer, Blank Rome LLP. 5 Left, John Wilhelm, UNITE HERE; right, Arthur Rosenfeld, General Counsel National Labor Relations Board.

6 Left to right: Patrick Szymanski, International Brotherhood of Teamsters; Hon. Robert Battista, Chairman, National Labor Relations Board; Betsey Engel, International Union, UAW. 7 Marshall Babson, Hughes Hubbard & Reed. Background: Edward B. Rock, University of Pennsylvania Law School. 8 David Prouty, UNITE HERE. Right: James M. Stephens, U.S. Occupational Safety and Health Review Commission. 9 Keith Hylton, Boston University School of Law.

roundtable programs

Corporate Law 15 april 2005

Welcome Michael A. Fitts Bernard G. Segal Professor of Law Dean, University of Pennsylvania Law School

Morning Session The Fair Value of Cornfields in Delaware Appraisal Law Lawrence A. Hamermesh Ruby R. Vale Professor of Corporate and Business Law Widener University Law School Michael L. Wachter William B. Johnson Professor of Law and Economics University of Pennsylvania Law School Commentators Michael Klausner Nancy and Charles Munger Professor of Business; Professor of Law Associate Dean for Research and Academics Stanford Law School Bruce L. Silverstein Young Conaway Stargatt & Taylor, LLP The Public and Private Faces of Derivative Lawsuits Randall S. Thomas Professor of Law Vanderbilt University Law School Commentators Jill E. Fisch Alpin J. Cameron Professor of Law Director, Center for Corporate, Securities and Finance Law Fordham University School of Law David M. Silk Wachtell, Lipton, Rosen & Katz

Afternoon Session Panel Discussion on Hedge Funds, Private Equity, and Control Contests

Moderators Edward B. Rock Saul A. Fox Distinguished Professor of Business Law University of Pennsylvania Law School Michael L. Wachter William B. Johnson Professor of Law and Economics University of Pennsylvania Law School

Panelists William Anderson Managing Director Goldman, Sachs & Co. Isaac Corre Senior Managing Director Eton Park Capital Management Saul A. Fox Chief Executive Officer Fox Paine & Company, LLC Robert L. Friedman Senior Managing Director, Chief Administrative Officer and Chief Legal Officer The Blackstone Group L.P. Simon M. Lorne Vice Chairman and Chief Legal Officer Millennium Management, LLC Andrew Metrick Associate Professor of Finance The Wharton School Alan Miller Innisfree M&A Incorporated

1 Left: Saul A. Fox, Fox Paine & Company; Andrew Metrick, The Wharton School. Background, Merritt B. Fox, Columbia Law School. 2 Left: Albert S. Dandridge III, Schnader Harrison Segal & Lewis; David M. Silk, Wachtell, Lipton, Rosen & Katz. 3 From left: Saul A. Fox, Fox Paine & Company; Andrew Metrick, The Wharton School; Isaac Corre, Eton Park Capital Management; William Anderson, Goldman Sachs.

4 William Anderson, Goldman Sachs. Background, Michael Klausner, Stanford Law School. 5 Left: Robert L. Friedman, The Blackstone Group; Simon M. Lorne, Millennium Management.

roundtable programs

Corporate Law 10 december 2004

Welcome Michael A. Fitts Bernard G. Segal Professor of Law Dean, University of Pennsylvania Law School

Morning Session Antitakeover Provisions in PostReorganization Charters Edward Rock Saul A. Fox Distinguished Professor of Business Law University of Pennsylvania Law School David A. Skeel S. Samuel Arsht Professor of Corporate Law University of Pennsylvania Law School Commentators Michael Klausner Nancy and Charles Munger Professor of Business; Professor of Law Stanford Law School William H. Schorling Klett Rooney Lieber & Schorling. Post-Siliconix Freeze-Outs: Theory and Evidence Guhan Subramanian Joseph Flom Assistant Professor of Law and Business Harvard Law School

Afternoon Session Panel Discussion on Controlling Shareholders Moderators Edward B. Rock Saul A. Fox Distinguished Professor of Business Law University of Pennsylvania Law School Michael L. Wachter William B. Johnson Professor of Law and Economics University of Pennsylvania Law School Panelists Andrew D. Africk Apollo Management Michael J. Biondi Co-Chairman of Investment Banking Lazard FrĂ¨res & Co. LLC Joseph B. Frumkin Sullivan & Cromwell LLP Jeffrey N. Gordon Alfred W. Bressler Professor of Law Co-Director, Center for Law and Economics Studies Columbia Law School Hon. Leo E. Strine, Jr. Vice Chancellor Delaware Court of Chancery

6 Commentators Marcel Kahan George T. Lowy Professor of Law New York University School of Law Eileen Nugent Skadden Arps Slate Meagher & Flom LLP

1 Andrew Africk, Apollo Management. 2 Guhan Subramanian, Harvard Law School. 3 Charles I. Cogut, Simpson Thacher & Bartlett. 4 Joseph B. Frumkin, Sullivan & Cromwell. Background: Randall Thomas, Vanderbilt University Law School; Jill Fisch, Fordham University School of Law.

5 From left: Michael J. Biondi, Lazard; Charles I. Cogut, Simpson Thacher & Bartlett; Pamela F. Craven, Avaya Inc. Second row: Marcel Kahan, New York University School of Law; David A. Skeel, University of Pennsylvania Law School; Kenneth M. Ayotte, Columbia Business School; Katherine Litvak, The University of Texas School of Law. Rear: Michael Klausner, Stanford Law School. 6 Michael E. Lubowitz, Weil, Gotshal & Manges. Second row: David A. Skeel, University of Pennsylvania Law School; Kenneth M. Ayotte, Columbia Business School.

roundtable programs

Private Equity 21 may 2004 claridge’s, london, england Organized by the Institute for Law and Economics, University of Pennsylvania, in cooperation with the Faculty of Law, University of Cambridge Moderators Edward B. Rock Saul A. Fox Distinguished Professor of Business Law University of Pennsylvania Law School Michael L. Wachter William B. Johnson Professor of Law and Economics University of Pennsylvania Law School

Morning Session The Blackstone Group Spirit Amber’s Acquisition of Scottish & Newcastle’s Managed Pubs, Restaurants and Lodges Business Presenters Joseph P. Baratta Principal David S. Blitzer Senior Managing Director Private Equity Group The Blackstone Group International Limited London Commentators Edward Chandler Vice President Merrill Lynch International London David L. Melvin Managing Director of Investment Banking Merrill Lynch International London Scott V. Simpson Skadden, Arps, Slate, Meagher & Flom LLP London

Afternoon Session Kohlberg Kravis Roberts & Co. Rockwood: Acquisition of Laporte’s Specialty Chemical Businesses, Their Operation and Expansion

Presenters Todd Fisher Partner Kohlberg Kravis Roberts & Co. London Seifi Ghasemi Chairman and CEO Rockwood Specialties Group, Inc. Princeton, New Jersey Commentators Walter J. Clayton III Sullivan & Cromwell LLP London John Empson J.P. Morgan London Brian McCall Dechert LLP London Jay Ptashek Simpson Thacher & Bartlett LLP London

Private Equity 1 From left: Edward Chandler, Merrill Lynch International, London; Robert L. Friedman, The Blackstone Group, New York; David S. Blitzer, The Blackstone Group International, London; Joseph P. Baratta, The Blackstone Group International, London. 2 Seifi Ghasemi (standing), Rockwood Specialties Group, Princeton, New Jersey; Right, Todd Fisher, Kohlberg Kravis Roberts & Co., London. Background: John Empson, J.P. Morgan, London.

3 Foreground, Robert L. Friedman, The Blackstone Group, New York; right, David A. Skeel, Jr., University of Pennsylvania Law School. Background, left to right: Brian Cheffins, University of Cambridge; James Croock, Dechert, London.

roundtable programs

Corporate Law 16 april 2004

Morning Session A New Player in the Boardroom: The Emergence of the Independent Directors’ Counsel

Afternoon Session: Panel Discussion on CEO Certification Under Sarbanes-Oxley?

Edward B. Rock Saul A. Fox Distinguished Professor of Business Law University of Pennsylvania Law School

Commentators Robert C. Clark Harvard University Distinguished Service Professor and Austin Wakeman Scott Professor of Law Harvard Law School Hon. E. Norman Veasey Chief Justice Delaware Supreme Court [1992–May 2004]

Resetting the Corporate Thermostat: Lessons from the Recent Financial Scandals About Agency Costs, SelfDeception, and Deceiving Others Donald C. Langevoort Professor of Law Georgetown University Law Center Commentators James D. Cox Professor of Law Duke University School of Law Perry Golkin General Partner Kohlberg Kravis Roberts & Co.

Panelists Lawrence A. Weinbach CEO Unisys Corporation John C. Coffee, Jr. Adolf A. Berle Professor of Law Columbia Law School Michael H. Friedman Pepper Hamilton LLP Hon. Jack B. Jacobs Justice Delaware Supreme Court Michael P. Rogan Skadden, Arps, Slate, Meagher & Flom LLP

Corporate Law 1 Michael P. Rogan, Skadden, Arps, Slate, Meagher & Flom. Background: Jill Fisch, Fordham University School of Law; William W. Bratton, Georgetown University Law Center. 2 Left, Perry Golkin, Kohlberg Kravis Roberts; Right, Leo Strine, Delaware Court of Chancery. 3 Left to right: Michael H. Friedman, Pepper Hamilton; E. Norman Veasey, Delaware Supreme Court;

Robert L. Friedman, The Blackstone Group. Background: Howard L. Shecter, Morgan, Lewis & Bockius. 4 Donald F. Parsons, Jr., Delaware Court of Chancery. 5 Michael Friedman, Pepper Hamilton. 6 Lawrence A. Weinbach, Unisys Corporation; Jack B. Jacobs, Delaware Court of Chancery.

Chancery Court Panels and Corporate Governance Dinners

ILE’s series of Chancery Court Panels was initiated in fall 2003 as a component of a Penn Law course on corporate law and finance. Co-taught by Leo E. Strine, Jr., Vice Chancellor of the Delaware Chancery Court, and Michael L. Wachter, William B. Johnson Professor of Law and Economics, the course focuses on the valuation principles raised in corporate litigation and M&A transactions. Topics include appraisal, fair price principles in entire fairness scrutiny, and the role of investment bankers’ fairness opinions. Each semester, two special sessions of the class are opened to the entire University community, as well as to ILE Board members and invited guests, under the auspices of ILE. These open sessions feature panels of M&A lawyers, investment bankers, and experts in appraisal whose wealth of experience in appearing before the Chancery Court informs a discussion of actual case law. Since the topics combine areas of finance and law, faculty of The Wharton School participate actively in the Chancery Court Programs. The Chancery Court panels are followed by Corporate Governance Dinners with further commentary and discussion. ILE’s Corporate Governance Dinners—whether as stand-alone events or as adjuncts to lectures, presentations, Chancery Court panels, and other formal programs—provide an opportunity for further off-the-record commentary and conversation among presenters and members of the Board of Advisors, their invited colleagues, and the Institute’s Associate Faculty. Each dinner features focused commentary on a current issue in corporate governance, followed by a general discussion moderated by ILE Co-Directors Edward Rock and Michael Wachter.

Chancery Court Programs Moderators Vice Chancellor Leo E. Strine, Jr. Chancery Court of Delaware Michael L. Wachter University of Pennsylvania Law School 4 April 2006 Panel Discussion of the Toys “R” Us Litigation Toys “R” Us is a fascinating case, recently decided by Vice Chancellor Leo Strine, involving the merger of the company with an acquisition vehicle of KKR. The plaintiffs asserted that the board of directors failed to act reasonably in pursuit of the highest attainable value. The Toys “R” Us case is thus a fiduciary duty suit rather than an appraisal case. However, the case provides an excellent study, filled with intricate corporate valuation principles and showing the interplay of fiduciary duty suits and valuation. The panel and audience on April 4 brought together the major participants representing the defendant and the plaintiff in Toys “R” Us. Panelists and Dinner Commentators Thomas J. Allingham II Skadden, Arps, Slate, Meagher & Flom William D. Anderson, Jr. Goldman, Sachs & Co. John G. Finley Simpson Thacher & Bartlett LLP Robin M. Rankin Credit Suisse First Boston

Chancery Court Programs Toys “R” Us 1 Left to Right: Thomas J. Allingham II, Skadden, Arps, Slate, Meagher & Flom; Robin Rankin, Credit Suisse First Boston; John Finley, Simpson Thacher & Bartlett. 2 Left to Right: John Finley, Simpson Thacher & Bartlett; Hon. Leo E. Strine, Jr., Delaware Chancery Court; Michael Wachter, University of Pennsylvania Law School. 3 Front: Joel Friedlander, Bouchard Margules & Friedlander; Bruce Silverstein, Young Conaway Stargatt & Taylor. Background, left: David Silk, Wachtell, Lipton, Rosen & Katz.

5 William T. Allen, New York University School of Law {former Delaware Chancellor); William B. Chanceler III, Chancellor, Delaware Court of Chancery. 6 Leo E. Strine, Jr., Delaware Court of Chancery; Michael Wachter, University of Pennsylvania Law School.

18 February 2006 “The Technicolor Saga” Discussion with Members of the Delaware Chancery Court

The Technicolor saga began in 1983 following a cash-out merger of the minority shareholders of Technicolor Incorporated by a company controlled by Ron Perelman. There were five remands by the Delaware Supreme Court to the Court of Chancery and two appraisal 5

Technicolor 4 Front row: Donald J. Wolfe, Jr., Potter Anderson & Corroon; A. Gilchrist Sparks III, Morris, Nichols, Arsht & Tunnell. Second row: John Schmutz, ILE Board of Advisors; Steven Reed, Harkins Cunningham; Eileen Nugent, Skadden, Arps, Slate, Meagher & Flom.

chancery court programs & corporate governance dinners ”The Technicolor Saga” (cont’d) trials, the first in 1989 before Chancellor Allen. The litigation finally ended with a Chancery Court opinion from Chancellor Chandler in 2004. The appraisal remedy, available in a cash-out merger, has become more frequently utilized and thus more frequently debated over the last several years as a result of the “going- private” boom. Panelists and Dinner Commentators Hon. William T. Allen Former Chancellor Delaware Chancery Court Hon. William B. Chandler III Chancellor Delaware Chancery Court Hon. Leo E. Strine, Jr. Vice Chancellor Delaware Chancery Court 7 December 2004 Legal Regulation of Controlling Stockholders Panelists Joel Friedlander Bouchard Margules & Friedlander P.A.

Mark Gordon Wachtell, Lipton Rosen & Katz Victor L. Lewkow Cleary, Gottlieb, Steen & Hamilton Bruce L. Silverstein Young Conaway Stargatt & Taylor, LLP Dinner Commentators Lawrence Hamermesh Widener University School of Law Friedrich Kübler University of Pennsylvania Law School Howard L. Shecter Morgan, Lewis & Bockius LLP 9 November 2004 Valuation Panelists Thomas J. Allingham II Skadden, Arps, Slate, Meagher & Flom David G. Clarke The Griffing Group, Inc. Robert W. Holthausen The Wharton School Michael A. Weidinger Morris, James, Hitchens & Williams LLP

Dinner Commentators Perry Golkin Kohlberg Kravis Roberts & Co. Friedrick K. Kübler University of Pennsylvania Law School Andrew Metrick The Wharton School 18 November 2003 Investment Banking in M&A Deals: Do They Generate Value and Promote Integrity? And Under What Conditions? Moderators Vice Chancellor Leo E. Strine, Jr. Chancery Court of Delaware Michael L. Wachter University of Pennsylvania Law School Panelists Charles M. Elson University of Delaware Stuart M. Grant Grant & Eisenhofer, P.A. Robert A. Kindler J. P. Morgan Securities, Inc. Robert Spatt Simpson Thacher & Bartlett LLP

Corporate Governance Dinners

5 From left: Robin Rankin, Credit Suisse First Boston; Joseph Frumkin, Sullivan & Cromwell; Hon. Leo E. Strine, Jr., Delaware Court of Chancery; Charles Cogut, Simpson Thacher & Bartlett; Joel Friedlander, Bouchard Margules & Friedlander.

Valuation Representing Shareholders Bruce L. Silverstein Young Conaway Stargatt & Taylor, LLP Representing the Corporation Alan Stone Morris, Nichols, Arsht & Tunnell Expert Witness Donald Puglisi University of Delaware Puglisi & Associates Dinner Commentators Robert L. Friedman The Blackstone Group Michael L. Knoll University of Pennsylvania Law School Andrew Metrick The Wharton School

Mock Argument on the Classified Board/Poison Pill Debate Presiding Vice Chancellor Leo E. Strine, Jr. Chancery Court of Delaware 1

3 From left: Hon. Donald F. Parsons, Jr., Delaware Court of Chancery; Michael Wachter, University of Pennsyvlania Law School; Robert L. Friedman, The Blackstone Group; John Finley, Simpson Thacher & Bartlett. 4 Robert Friedman, The Blackstone Group; John Finley , Simpson Thacher & Bartlett; Brent Sonnek-Schmeltz, Penn Law JD’06.

21 October 2003

25 March 2003

1 Charles Cogut, Simpson Thacher & Bartlett. 2 Joseph Frumkin, Sullivan & Cromwell. Background: Robin Rankin, Credit Suisse First Boston.

Dinner Commentators Charles I. Cogut Simpson Thacher & Bartlett LLP Barry H. Feinberg Consolidated Vision Group Geoffrey C. Hazard, Jr. University of Pennsylvania Law School

Counsel for Plaintiff Jay Kasner Skadden, Arps, Slate, Meagher & Flom Counsel for Defendant Theodore Mirvis Wachtell, Lipton, Rosen & Katz

Panelists and Dinner Commentators John Coates Harvard Law School Mark Gordon Wachtell, Lipton, Rosen & Katz Paul Schnell Skadden, Arps, Slate, Meagher & Flom Robert Spatt Simpson Thacher & Bartlett Moderator: Michael L. Wachter University of Pennsylvania Law School

SYMPOSIA

ajor one- and two-day symposia are organized under the sole sponsorship of the Institute for Law and Economics and in cooperation with other organizations within the Law School and Wharton. In February 2005 we launched an annual conference on Law and Finance, jointly sponsored by ILE, the Wharton Finance Department, and the Center for Law and Business at NYU Law School and the Stern School Finance Department; the second joint conference was held in February 2006. The conference location alternates between Penn and NYU. 1 Yakov Amihud, Stern School of Business, and Richard Kihlstrom, The Wharton School. 2 Michael R. Roberts, The Wharton School. 3 Marcel Kahan, New York University School of Law; Gerald Rosenfeld, Rothschild North America. 4 Laura Starks, McCombs School of Business, University of Texas at Austin; Luigi Zingales, Graduate School of Business, University of Chicago; Andrew Metrick, The Wharton School. 5 From left: Augustine Landier, Stern School of Business; Vinay Nair, The Wharton School; Michael Roberts, The Wharton School. 6 Reed Shuldiner and Charles Mooney, University of Pennsylvania Law School.

7 Andrei Shleifer, Harvard University. 8 Front row: Yakov Amihud, Stern School of Business; Alexander Dyck, Rotman School of Management, University of Toronto; Luigi Zingales, Graduate School of Business, University of Chicago. Second Row: Hayong Yun, Graduate School of Business, Columbia University; Katharina Pistor, Columbia Law School; H. Franklin Allen, The Wharton School; Jun Qian, Carroll School of Management, Boston College.

9 Michael Wachter, University of Pennsylvania Law School, and Richard Kihlstrom, The Wharton School. 10 Rainer Haselmann, Vikrant Vig, and Hayong Yun, Graduate School of Business, Columbia University.

symposia

Penn/NYU Conference on Law and Finance 24â&#x20AC;&#x201C;25 February 2006 University of Pennsylvania Law School Jointly sponsored by Institute for Law and Economics, University of Pennsylvania Financial Institutions Center, The Wharton School Center for Law & Business, New York University Organized by Yakov Amihud Stern School of Business New York University Marcel Kahan New York University School of Law Andrew Metrick The Wharton School University of Pennsylvania Michael L. Wachter University of Pennsylvania Law School Session I Ex Ante Choices of Law and Forum: An Empirical Analysis of Corporate Merger Agreements Theodore Eisenberg Cornell University Law School Geoffrey P. Miller New York University School of Law Commentator: Matthew Rhodes-Kropf Columbia University Graduate School of Business Moderator: Merritt B. Fox Columbia Law School Session II Is Financial Contracting Costly? An Empirical Analysis of Debt Covenants and Corporate Investment Sudheer Chava C. T. Bauer School of Business, University of Houston Michael R. Roberts The Wharton School University of Pennsylvania Commentator: Michael Klausner Stanford Law School Moderator: Andrew Metrick The Wharton School University of Pennsylvania

Session III Bottom-Up Corporate Governance Augustin Landier Stern School of Business New York University David Sraer CREST & GREMAQ David Thesmar HEC Paris (Groupe HEC) & CEPR Commentator: Ehud Kamar University of Southern California, Law School Moderator: Jill Fisch Fordham University School of Law

Session VII Hedge Funds in Corporate Governance and Corporate Control Marcel Kahan New York University School of Law Edward B. Rock University of Pennsylvania Law School Commentator: Laura T. Starks McCombs School of Business University of Texas at Austin Moderator: William T. Allen New York University School of Law

Session VIII Judge-Specific Effects in Chapter 11 and Firm Outcomes Tom Chang Massachusetts Institute of Technology Antoinette Schoar Sloan School of Management Massachusetts Institute of Technology Commentator: Barry F. Adler New York University School of Law Moderator: William W. Bratton Georgetown University Law Center

Session IV Legal Origins and Stock Markets in the Twentieth Century Mark J. Roe Harvard Law School Commentator: Luigi Zingales The University of Chicago Gradate School of Business Moderator: H. Franklin Allen The Wharton School University of Pennsylvania Session V The Law and Economics of Self-Dealing Simeon Djankov The World Bank Rafael LaPorta Dartmouth College Florencio Lopez-de-Silanes University of Amsterdam Andrei Shleifer Harvard University

Commentator: John C. Coates Harvard Law School Moderator: Michael L. Wachter University of Pennsylvania Law School Session VI How Law Affects Lending Rainer Haselmann Leipzig Graduate School of Management Katharina Pistor Columbia Law School Vikrant Vig Graduate School of Business, Columbia University Commentator: Viral V. Acharya London Business School Moderator: Bernard Black University of Texas School of Law

Penn/NYU Conference on Law and Finance 1 Edward Rock, University of Pennsylvania Law School. 2 Michael Klausner, Stanford Law School. 3 Jeffrey Gordon, Columbia Law School.

4 Werner Ebke, New York University Law School. 5 Front row: Phillip Bond and Hulya Eraslan, The Wharton School. Back row: Reiner Haselmann, Vikrant Vig, and Hayong Yun, Graduate School of Business, Columbia University; Katharina Pistor, Columbia Law School; H. Franklin Allen, The Wharton School; Jun Qian, Carroll School of Management, Boston College.

symposia

NYU/Penn Conference on Law and Finance 25–26 February 2005 New York University School of Law Co-Sponsored by Center for Law & Business, New York University Institute for Law and Economics, University of Pennsylvania SEC Regulation Fair Disclosure, Information, and the Cost of Capital Armando Gomes Gary Gorton Leonardo Madureira The Wharton School University of Pennsylvania Theft and Taxes Mihir A. Desai Harvard University and NBER Alexander Dyck University of Toronto Luigi Zingales University of Chicago, NBER and CEPR Corporate Governance and Firm Performance Laurence D. Brown Marcus L. Caylo Georgia State University How Do Legal Differences and Learning Affect Financial Contracts? Steven N. Kaplan University of Chicago Graduate School of Business Frederic Martel University of Lausanne IMD and UBS Global Asset Management Per Strömberg University of Chicago Graduate School of Business The Good, The Bad, and the Lucky: CEO Pay and Skill Robert Daines Stanford Law School Vinay Nair The Wharton School, University of Pennsylvania Lewis A. Kornhauser NYU School of Law On the Capital Structure Implications of Bankruptcy Codes Viral V. Acharya London Business School Rangarajan K. Sundaram Kose John Stern School of Business, New York University

Do the Merits Matter Less After the Private Securities Litigation Reform Act? Stephen J. Choi NYU School of Law Why Defer to Managers? A Strong Form Efficiency Model Michael L. Wachter University of Pennsylvania Law School Richard E. Kihlstrom The Wharton School University of Pennsylvania Corporate Governance, Executive Compensation and Securities Litigation Eric Talley University of Southern California Law School Gudrun Johnsen The RAND Corporation

Control Transactions 8–9 February 2003 University of Pennsylvania Law School Sponsored by Institute for Law and Economics University of Pennsylvania Law Review Co-sponsored by Alfred P. Sloan Foundation Saul A. Fox Research Endowment

Panel II Theory of the Firm

Panel V Controlling Shareholders

A Theory of Firm Scope Oliver Hart Harvard University Bengt Holmstrom Massachusetts Institute of Technology

Appraising the Non-Existent: The Delaware Courts’ Struggle with Control Premiums William J. Carney Emory University School of Law Mark E. Heimendinger Milbank, Tweed, Hadley & McCloy LLP

Panel III Managerial Incentives Managing to Market Anomalies versus Maximizing Corporate Value: The Essential Tension in Takeover Law Richard E. Kihlstrom The Wharton School Michael L. Wachter University of Pennsylvania Law School Anti-Takeover Charter Provisions Lucian Arye Bebchuk Harvard Law School Panel IV Federalism The New Federalism of the American Corporate Governance System: Preliminary Reflections of Two Residents of One Small State Chancellor William B. Chandler III Vice Chancellor Leo E. Strine, Jr. Delaware Court of Chancery Dinner Address Chief Justice E. Norman Veasey Supreme Court of Delaware

Controlling Controlling Shareholders: New Limits on the Operate, Sale of Control, and Freeze Out Alternatives Ronald J. Gilson Stanford Law School Jeffrey N. Gordon Columbia Law School Panel VI Checks & Balances on Corporate Law: Institutional & Bankruptcy Institutional Shareholders’ Split Personality on Corporate Governance: Active in Proxies, Passive in IPOs Michael Klausner Stanford Law School Creditors’ Ball: The “New” New Corporate Governance in Chapter 11 David A. Skeel, Jr. University of Pennsylvania Law School

Published in a special issue of the University of Pennsylvania Law Review (Vol. 152, No. 2, December 2003) Panel I Precommitment Corporate Constitutionalism: Anti-Takeover Charter Provisions as Precommitment Marcel Kahan New York University School of Law Edward B. Rock University of Pennsylvania Law School Unregulable Defenses and the Perils of Shareholder Choice Jennifer H. Arlen New York University School of Law Eric L. Talley USC Law School The Shareholder as Ulysses: An Empirical Exploration of Why Public Corporations Are Controlled by Boards of Directors Lynn A. Stout UCLA School of Law

Control Transactions 1 Oliver Hart, Harvard University. 2 Jennifer H. Arlen, New York University School of Law (left); Robert Romano, Yale University Law School.

3 Franklin Allen, The Wharton School. 4 Hon. E. Norman Veasey, Delaware Supreme Court.

LECTURES

he Institute for Law and Economics sponsors two series of public lectures: Law and Entrepreneurship and Distinguished Jurist. In sponsoring these events, the Institute aims to spotlight and honor lawyers who have led noteworthy careers and made significant contributions as corporate executives and entrepreneurs or as members of the judiciary at the state or federal levels. Audiences are drawn from all sectors of the University and the legal and business communities. These eminent speakers hold particular appeal and inspiration for students of Pennâ&#x20AC;&#x2122;s Law School and the Wharton School, with whom they talk informally at receptions following each lecture. The Law and Entrepreneurship lecture is supported in part by the Ronald N. Ruttenberg Fund.

law and entrepreneurship lectures

Law and Entrepreneurship Lectures

16 February 2006

23rd Law and Entrepreneurship Lecture

22nd Law and Entrepreneurship Lecture

The Banker as Entrepreneur Michael J. Biondi Co-President of Investment Banking Lazard Ltd

Founding and Building a New Venture: The Story of the National Women’s Law Center Marcia Greenberger Founder and Co-President National Women’s Law Center

Michael Biondi has extensive experience in advising companies and independent board committees on domestic and cross-border transactions in a broad array of industries—media/communications, transportation, utilities, general industrial and retail. He joined Lazard from Dresdner Kleinwort Wasserstein, where he held a number of senior positions, including Chairman and Co-Chief Executive of the Americas and Co-Head of Global Investment Banking. Prior to that, he was a founding partner of the boutique investment bank Wasserstein Perella & Co., serving as its Chairman and Chief Executive Officer from 1996 until its sale early in 2001. His talk for ILE focused on his experiences in starting and building Wasserstein Perella & Co. and ultimately selling it for $1.37 billion. More recently, Mike has played a key role at Lazard as part of the team that assumed control and took the company public. Known as the world’s preeminent advisory investment bank, Lazard has offices in 16 countries around the globe. The firm provides advisory services—including mergers and acquisitions, asset management, and restructuring—to corporations, partnerships, institutions, governments, and individuals. Mike has a particular expertise in advising independent directors in con-

“Once you’ve done something entrepreneurial, once you’ve met a payroll, once you’ve been responsible for hundreds of people who’ve been willing to follow you into battle— whether rightly or wrongly—it is very hard to go to work at a big bureaucratic organization.... And it’s that spark, it’s that essence, it’s that feel of a small firm that keeps me doing this...the thrill of both counseling people over the long run and staying cutting edge with what’s going on in your business. I wouldn’t be doing this today if I didn’t have a place where I could be doing both of those things.”

flict situations. When a parent company seeks to acquire a partially owned subsidiary, current practice requires that the subsidiary board appoint a special committee of independent directors to look after the interests of minority shareholders. For these committees to fulfill their responsibilities, they need independent and expert investment banking advice. Whom do they call? Mike Biondi. Michael Biondi began his M&A career as a lawyer at Skadden, Arps, Slate, Meagher & Flom. He holds both an M.B.A. from The Wharton School and a J.D. from Penn Law.

Marcia Greenberger is one of the founders and the entrepreneurial spirit behind the National Women’s Law Center. She along with others developed what was essentially a new industry in the early 1970s—law firms and organizations dedicated to the then-emerging women’s rights movement. The creation of the Center over 30 years ago established her as the first full-time women’s rights legal advocate in Washington, D.C. and she has been described as “guiding the battles of the women’s rights movement” by The New York Times. A recognized expert on sex discrimination and the law, Marcia has participated in the development of key legislative initiatives and litigation protecting women’s rights, particularly in the areas of education, employment, health and reproductive rights. She has been a leader in developing strate-

gies to secure the successful passage of legislation protecting women and counsel in landmark litigation establishing new legal precedents for women, and is the author of numerous published articles. She was recognized by Working Woman Magazine as one of the 25 heroines whose activities over 25 years have helped women in the workplace, and by Washingtonian Magazine as one of Washington, D.C.’s most powerful women. Marcia Greenberger received her B.A. with honors in 1967, and her J.D. cum laude in 1970, from the University of Pennsylvania. She practiced law with the Washington, D.C., firm of Caplin and Drysdale from 1970–72. In 1972 she started and became Director of the Women’s Rights Project of the Center for Law and Social Policy, which became the National Women’s Law Center in 1981. In her talk, Marcia described the challenges and the excitement of building a new, vital organization from the ground up. “Thinking about how—and most important, why—the National Women’s Law Center has grown over the last 30-plus years...I have thought about what ‘public interest, nonprofit advocacy organization’ really means, and the words that I often use to describe it are ‘entrepreneurial enterprise.’....As we evolved and our sophistication developed about what it meant to change public policy, we began to think of ourselves as an institution that uses the law but not as a law firm per se...and we became an institution that presses and takes positions along with its coalition partners.”

law and entrepreneurship lectures

7 April 2005

24 March 2004

21st Law and Entrepreneurship Lecture

20th Law and Entrepreneurship Lecture

A Swing of the Pendulum: 20 Years in M&A Joseph D. Gatto Managing Director Goldman, Sachs & Co.

The WNBA and Women’s Team Sports: A New Sports Marketing Proposition for the New Millennium Val Ackerman President Women’s National Basketball Association

Joseph Gatto’s career at Goldman Sachs has spanned more than 20 years. His talk focused on how the market for corporate control has changed during that period, and he shared personal observations based on his rich experience in working on public company deals and advising CEOs and boards of directors. As a graduate of both Wharton (MBA) and the Penn Law School (JD), Joe Gatto has the interdisciplinary background that is characteristic of ILE’s Law and Entrepreneurship speakers. He began his career at Goldman Sachs as an Associate in the Mergers and Acquisitions Department. In 1987, he was a founding member of Goldman Sachs Corporate Reorganizations and Workout Group. In 1991, he was appointed Head of the Strategic Development Group, which was organized to provide strategic advisory services to major clients in selected industries including health care, technology, packaging and forest products and consumer products. In 1994, Mr. Gatto was elected General Partner of Goldman Sachs. He was appointed Head of the Consumer

“We, as a society, find ourselves in 2005 at a crossroads in terms of how American corporations should be governed and how such governance considerations should affect the market for corporate control.”

Products Industry practice, and in 2003 he was named Chairman of Global Consumer Products Banking. In recent years, Joe has worked closely with the world’s major consumer products companies and has advised on many significant industry transactions including Unilever’s acquisition of Bestfoods, the merger of RJ Reynolds and Brown & Williamson, Seagram’s sale of Tropicana to Pepsi, Cadbury’s acquisition of Dr. Pepper/7-Up, the sale of Dial Corporation to Henkel, Kellogg’s acquisition of Keebler and the sale of Chef America to Nestle.

Val Ackerman’s Law and Entrepreneurship Lecture continued an ILE tradition of sponsoring speakers who have combined a law education with a career in the business of sports. Ms. Ackerman graduated from the University of Virginia, where she was a four-year starter for the women’s basketball team and a two-time Academic All-American. Following graduation, she played professional basketball in France for one year before entering law school at UCLA. After earning her law degree in 1985, Val spent two years with Simpson Thacher & Bartlett LLP in New York before joining the National Basketball

Association as a staff attorney. From 1990 to 1992 she served as special assistant to NBA Commissioner David Stern. (who was ILE’s Law and Entrepreneurship speaker in 1993). From 1994 to 1996, Val was the NBA’s vice president of business affairs. In 1996, she was named President of the WNBA, which is affiliated with the NBA and had its inaugural season in 1997. The league features 13 teams, worldclass players, national network and corporate support, and a following of avid fans. In 2003 it completed its seventh season of play. Ms. Ackerman’s talk focused on marketing strategies for women’s professional basketball for 2000 and beyond. The league is looking to grow its fan base and revenues in the face of a tough economy and a very crowded sports and entertainment landscape. A primary goal is to create a receptive mindset among potential fans. The WNBA is integrated with the overall NBA structure, which provides built-in efficiencies, in the sharing of staff and facilities and the ability to build on existing organizational and community relationships. “We have our niche and we are intent on growing it,” Ms. Ackerman said.

“Our challenge is a promotional challenge. We think if we can get the word out, if we can market the league aggressively, if we can make sure that more and more people are aware that we have something very exciting to offer in terms of the best women players in the world playing a game that Americans seem to love...that more and more people will come to learn about it and will give it a try. Hopefully, when they come to a game they’ll want to come back.”

lectures

Past Law and Entrepreneurship Lectures

30 October 2003 The Role of Entrepreneurship in Urban Education: Past, Present and Future James E. Nevels Chairman and CEO The Swarthmore Group, Inc. Chairman, Philadelphia School Reform Commission 6 November 2002 Public Trust—and Distrust— in American Business: What Needs to be Done Peter G. Peterson Chairman, The Blackstone Group Chairman, Federal Reserve Bank of New York Co-Chair, Conference Board Commission on Public Trust and Private Enterprise 26 September 2002 What They Did Not Teach Me in Law School Robert M. Potamkin Co-Chairman and Co-CEO Planet Automotive Group, Inc. 19 April 2002 Smart People Making and Losing Money: Some Recent Examples Perry Golkin Kohlberg Kravis Roberts & Co. 25 October 2001 The Economics of Sports Team Franchises for Cities Hon. Edward G. Rendell Governor, Commonwealth of Pennsylvania [former Mayor, City of Philadelphia; former General Chair, Democratic National Committee]

2 March 2000 Perspectives on the Health Care Revolution Charles A. Heimbold, Jr. Chairman and CEO Bristol-Myers Squibb Company

12 November 1998 Financial Industry Restructuring: The Best and the Worst Finn M. W. Caspersen Chairman and CEO Knickerbocker LLC (former Chairman and CEO, Beneficial Corporation)

7 October 1998 Crisis Management Henry Silverman Chairman, President and CEO Cendant Corporation 23 October 1997 How to Maintain Entrepreneurial Values While Your Company Climbs into the Fortune 500 Brian L. Roberts President Comcast Corporation 27 March 1997 The Unique Impact of the Law on the Leveraged Buyout Business Saul A. Fox Fox Paine &Company, LLC

21 February 2001 Private Equity: Difficult Investing in a Difficult Time Paul S. Levy Senior Managing Director Joseph Littlejohn & Levy

28 November 1995 Media Consolidation, Viacom and Paramount Mark M. Weinstein Senior Vice President, Government Affairs Viacom, Inc.

15 November 2000 MetLife’s Record-Setting Demutualization and IPO Gary A. Beller Senior Executive Vice President and General Counsel Metropolitan Life Insurance Company

4 April 1995 Letting the Market Decide: Law and Lawlessness in the Merger Marketplace Lawrence Lederman Milbank, Tweed, Hadley &McCloy

18 November 1999 Ethics in Sports: Deciding the Game Anita DeFrantz Vice President International Olympic Committee President, Amateur Athletic Foundation

1 Peter G. Peterson 2 James E. Nevels 3 Edward G. Rendell 4 Brian L. Roberts 5 Paul S. Levy 6 Perry Golkin 7 Anita DeFrantz

lectures

Distinguished Jurist Lectures

16 March 2006 19th Distinguished Jurist Lecture Technology Mergers in a Shrinking World Hon. Vaughn R. Walker Chief Judge U.S. District Court for the Northern District of California Hon. Vaughn R. Walker became a federal judge in 1990 after having been nominated by Presidents Reagan and George H. W. Bush and confirmed by the Senate. He studied law at the University of Chicago and Stanford and practiced law in San Francisco, handling antitrust and other business cases, from 1972 until his appointment to the bench. As a federal judge, Walker has been described as “a pioneer who understands business law.” In his Distinguished Jurist talk he shared

insights gained in presiding over the Oracle antitrust trial and other highprofile litigation involving mergers and intellectual property issues in high-tech companies (such as the landmark case that pitted Apple Computer against Microsoft). His lecture focused on the implications for antitrust merger analysis of the increasing importance of intellectual property (i.e., technology) in commercial activity, and the impact of globalization. “In an industry whose products derive their value from their intellectual or conceptual content, not from their physical characteristics, the traditional tools we’ve used in merger analysis are much less useful. They don’t fit the kinds of dynamics that a technology industry displays in quite the same way that the traditional physical kind of product fits those standards.... Sometimes the key question in deciding a merger case should not be whether a merged firm can exercise market power, but assuming that the merged firm will exercise such power, how long is that state of affairs likely to persist.... We’ve seen that judges in our courts have approached these merger cases with a healthy skepticism. This, I think, has been a wholesome development that eventually may spur and forward the search for a more workable metric of competition in a fast-changing, shrinking world.”

3 March 2005 18th Distinguished Jurist Lecture Corporate Federalism: Event Horizons in Corporate Governance Hon. Myron T. Steele Chief Justice Delaware Supreme Court The Honorable Myron T. Steele is a former Vice Chancellor of the Delaware Court of Chancery, Resident Judge of Superior Court, Deputy Attorney General, Senate (Delaware) Attorney and Chairman of the Consumer Affairs Board. He has presided over major corporate litigation, LLC and limited partner governance disputes, and he writes frequently on issues of corporate document interpretation and corporate governance. He has published over 300 opinions disposing of disputes among members of limited liability companies, and limited partnerships, and between shareholders and management of both publicly traded and closed corporations. In his talk, Chief Justice Steele described how the federal government’s desire to protect shareholders in corporations has led to a “one-sizefits-all regulatory model” that is often less sensitive to a corporation’s particular situation than the corresponding state laws would be. As early as the Securities Act of 1933 and the

“The larger the federal presence, the less scope to the states’ radically different approaches and their influence in shaping corporate governance. Like black holes, the federal government’s gravitational pull inevitably swallows everything in its path.”

Exchange Act of 1934, the federal regulation of corporations has been creeping further and further into the domain of individual states’ regulation, he said. He sees the Sarbanes-Oxley Act, passed in 2002 in response to corporate financial and accounting scandals, as a troubling harbinger of growing federal control. Since 2002, corporations have spent $8 billion attempting to comply with the new restrictions, the Chief Justice said, and he expressed concern that there would be further costs, not only in direct compliance expenditures, but in losses from restricted business practices.

lectures

Distinguished Jurist Lectures

28 October 2004 17th Distinguished Jurist Lecture A Twelve-Year Retrospective on Delaware Corporate Jurisprudence and Governance Issues Hon. E. Norman Veasey Chief Justice Delaware Supreme Court 1992–2004 Chief Justice Veasey presented “a thematic look through the rear-view mirror” of some of the Delaware Supreme Court decisions handed down during a term that began in April of 1992 and ended in the spring of 2004. He discussed changes during his time on the bench in liability exposure of directors; standards of conduct and standards of review; trends in fiduciary duty law and the evolving expecations of directors, including good faith; deal protection; duty of disclosure; derivative suits; the role of best practices; and federalism vs. federalization. In summing up his observations across all of these areas, he offered the over-arching conclusion that “the corporate governance regime depends on an active board, and it works only when people of integrity operating in the right corporate culture make it work. The system depends on trust in people—especially the directors, regulators and courts.” During Mr. Veasey’s tenure as Chief Justice, the U.S. Chamber of Commerce ranked Delaware’s courts first in the nation for three consecutive years for their fair, reasonable and efficient litigation environment. Chief

Justice Veasey has also been credited with leading nationwide programs to restore professionalism to the practice of law and adopt best practices in the running of America’s courts. Currently, E. Norman Veasey is a senior partner at Weil, Gotshal & Manges, serving as a strategic advisor to the firm’s roster of prominent global clients on a wide range of issues related to mergers and acquisitions, restructuring and litigation. Additionally, he advises on corporate governance issues involving the responsibilities of corporate directors in complex financial transactions and crisis management. He is a member of the ILE Board of Advisors.

“The best way to demonstrate that federal intervention into the internal affairs of corporations is unnecessary and undesirable is for boards of directors—guided by business lawyers—to continue what the Delaware judges have consistently encouraged, which is the quest for best practices of due care, loyalty, good faith, independence, constructive skepticism and demanding total understanding before acting.”

4 March 2004 16th Distinguished Jurist Lecture Corporate Decision-Making in Delaware Courts Hon. Carolyn Berger Justice Delaware Supreme Court The Institute for Law and Economics roster of Distinguished Jurists includes many representatives of the Delaware Chancery and Supreme Courts, reflecting the close relationship between the Institute and the judges who are this country’s premier shapers of corporate law. In 2004 this tradition continued with Justice Carolyn Berger’s presentation of the 16th Distinguished Jurist Lecture. When Carolyn Berger joined the Delaware Supreme Court in 1994, she was the first woman to be appointed to a constitutional court in Delaware. Previously she served for ten years as a Vice Chancellor on Delaware’s Court of Chancery, having practiced law as a corporate litigator and as a Deputy Attorney General. In her talk, Justice Berger described how the Supreme Court operates in maintaining “the long tradition of coherent and predictable corporate decision-making that has been our trademark over the years.” She focused on the issues and tensions inherent in deciding corporate cases, describing, for example, how the Court balances the “hands-off” restraint mandated

“[ Judges] bring different sensibilities to their decision-making. ...What we share, I believe, is a strong commitment to the basic goal of maintaining a coherent, predictable, and consistent body of law.”

by the business judgment rule with the heightened judicial scrutiny required in cases of contested conduct. She also described the Court’s dilemmas in applying the entire fairness standard, determining fair price—given the experts’ “wildly differing” valuations in appraisal cases—and reconciling the respective merits of fair price (outcome) vs. fair dealing (process). In conclusion, she offered observations and practical advice about how understanding the nature of the Court’s process might affect a corporate practitioner’s approach to a given case as well as how much litigators should or should not read into the Court’s decisions.

lectures

Past Distinguished Jurist Lectures

27 February 2003 The Effects of Collegiality on Judicial Decision Making The Honorable Harry T. Edwards Circuit Judge U.S. Court of Appeals for the D.C. Circuit 29 November 2001 Fee Shifting as a Control Against the Rogue Litigant The Honorable Jack B. Jacobs Justice, Supreme Court of Delaware [former Vice Chancellor, Delaware Court of Chancery] 6 March 2001 Administering Capital Punishment: Is Texas Different? The Honorable Patrick E. Higginbotham U.S. Court of Appeals for the Fifth Circuit 24 February 2000 The Court of Chancery as Teacher of Corporate Law The Honorable William B. Chandler III Chancellor, Delaware Court of Chancery 11 February 1999 Why Do People Bring Employment Discrimination Cases When They Usually Lose? The Honorable Diane Wood U.S. Court of Appeals for the Seventh Circuit 12 February 1998 The Value of Predictability in Corporate Law The Honorable E. Norman Veasey Chief Justice, Delaware Supreme Court 11 February 11 1997 What Economics of Law Must Address Next: Some Thoughts on Theory The Honorable Guido Calabresi U.S. Court of Appeals for the Second Circuit

7 February 1996 The MTV Constitution The Honorable Alex Kozinski U.S. Court of Appeals for the Ninth Circuit 22 March 1995 Accountability: Popular Will, Interest Groups, or the Invisible Hand The Honorable Stephen F. Williams U.S. Court of Appeals for the District of Columbia

13 April 1994 On the Constitution The Honorable Antonin Scalia Associate Justice, U.S. Supreme Court 14 October 1992 Nonprice Competition The Honorable Douglas H. Ginsberg U.S. Court of Appeals for the District of Columbia 3 December 1991 Corporate Takeovers and Our Schizophrenic Conception of the Corporation The Honorable William T. Allen Chancellor, Delaware Court of Chancery 1990 The Constitution and the Spirit of Freedom The Honorable Anthony M. Kennedy Associate Justice U.S. Supreme Court

1 The Honorable Harry T. Edwards

5 The Honorable Antonin Scalia

2 The Honorable Jack B. Jacobs

6 The Honorable E. Norman Veasey (left) and the Honorable Myron T. Steele, the former and present Chief Justices of the Delaware Supreme Court. Both presented Distinguished Jurist Lectures for ILE during the 2004â&#x20AC;&#x201C;2005 academic year.

3 The Honorable William B. Chandler III 4 The Honorable Diane Wood

SEMINARS AND WORKSHOPS

LE Seminars provide an opportunity for scholars from the University of Pennsylvania and elsewhere to present provocative ideas on timely issues and a wide range of subjects. All participants are invited to engage in a give-and-take with the presenter, an interchange that is a hallmark of these workshops. Papers, which are usually works in progress, can be downloaded from the ILE Web site at http://www.law.upenn.edu/ile/seminarseries.html, and copies are provided to faculty and advanced students upon request. The 2005–2006 ILE Seminar Series was organized by Professors R. Polk Wagner and Michael Wachter. During the 2005–2006 academic year, Professors Mitchell Kane (visiting Penn Law from the University of Virginia School of Law), Michael Knoll (Penn Law and The Wharton School), and Reed Shuldiner (Penn Law), with funding from the University of Pennsylania Provost’s Office, ran a Seminar on Tax Policy and Public Finance. As part of that seminar, six prominent tax academics and one highranking government official were brought to the University to make presentations. In October 2002 ILE debuted the first installment in the new ILE/Wharton Finance series, providing an opportunity for faculty and advanced students from the Law School, the Wharton School, and the Department of Economics to come together around an area of common interest and strengthening the Institute’s core academic relationships. A dinner follows each presentation, with commentary presented by members of ILE’s Associate Faculty from Law, Wharton Finance, and the Department of Economics and a general discussion. This series continued with two seminars during 2005–2006. ILE and Finance alternate in selecting speakers, with the venue for the presentations alternating between the Law School and Wharton. Organizers are Michael Wachter (Law) and Andrew Metrick (Wharton).

3 1 Raghuram G. Rajan, International Monetary Fund. 2 Foreground: Michael Knoll, University of Pennsylvania Law School. 3 Left, Bruce Silverstein, Young Conaway Stargatt & Taylor; right, Andrew Metrick, the Wharton School. 4 Roberta Romano, Yale Law School.

seminars and workshops

ILE Seminar Series

ILE/Finance Seminars

spring 2006 & fall 2005

Co-Sponsored by Institute for Law and Economics and Department of Finance The Wharton School 6 April 2006 The States as Laboratory: Legal Innovation and State Competition for Corporate Charters Roberta Romano Allen Duffy/Class of 1960 Professor of Law Yale University Law School Commentators: Richard E. Kihlstron Wharton Finance Andrew Metrick Wharton Finance Chris W. Sanchirico Penn Law Bruce L. Silverstein Young Conaway Stargatt & Taylor 20 October 2005 Creating Constituencies for Reform Raghuram G. Rajan Economic Counsellor and Director, Research International Monetary Fund Commentators: William W. Burke-White Penn Law Robert P. Inman Wharton Finance Jason Scott Johnston Penn Law Bilge Yilmaz Wharton Finance 31 March 2005 What Matters in Corporate Governance? Lucian Arye Bebchuk Harvard Law School Commentators: Hulya Eraslan Wharton Finance Andrew Metrick Wharton Finance Edward B. Rock Penn Law David A. Skeel Penn Law

11 November 2004 Venture Capital Investment Cycles: The Role of Experience and Specialization Paul A. Gompers Graduate School of Business Administration Harvard University Commentators: Rafi Amit Wharton Finance Sean Griffith Penn Law (visiting) Richard Kihlstrom Wharton Finance Polk Wagner Penn Law 21 April 2004 The State of U.S. Corporate Governance: What’s Right and What’s Wrong Steven Kaplan Graduate School of Business University of Chicago Commentators: Franklin Allen Wharton Finance Andrew Metrick Wharton Finance Katharina Pistor Penn Law (visiting) 9 October 2003 Understanding Material Adverse Change Clauses: Moral Hazard in Acquisitions (co-authored with Alan Schwartz) Ronald J. Gilson Columbia Law School and Stanford Law School Commentators: Franklin Allen Wharton Finance Kristin Madison Penn Law Andy Postlewaite Penn Economics 31 October 2002 Law and Finance: The Practice of Justice Andrei Shleifer Harvard University Commentators: Richard E. Kihlstrom Wharton Finance Michael S. Knoll Penn Law Jason Scott Johnston Penn Law Andrew Metrick Wharton Finance

27 April 2006 Mergers and Innovation (with Howard A. Shelanski) Michael Katz Professor of Economics Sarin Chair in Strategy and Leadership Haas School of Business University of California, Berkeley

19 September 2005 The Rhetoric of Corporate Law: The Impact of Stakeholder Rhetoric on Corporate Norms Lisa Fairfax Associate Professor of Law University of Maryland School of Law

Tax Policy Seminars 24 April 2006 The Screening Effect of the Private Securities Litigation Reform Act Adam C. Pritchard Professor of Law The University of Michigan Law School 19 April 2006 ILE Seminar / Wharton Applied Economics Workshop Why Has the Auto Death Rate Fallen So Dramatically? Understanding the Decline in Motor Vehicle Fatality Rates from 1980 to 2002 John J. Donohue III Leighton Homer Surbeck Professor of Law Yale Law School 27 March 2006 Independent Directors as Securities Monitors Hillary Sale F. Arnold Daum Corporate Scholar Professor of Law The University of Iowa College of Law 25 January 2006 Auditing the Court: Congressional Oversight of Supreme Court Decision-Making Nancy C. Staudt Professor of Law Washington University School of Law 10 October 2005 Principles of Contract Design (with George G. Triantis) Robert E. Scott Justin W. D’Atri Visiting Professor of Law, Business and Society Columbia Law School

Spring 2006 Speakers: Anne Alstott Yale Law School Revisiting the Fiscal Politics of the 1920s Alan J. Auerbach Department of Economics University of California, Berkeley (Vistiing, NYU Law School) Who Bears the Corporate Tax? A Review of What we Know Lily Batchelder NYU Law School Refundable Credits Daniel I. Halperin Harvard Law School Is Income Tax Exemption for Charities Special? The Issue is Investment Income Mitchell Kane University of Virginia School of Law (Visiting, University of Pennsylvania Law School) Alex Raskolnikov Columbia Law School Tax Shelter Penalties Eric Solomon Acting Assistant Secretary of Tax Policy U.S. Treasury

Richard J. Herring (cont’d) The Case of the Missing Market: The Bond Market & Why it Matters for Financial Development, (with Nathporn Chatusripitak), in Recent Financial Crises: Analytical Issues and Lessons to be Learned, eds. Lawrence R. Klein and Tayyeb Shabbir, Edward Elgar Publishing, 2006.

Richard E. Kihlstrom Ervin Miller-Arthur M. Freedman Professor of Finance and Economics and Chairman, Department of Finance, The Wharton School

Robert W. Holthausen Nomura Securities Company Professor of Accounting and Finance and Chairman, Department of Accounting, The Wharton School

Corporate Policy and the Coherence of Delaware Takeover Law (with Michael Wachter), 152 University of Pennsylvania Law Review, December 2003.

Michael S. Knoll Theodore K. Warner Professor of Law & Professor of Real Estate

Agency Problems of Excess Endowments in Not-for-Profit Firms (with W. Guay and R. Verdi), Journal of Accounting and Economics, forthcoming.

Testing the Relative Power of Accounting Standards versus Incentives and Other Institutional Features to Influence the Outcome of Financial Reporting in an International Setting, 36 Journal of Accounting & Economics, December 2003.

Gerald R. Faulhaber Professor of Business and Public Policy and Management, The Wharton School Professor of Law

Robert P. Inman Richard King Mellon Professor; Professor of Finance, Economics, Business and Public Policy, Real Estate, The Wharton School

The Future of Wireless Telecommunications: Spectrum as a Scarce Resource, Information Economics and Policy, forthcoming 2006.

Financing Cities, in A Companion to Urban Economics, eds. Richard Arnott and Daniel McMillen, Blackwell Publishing, 2006.

Wireless Telecommunications: Spectrum as a Critical Resource, 79 Southern California Law Review, 2006.

Federalism and the Democratic Transition: Lessons from South Africa, American Economic Review, Papers and Proceedings, May 2005.

PUBLICATIONS AND PAPERS

Listed below is a sampling of recently published papers and work in progress by members of the Associate Faculty of the Institute for Law and Economics. ILE maintains a series of research papers and provides copies—electronic or paper—to interested parties upon request to clauseb@law.upenn.edu. The Institute is a member of the Legal Scholarship Network (LSN), a subset of the Social Science Research Network. Current ILE research papers are posted in the University of Pennsylvania Law and Economics Research Paper Series on the LSN Web site. Abstracts as well as complete papers can be downloaded (http://www. ssrn.com/link/penn-lawecon.html). Faculty appointments are in the University of Pennsylvania Law School unless otherwise noted. Matthew D. Adler Leon Meltzer Professor of Law Inequality and Uncertainty: Theory and Legal Applications (co-authored with Chris Sanchirico), University of Pennsylvania Law Review, forthcoming 2007. Welfare Polls: A Synthesis, NYU Law Review, forthcoming 2006.

Franklin Allen Nippon Life Professor of Finance and Professor of Economics, The Wharton School Credit Risk Transfer and Contagion (with E. Carletti), 53 Journal of Monetary Economics, 2006. Law, Finance and Economic Growth in China (with J. Qian and M. Qian), 77 Journal of Financial Economics, 2005.

Howard F. Chang Earle Hepburn Professor of Law The Effect of Joint and Several Liability Under Superfund on Brownfields (with Hilary Sigman). ILE research paper, 2005. Cultural Communities in a Global Labor Market: Immigration Restrictions as Residential Segregation. ILE research paper, 2005.

John E. Core Associate Professor of Accounting, The Wharton School Is U.S. CEO Compensation Inefficient Pay Without Performance? A review of Pay Without Performance: The Unfulfilled Promise of Executive Compensation by Lucian Bebchuk and Jesse Fried (with W. Guay and R. Thomas), 103 Michigan Law Review, 2005.

Lawrence A. Hamemesh Ruby R. Vale Professor of Corporate and Business Law, Widener University School of Law The Fair Value of Cornfields in Delaware Appraisal Law (with Michael Wachter), 31 Journal of Corporation Law, 2006. The Policy Foundations of Delaware Corporate Law, Columbia Law Review, forthcoming.

Richard J. Herring Jacob Safra Professor of International Banking, The Wharton School, and Co-Director of the Wharton Financial Institutions Center Implementing Basel II: Is the Game Worth the Candle?, in Basel II and the Future of Banking Regulation, special issue of Financial Markets, Institutions & Instruments, eds. Harold Benink, Jón Daníelsson, and Charles Goodhart, Vol. 14, No. 5, 2005.

Takeover Defenses and Managerial Incentives Under Alternative Legal Regimes (with Michael L. Wachter), 2006.

The Section 83(b) Election for Restricted Stock: A Joint Tax Perspective, Southern Methodist University Law Review, forthcoming. Prejudgment Interest (with Jeff Colon), in Litigation Services Handbook: The Role of the Financial Expert (fourth edition), eds. Roman Weil et al., forthcoming.

Friedrich K. Kübler Professor and Director of the Banking Law Institute Emeritus, University of Frankfurt, Germany; Professor of Law Gesellschaftsrecht (comprehensive treatise of German corporate law), with Hans-Dieter Assmann, 6th edition, 2006.

Jason Scott Johnston Robert G. Fuller Jr. Professor of Law and Director, Program on Law and the Environment

The Shifting Paradigm of European Company Law, 11 The Columbia Journal of European Law, 2005.

The Return of Bargain: An Economic Theory of Standard Form Contracts and the Negotiation of Business Relationships, 104 Michigan Law Review, 2006.

Peter D. Linneman Albert Sussman Professor of Real Estate; Professor of Finance and Business and Public Policy, The Wharton School

The Rule of Capture and the Economic Dynamics of Natural Resource Use and Survival Under Open Access Management Regimes, 35 Environmental Law, 2006.

A New Product to ENHANCE Shareholder Value: Bifurcating Land and Improvements to Generate Superior Returns (co-authored with Mukund Krishnaswami), Wharton Real Estate Review, forthcoming Fall 2006).

Leo Katz Frank Carano Professor of Law Actio Libera in Causa. Working paper, 2006. Nuclear Deterrence: Two Facets of One Problem (with Claire Finkelstein), William and Mary Law Review, forthcoming.

Revisiting Return Profiles of Real Estate Investment Vehicles (co-authored with Deborah Chan Moy), Wharton Real Estate Review, Fall 2005.

publications & papers Kristin Madison Assistant Professor of Law Health Care Regulation in an Information Age. Working Paper, 2006. ERISA and Liability for Medical Information Provision, 84 North Carolina Law Review, 2006.

George J. Mailath Walter H. Annenberg Professor in the Social Sciences; Professor of Economics, School of Arts and Sciences Coordination Failure in Repeated Games with Almost-Public Monitoring (with Stephen Morris), Theoretical Economics, forthcoming. Disappearing Private Reputations in Long-Run Relationships (with Martin W. Cripps and Larry Samuelson), Journal of Economic Theory, forthcoming.

Andrew Metrick Associate Professor of Finance, The Wharton School Large Blocks of Stock: Prevalence, Size, and Measurement (with Jennifer Dlugosz, Ruediger Fahlenbrach, and Paul A. Gompers), Journal of Corporate Finance, June 2006. Extreme Governance: An Analysis of U.S. Dual Class Companies (with Paul A. Gompers and Joy L. Ishii). Working paper, March 2006.

Charles W. Mooney, Jr. Charles A. Heimbold, Jr. Professor of Law Security Interests in Personal Property (with S. Harris), Foundation Press, 4th ed., 2006. A Normative Theory of Bankruptcy: Bankruptcy As (Is) Civil Procedure, 61 Washington & Lee Law Review, 2004.

Gideon Parchomovsky Professor of Law The Uselessness of Public Use (with Abraham Bell), 106 Columbia Law Review, forthcoming 2006. Taking Compensation Private, (with Abraham Bell), 59 Stanford Law Review, forthcoming 2006.

Mark V. Pauly Bendheim Professor, Department of Health Care Systems, and Professor of Health Care Systems, Insurance and Risk Management, and Public Policy and Management, The Wharton School; Professor of Economics, School of Arts and Sciences Who Pays When Malpractice Premiums Rise? in Medical Malpractice and the U.S. Health Care System, eds. W. M. Sage and R. Kersh, Cambridge University Press: New York, 2006. Insurance Decision Making and Market Behavior (with H. Kunreuther), 1 Foundations and Trends in Microeconomics, 2006.

Nicola Persico Professor of Economics, School of Arts and Sciences A Rational Theory of Random Crackdowns (with Jan Eeckhout and Petra Todd). July 2005. Rational Choice Foundations of Equal Protection in Selective Enforcement: Theory and Evidence. July 2006.

Nathaniel Persily Professor of Law; Secondary Appointment in Political Science Department, School of Arts and Sciences

Edward B. Rock Saul A. Fox Distinguished Professor of Business Law; Co-Director, Institute for Law and Economics; Associate Dean, University of Pennsylvania Law School

Michael L. Wachter William B. Johnson Professor of Law and Economics; Co-Director, Institute for Law and Economics

Hedge Funds in Corporate Governance and Corporate Control (with Marcel Kahan), University of Pennsylvania Law Review, forthcoming.

Labor Unions: A Corporatist Institution in a Competitive World, University of Pennsylvania Law Review, forthcoming.

Symbiotic Federalism and the Structure of Corporate Law (with Marcel Kahan), 58 Vanderbilt Law Review, 2005.

Chris W. Sanchirico Professor of Law; Professor of Business and Public Policy, The Wharton School Evidence, Procedure, and the Upside of Cognitive Error, 57 Stanford Law Review, 2004. Collusion and Price Rigidity (with S. Athey & K. Bagwell), 71 Review of Economic Studies, 2004.

Reed Shuldiner Alvin L. Snowiss Professor of Law Taxation of Risky Investments, April 5, 2005. Lessons from the Limitation on Itemized Deductions (with David Shakow), 93 Tax Notes, 2001.

Corporate Governance and Managerial Incentives Under Alternative Legal Regimes (with Richard Kihlstrom), 2006.

Susan M. Wachter Richard B. Worley Professor of Financial Management; Professor of Real Estate and Finance, The Wharton School Co-Director, Institute for Urban Research The Inevitability of Market-Wide Underpriced Risk (with Andrey Pavlov), Real Estate Economics, forthcoming 2006. Neighborhood Patterns of Subprime Lending: Evidence from Disparate Cities (with Paul Calem and Jonathan E. Hershaff), 15 Housing Policy Debate, 2005.

R. Polk Wagner Professor of Law Patent Portfolios (with Gideon Parchomovsky), 154 University of Pennsylvania Law Review, 2005.

Public Opinion and Constitutional Controversies (edited with Jack Citrin and Patrick Egan, forthcoming 2008.

David A. Skeel, Jr. S. Samuel Arsht Professor of Corporate Law

On Software Regulation, 78 Southern California Law Review, 2005.

The Place of Competition in American Election Law, in The Marketplace of Democracy, eds. Michael McDonald and John Samples, Brookings Institution Press, 2006.

An Efficiency-Based Explanation for Current Corporate Reorganization Practice (with Ken Ayotte; essay review of Courting Failure by Lynn LoPucki), 73 University of Chicago Law Review, 2006.

Amy Wax Robert Mundheim Professor of Law

Andrew W. Postlewaite Harry P. Kamen Professor of Economics, School of Arts and Sciences; and Professor of Finance, The Wharton School

Who Makes the Rules for Hostile Takeovers, and Why? The Peculiar Divergence of US and UK Takeover Regulation (with John Armour). Unpublished manuscript, 2006.

Too Few Good Men, 134 Policy Review, Dec. 2005/Jan. 2006. Group Justice, Social Wrongs and Individual Responsibility, forthcoming in the Hoover Institution Monograph Series, 2007.

Fact-Free Learning (with E. Aragones, I. Gilboa and D. Schmeidler), 95 American Economic Review, 2005 Confidence-Enhanced Performance (with O. Compte), 94 American Economic Review, 2005.

ASSOCIATE FACULTY

M Left to right, from top: Matthew Adler Franklin Allen Elizabeth Bailey Howard F. Chang John Core Patrician M. Danzon Jason S. Johnston Richard E. Kihlstrom Michael S. Knoll Friedrich K. K端bler Kristin Madison Andrew Metrick Charles W. Mooney, Jr. Andrew W. Postlewaite Chris Sanchirico David A. Skeel, Jr. Polk Wagner Amy Laura Wax

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Matthew D. Adler Leon Meltzer Professor of Law Professor Adler is a graduate of Yale College, St. Antony’s College of Oxford University, and the Yale Law School. Prior to teaching at Penn, he worked as a law clerk for Judge Harry Edwards, U.S. Court of Appeals for the D.C. Circuit, and for Justice Sandra Day O’Connor, U.S. Supreme Court, and practiced law at Paul, Weiss, Rifkind, Wharton & Garrison in New York City. At the Penn Law School, Professor Adler teaches administrative law, constitutional law, and regulation. His current research focuses on policy analysis and on risk regulation. Franklin Allen Nippon Life Professor of Finance and Professor of Economics, The Wharton School Franklin Allen is the Nippon Life Professor of Finance and Professor of Economics at the Wharton School of the University of Pennsylvania. He has been on the faculty since 1980. He is currently Co-Director of the Wharton Financial Institutions Center and President of the Financial Intermediation Research Society. He was formerly Vice Dean and Director of Wharton Doctoral Programs and Executive Editor of the Review of Financial Studies, one of the leading academic finance journals. He is a past President of the American Finance Association, the Western Finance Association and the Society of Financial Studies. He received his doctorate from Oxford University. Dr. Allen’s main areas of interest are corporate finance, asset pricing, financial innovation and comparative financial systems. He is a co-author with Richard Brealey and Stewart Myers of the eighth edition of the textbook Principles of Corporate Finance. Elizabeth Bailey John C. Hower Professor of Business and Public Policy, The Wharton School Professor Bailey received her Ph.D. in economics from Princeton University in 1972. From 1983 until 1990, Professor Bailey served as dean of the Graduate School of Industrial Administration at Carnegie Mellon University. She joined the Wharton faculty in 1991 where she served as Chair, Department of Business and

Public Policy from 1997 to 2005. She served as head of the Economics Research Department and member of the Technical Staff at Bell Laboratories between 1960 and 1977 and was commissioner and vice-chairman of the Civil Aeroneutics Board from 1977 until 1983. She has served on the boards of many organizations, including the Brookings Institution and Bancroft Neurohealth, and she currently serves on the boards of Altria Group, Inc., CSX, TIAA/CREF, and the National Bureau of Economic Research. Her research interests concern public policies that affect business, particularly those involving regulation, deregulation, and corporate governance. Howard F. Chang Earle Hepburn Professor of Law Professor Chang received a Ph.D. in economics from the Massachusetts Institute of Technology in 1992, a J.D. from Harvard Law School in 1987, a Master in Public Affairs from Princeton University in 1985, and an A.B. from Harvard College in 1982. Prior to joining the Penn faculty in 1999, he was a Professor of Law at the University of Southern California Law School, where he began teaching in 1992. He was a Visiting Professor of Law at Stanford Law School in 1998, at Harvard Law School and at the New York University School of Law in 2001, and at the University of Michigan Law School in 2002, and a Visiting Associate Professor of Law at the Georgetown University Law Center during 1996–97. He served as a law clerk for the Honorable Ruth Bader Ginsburg on the U.S. Court of Appeals for the D.C. Circuit during 1988–89. He serves on the Board of Directors of the American Law and Economics Association. He has written on a wide variety of subjects including environmental protection, international trade, immigration, intellectual property, and the economics of litigation and settlement. John E. Core Associate Professor of Accounting, The Wharton School John Core joined the Wharton School in 1996. He has a B.A. from Yale University and a Ph.D. from The Wharton School. He has worked as an investment banker for PaineWebber,

as a compensation consultant for Ernst & Young, and as an assistant professor at MIT Sloan School of Management. He is an editor of The Accounting Review and an associate editor of the Journal of Accounting and Economics, and he serves on the editorial boards of the Journal of Accounting Research and the Journal of Management Accounting Research. His primary research interest is executive compensation and executive stock and option incentives, and he has also published work in the areas of corporate governance, equity valuation, and corporate disclosure. Rachel T. A. Croson Associate Professor of Operations and Information Management, The Wharton School Professor Croson received her Ph.D. in economics from Harvard University and joined the Wharton School in 1994. Her research uses the methodology of experimental economics to test game theory and its predictions of behavior in strategic situations. Professor Croson has applied this methodology to negotiation in studying how and why people care about fairness, to the voluntary provision of public goods in studying how and why people are altruistic, and to strategic models of legal situations, including the employment of a lawyer to represent a client in a lawsuit and bargaining under different property regimes. Patricia M. Danzon Chair, Health Care Systems Department, Celia Z. Moh Professor of Health Care Systems, Insurance and Risk Management, The Wharton School Professor Danzon received her Ph.D. in economics from the University of Chicago in 1973 and joined the Penn faculty from Duke University in 1985. She is a member of the Institute of Medicine and the National Academy of Social Insurance, and she has served as a consultant to many private and public institutions in the U.S. and worldwide. Professor Danzon’s research interests are in health care, pharmaceuticals, insurance, law and economics. She has published widely in scholarly journals on a broad range of subjects related to medical care, pharmaceuticals, insurance, and the economics of law.

Faculty appointments are in the University of Pennsylvania Law School unless otherwise noted.

Gerald R. Faulhaber Professor of Business and Public Policy and Management, The Wharton School Professor of Law Professor Faulhaber has published extensively on telecommunications and Internet economics and policy, focusing particularly on the interaction of business and public policy. He spent a year on scholarly leave at Penn Law, after which he was granted a secondary appointment at the Law School. He served as Chief Economist at the Federal Communications Commission for the year ending June 30, 2001. At the FCC he worked on telecommunications and Internet issues, including the AOL-Time Warner merger. He has served on numerous scholarly boards and review committees and was VicePresident of the Board of Directors of the Telecommunications Policy Research Conference in Washington, D.C. Professor Faulhaber was the founding director of Wharton’s Fishman-Davidson Center for the Study of the Service Sector, from 1984 to 1989. Prior to his academic career, Professor Faulhaber was Director of Strategic Planning and Financial Management at AT&T, after holding the position of Head, Economics Research at Bell Laboratories. As a Visiting Scholar at INSEAD, Fountainebleau, France, and at the Institut d’Analisi Economica in Barcelona, Spain, Professor Faulhaber engaged in political economy research. He held an appointment at Tsinghua University School of Economics and Management, Beijing, China, as a Visiting Professor, where he lectured on technology management. His current research is in the area of public policy and broadband infrastructure for the Internet, and the use of markets and property rights for the allocation of the electromagnetic spectrum.

Michael A. Fitts Dean of the Law School and Bernard G. Segal Professor of Law Michael A. Fitts was named Dean of the Law School in March 2000. Before joining the Penn Law faculty in 1985, Dean Fitts served as clerk to the Honorable A. Leon Higginbotham, Jr., U.S. Court of Appeals for the Third Circuit, and as attorney advisor in the

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Office of Legal Counsel in the U.S. Department of Justice. At Penn he was appointed Associate Professor of Law in 1990, Professor of Law in 1992 and Robert G. Fuller, Jr. Professor of Law in 1996. From 1996 to 1998 he served as Associate Dean for Academic Affairs at the Law School and was active in establishing a variety of joint programs with other schools within the University. In 1999 he served as Visiting Professor in Political Science at Swarthmore College. Dean Fitts’s current research focuses on the effect of various structural changes (e.g., stronger political parties, presidents or centralized legal institutions) on government budgeting and legislation. He has authored numerous law review and political science articles in this area, several coauthored with political scientists. Lawrence A. Hamermesh Ruby R. Vale Professor of Corporate and Business Law, Widener University School of Law Professor Hamermesh received a B.A. from Haverford College in 1973, and a J.D. from Yale Law School in 1976. Professor Hamermesh practiced law with Morris, Nichols, Arsht & Tunnell, Wilmington, Delaware, as an associate from 1976–84, and as a partner from 1985–94. Professor Hamermesh joined the faculty at Widener in 1994, and teaches and writes in the areas of corporate finance, mergers and acquisitions, securities regulation, business organizations, and professional responsibility. Since 1995, Professor Hamermesh has been a member of the Council of the Corporation Law Section of the Delaware State Bar Association, which is responsible for the annual review and modernization of the Delaware General Corporation Law, and served as Chair of the Council from 2002 to 2004. In 2002 and 2003 he also served as the Reporter for the American Bar Association’s Task Force on Corporate Responsibility. He was elected in 2001 as a member of the Committee on Corporate Laws of the American Bar Association Section of Business Law, which supervises the drafting of the Model Business Corporation Act. In 1999 Professor Hamermesh was elected as a member of the American Law Institute. Professor Hamermesh is also a member of the Board of

Directors of ACLU Delaware, Inc., and represents that organization on the National Board of the ACLU. Richard J. Herring Jacob Safra Professor of International Banking, The Wharton School, and Co-Director of the Wharton Financial Institutions Center Dr. Richard J. Herring, an expert on financial institutions and international finance, was founding director of the Wharton Financial Institutions Center. He has also served as Vice Dean and Director of the Wharton Undergraduate Division and Director of the Joseph H. Lauder Institute of Management and International Studies. He has advised numerous U.S. government agencies as well as several multilateral lending institutions. Dr. Herring is co-chair of the Shadow Financial Regulatory Committee and co-chair of the Biennial Multinational Banking Seminar, and he has been a fellow of the World Economic Forum in Davos, Switzerland. He is the author of more than 80 articles and books. His most recent book (with Robert E. Litan of the Brookings Institution) is Financial Regulation in the Global Economy. He serves on the editorial boards of several leading journals and has been co-editor of The Brookings-Wharton Papers on Financial Services. Before coming to Wharton in 1972, Dr. Herring taught at Princeton University. He received his A.B. from Oberlin College (1968), and his M.A. (1970) and Ph.D. (1973) from Princeton University. Robert W. Holthausen Nomura Securities Company Professor of Accounting and Finance and Chairman, Department of Accounting, The Wharton School Professor Holthausen earned his doctorate and his M.B.A. at the University of Rochester. Prior to his academic career, he was a C.P.A. He worked at Price Waterhouse and was also a financial analyst with Mobil. He was on the accounting and finance faculty at the Graduate School of Business of the University of Chicago for ten years, joining the Penn faculty in 1989. During the 2001–2002 academic year, he was a visiting professor at Harvard Business School. Since 1998 he has served as the academic director of Wharton’s Mergers and Acquisitions program. Professor Holthausen’s

research interests include the effects of management compensation and governance structures on firm performance, the effects of information on volume and prices, corporate restructuring and valuation, the effects of large block sales on common stock prices, and numerous other topics. He is widely published in both finance and accounting journals and is currently an editor of the Journal of Accounting and Economics. Robert P. Inman Richard King Mellon Professor; Professor of Finance, Economics, Business and Public Policy, and Real Estate, The Wharton School Professor Inman received his Ph.D. in economics from Harvard University and joined the Penn faculty in 1972. He is a senior fellow of Wharton’s Leonard Davis Institute of Health Economics. He is also a research associate of the National Bureau of Economic Research. He has served as a consultant to the city of Philadelphia, the state of Pennsylvania, CitiGroup, Chemical Bank, the U.S. Department of the Treasury, the Financial and Fiscal Commission of the Republic of South Africa, the National Bank of Sri Lanka, the National Academy of Sciences, and numerous U.S. federal government agencies. His research is currently focused on fiscal federalism, the urban fiscal crisis, and the political and legal institutions of fiscal policymaking. Professor Inman held the Florence Chair in Economics at the European University Institute, Florence, Italy, for the spring quarter of 2000. Jason Scott Johnston Robert G. Fuller Jr. Professor of Law and Director, Program on Law and the Environment After graduating summa cum laude from Dartmouth College, Professor Johnston obtained both his J.D. and Ph.D. in economics from the University of Michigan, where he was an Alcoa Fellow in Law and Economics and was elected to Order of the Coif. He served as law clerk for United States Court of Appeals Judge Gilbert Merritt, was a civil liability fellow at Yale Law School, and in 1995 came to the University of Pennsylvania Law School from

Vanderbilt University Law School. Johnston is the founding Director of the Program on Law and the Environment at Penn Law School, and in 2001 became the Robert G. Fuller Jr. Professor of Public Law. Professor Johnston’s research includes both theoretical and empirical projects exploring various aspects of natural resource and environmental law and policy, as well as more general studies of legal rights and entitlements. He is currently in the midst of book-length projects on the law and economics of corporate environmentalism and the centralization of environmental and natural resource regulation, and is organizing a first-of-its kind interdisciplinary conference on the law, economics and science of liability for global warming. Johnston has published dozens of articles, both in various major American law journals such as the Yale Law Journal, Virginia Law Review and Columbia Law Review, as well as in peer-reviewed economics journals such as the Journal of Law, Economics and Organization, and the Journal of Legal Studies. He has served as a Regent for the Policy Academy of the Multistate Working Group on Environmental Management Systems, on the Board of Directors of the American Law and Economics Association and on the National Science Foundation’s Law and Social Science grant review panel. He was an Olin Visiting Fellow at the University of Southern California Law Center and Visiting Professor at the University of Virginia School of Law. Leo Katz Frank Carano Professor of Law Professor Katz graduated from the University of Chicago College and Law School. He then clerked for the Honorable Anthony M. Kennedy, at that time on the U.S. Court of Appeals for the Ninth Circuit, and he practiced corporate law for several years with Mayer, Brown and Platt in Chicago. He began teaching at the University of Michigan in 1987 and joined the Penn faculty in 1991. Professor Katz teaches and writes about both criminal and corporate law. He is the author of Bad Acts and Guilty Minds: Conundrums of the Criminal Law and Ill-Gotten Gains: Evasion, Blackmail, Fraud and Kindred Puzzles of the Law, and editor (with

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Michael Moore and Stephen Morse) of Foundations of the Criminal Law. He is currently working on another book, Why the Law is So Perverse. Richard E. Kihlstrom Ervin Miller—Arthur M. Freedman Professor of Finance and Economics and Chairman, Department of Finance, The Wharton School Richard Kihlstrom holds a doctorate from the University of Minnesota. He has been a member of the Wharton faculty since 1979, was named to the Miller-Freedman professorship in 1986, and previously served as Chair of the Finance Department from 1988 to 1994. Before coming to Penn, he taught at Northwestern University, the University of Illinois, the State University of New York at Stony Brook, and the University of Massachusetts. He is a Fellow of the Econometric Society. His areas of research interest include information and uncertainty in economics, financial market equilibrium, and corporate finance Michael S. Knoll Theodore K. Warner Professor of Law; Professor of Real Estate, The Wharton School Professor Knoll joined the Penn Law and Wharton faculties from the University of Southern California Law School in 2000. He teaches courses in corporate finance and taxation in the Law School, the Wharton School, and the Wharton Executive Program. He is also an affiliate of the Zell/Lurie Real Estate Center at the Wharton School, and the editor of Forensic Economic Abstracts, an electronic journal published by the Social Science Research Network. Professor Knoll’s undergraduate and J.D. degrees are from the University of Chicago. He also earned a Ph.D. in Economics at the University of Chicago. In 1990 he joined the USC Law faculty as an Assistant Professor, and in 1995 he was promoted to full Professor. He has been a Visiting Professor of Law at Georgetown (1999), Penn (1998–99), and Virginia (2000). Professor Knoll was also a John M. Olin Senior Research Scholar at Columbia University School of Law (1996–97), a Visiting Scholar at New York University Law School (1996–97), and a John M. Olin Distinguished Visiting Professor of Law at Toronto University. He clerked for the

Honorable Alex Kozinski on the U.S. Court of Appeals, Ninth Circuit, from January to August 1986, when he was appointed legal advisor to the Vice Chairman of the U.S. International Trade Commission. He has published extensively in the fields of corporate finance, taxation, economics, and real estate finance. Friedrich K. Kübler Professor and Director of the Banking Law Institute Emeritus, University of Frankfurt, Germany; Professor of Law After earning a Dr. iur. from the University of Tübingen in 1961, Professor Kübler held appointments as teaching assistant in Tübingen and Paris; Professor of Law, University of Giessen (1966–70); Visiting Lecturer, Harvard Law School (1968–69); Professor of Law and Dean of the Graduate School of Social Sciences, University of Konstanz (1971–76); and Professor of Law, University of Frankfurt (1976–98). He first came to Penn in 1975 and again in 1983 as a Visiting Professor of Law, and in 1985 he joined the faculty as Professor of Law. He has served on the board of the Deutscher Juristentag and is a member of the American Law Institute. He was one of the six commissioners regulating concentration in the German television industry and is a member of the European Shadow Financial Regulatory Committee as well as of the Frankfurt Academy of Arts and Sciences. Professor Kübler’s teaching interests are the European Union, corporations, international finance, and mass communication. His current (comparative) research interests are in the areas of corporate governance and finance, the supervision of transnational financial markets, and broadcast regulation. Peter D. Linneman Albert Sussman Professor of Real Estate; Professor of Finance and Business and Public Policy, The Wharton School Dr. Linneman, a member of the Wharton faculty since 1979, also serves as a strategic advisor to the Lubert-Adler Realty Funds. He also currently serves as a Director of one New York Stock Exchange firm and several privately held firms. Dr. Linneman was the Chairman of the Board of Rockefeller Center Properties, Inc. He was Senior Managing Director

of Equity International Properties and a Managing Director and Vice Chairman of the Investment Committee of Amerimar Realty. He is an Urban Land Institute Research Fellow and a member of numerous professional organizations. Since 1987, Dr. Linneman has been Albert Sussman Professor of Real Estate, Finance and Public Policy at Wharton; he also served as the Director of the Wharton Real Estate Center for 13 years and was the founding Chairman of the Real Estate Department. He is one of the founding co-editors of The Wharton Real Estate Review. Dr. Linneman received both his master’s degree and doctorate in economics from the University of Chicago, and he is a graduate of Ashland University. Kristin Madison Assistant Professor of Law Professor Madison received a J.D. from Yale Law School in 2000 and a Ph.D. in economics from Stanford University in 2001. She joined the Penn Law faculty in 2001 and currently teaches contracts and health care law. Her main areas of research interest are health economics and the regulation of the health care industry. Professor Madison’s recent work examines the implications of improvements in health information technologies for the future of health care regulation. George J. Mailath Walter H. Annenberg Professor in the Social Sciences; Professor of Economics, School of Arts and Sciences Professor Mailath received his Ph.D. in economics from Princeton University in 1985. He is currently an associate editor of Econometrica, serves on the editorial board of Games and Economic Behavior, and is on the executive board of Theoretical Economics. His research interests include the organization of the firm, noncooperative game theory, evolutionary game theory, social norms, and the foundations of reputations, law, and authority. Oxford University Press will publish the coauthored (with Larry Samuelson) graduate text Repeated Games and Reputations: Long Run Relationships in summer 2006.

Andrew Metrick Associate Professor of Finance, The Wharton School Andrew Metrick is an associate professor of finance at the Wharton School and a faculty research fellow at the National Bureau of Economic Research. He joined Wharton in 1999 after spending five years on the faculty of the Harvard economics department. He teaches the course “Venture Capital and the Finance of Innovation,” for which he has been recognized with several teaching awards and twice been named by BusinessWeek as one of the best teachers at Wharton. Professor Metrick’s current research interests are in corporate governance, venture capital, and technological innovation. He has published papers in many top academic journals in economics and finance, and his research has been supported by grants from the National Science Foundation and the National Institutes of Health. He currently serves as an associate editor of The Journal of Finance. Professor Metrick received a B.A. in Economics and Mathematics from Yale in 1989 and a Ph.D. in Economics from Harvard in 1994. Charles W. Mooney, Jr. Charles A. Heimbold, Jr. Professor of Law Professor Mooney received his J.D. from Harvard Law School in 1972. He practiced law with the Oklahoma firm of Crowe and Dunlevy and with the New York firm of Shearman & Sterling. Professor Mooney joined the Penn faculty in 1986, and during 1999 he served as Interim Dean of the Law School. From 1998 to 2000 he served as Associate Dean for Academic Affairs. He is an active member of the American Law Institute and the American Bar Association. He served as a member of a Uniform Commercial Code Permanent Editorial Board Article 2 (Sales) Study Committee and also served as a reporter for that Board’s Article 9 (Secured Transactions) Study Committee and as a reporter for the Revised Article 9 drafting committee. He served as a member of the U.S. Security and Exchange Commission’s Advisory Committee on Market Transactions. Mooney recently was awarded the Distinguished Service Award, presented by the American College of Commercial Finance

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Lawyers. He also recently served as U.S. Delegate and Position Coordinator (appointed by U.S. Department of State) at the Diplomatic Conference for the Cape Town Convention on International Interests in Mobile Equipment and the Protocol on Matters Specific to Aircraft Equipment, in Cape Town, South Africa. He currently serves as a U.S. Delegate for the UNIDROIT draft convention on intermediated securities. His current research centers around the treatment of tort claims and security interests in bankruptcy and bankruptcy theory. Robert H. Mundheim University Professor of Law and Finance Emeritus, University of Pennsylvania; Of Counsel, Shearman & Sterling; formerly Senior Executive Vice President and General Counsel of Salomon Smith Barney Holdings, Inc. Professor Mundheim received his LL.B. from Harvard Law School in 1957. He joined the New York firm of Shearman & Sterling, of which he is now Of Counsel, and then served as special counsel to the U.S. Securities and Exchange Commission before joining the Penn faculty in 1965. Professor Mundheim served as Dean of the Law School from 1982 to 1989. He has been a visiting professor at Harvard Law School, UCLA Law School, and the University of Konstanz in Germany. Between 1977 and 1980, he served as general counsel to the U.S. Department of the Treasury. He also has served as chairman of the U.S. Tax Court Nominating Commission, a director of the Securities Investor Protection Corporation and general counsel to the Chrysler Loan Guarantee Board. He was co-chairman of the New York firm Fried, Frank, Harris, Shriver and Jacobson from 1989 to 1992. In 1992, he joined Salomon Inc. as its General Counsel and as a Managing Director and member of the Executive Committee of Salomon Brothers. Professor Mundheim is the organizer and presiding officer emeritus of the International Faculty for Corporate and Capital Market Law, a Trustee and former President of the American Academy in Berlin, a Trustee of the New School University, a director of the Appleseed Foundation, and a member of the Council of the American Law Institute and Chairman of its Governance Committee. He is a member of the Supervisory Board of Hypo Real Estate Holdings AG and a director of eCollege,

Inc. and of Arnhold & S. Bleichroeder Holdings, Inc. He is also the Chairman of the Legal Advisory Boards of NASDAQ and the NASD. Mr. Mundheim has served as a Consultant to the American Law Institute’s Principles of Corporate Governance: Analysis and Recommendations (1978–1994), as a member of the American Bar Association President’s Task Force on Corporate Responsibility (2002–2003), and as a member of the Association of the Bar of the City of New York’s Presidential Task Force on Lawyers’ Role in Corporate Governance. He has written in the areas of corporate governance, securities regulation, corporations, and professional responsibility. Gideon Parchomovsky Professor of Law Professor Parchomovsky received his LL.B. from the Hebrew University of Jerusalem in 1993, his LL.M. from the University of California at Berkeley in 1995, and his S.J.D. from Yale Law School in 1998. Prior to joining the Penn Law faculty in fall 2002, Professor Parchomovsky served as an Associate Professor at Fordham Law School and a Visiting Lecturer at Yale Law School. His research interests include intellectual property law and property theory. His recent work focuses on unlocking synergies among sub-fields of intellectual property and devising innovative mechanisms for protecting property entitlements. Mark V. Pauly Bendheim Professor, Department of Health Care Systems, and Professor of Health Care Systems, Insurance and Risk Management, and Public Policy and Management, The Wharton School; Professor of Economics, School of Arts and Sciences; Co-Director, Vagelos Life Sciences and Management Program, Wharton and SAS Dr. Pauly is a former commissioner on the Physician Payment Review Commission and an active member of the Institute of Medicine. He has made significant contributions to the fields of medical economics and health insurance. His classic study on the economics of moral hazard was the first to point out how health insurance coverage may affect patients’ use of medical services. Subsequent work, both theoretical and empirical, has explored the impact of conventional insurance coverage on preventive

care, on outpatient care, and on prescription drug use in managed care. In addition, he has explored the influences that determine whether insurance coverage is available and, through several cost effectiveness studies, the influence of use on health outcomes and cost. His interests in health policy deal with ways to reduce the number of uninsured through tax credits for public and private insurance, and appropriate design for Medicare in a budget-constrained environment. Dr. Pauly is a co-editorin-chief of the International Journal of Health Care Finance and Economics and an associate editor of the Journal of Risk and Uncertainty. He has served on Institute of Medicine panels on public accountability for health insurers under Medicare and on improving the financing of vaccines. Dr. Pauly is a former member of the advisory committee to the Agency for Health Care Research and Quality, and most recently a member of the Medicare Technical Advisory Panel. Nicola Persico Professor of Economics, School of Arts and Sciences Dr. Persico is a Professor of Economics at the University of Pennsylvania. He received his Ph.D. in Economics from Northwestern University in 1996, and spent one year on the faculty at UCLA prior to joining Penn in 1997. Dr. Persico has received a number of honors and fellowships, including several National Science Foundation Grants, and he was an Alfred P. Sloan research fellow from 2002 to 2004. He served on the board of the International Economic Review from 2001 to 2006. At Penn, Dr. Persico teaches undergraduate courses in law and economics. He has published in the areas of political economy, wage discrimination, and racial profiling. Nathaniel Persily Professor of Law; Secondary Appointment in Political Science Department, School of Arts and Sciences Nathaniel Persily is a nationally recognized expert on election law and a frequent media commentator and practitioner in the area of law and politics. Most recently, courts in Georgia, Maryland and New York have appointed him to draw legislative

districting plans, and he served as an expert witness for the California State Senate in their redistricting litigation. He has published dozens of articles, some of which have been cited by the U.S. Supreme Court, on topics as varied as political parties, election law, voting rights, redistricting, American public opinion, campaign finance, and the census. In addition to filing Supreme Court amicus briefs in Bush v. Gore and California Democratic Party v. Jones, Persily was one of the lawyers representing Senator John McCain in his successful challenge to the 2000 New York Republican presidential primary ballot access laws. He clerked for Judge David S. Tatel on the U.S. Court of Appeals for the District of Columbia Circuit. He is a graduate of Yale College (B.A. & M.A. 1992), U.C. Berkeley (Ph.D., Political Science, 2002), and Stanford Law School (1998), where he was President of Volume 50 of the Stanford Law Review. Andrew W. Postlewaite Harry P. Kamen Professor of Economics, School of Arts and Sciences; Professor of Finance, The Wharton School Professor Postlewaite received his Ph.D. from Northwestern University in 1974 and joined the Penn faculty from the University of Illinois in 1980. He is past editor of the International Economic Review and past co-editor of Econometrica, and serves on the Board of Directors of the National Bureau of Economic Research. He has published widely in the areas of strategic behavior and industrial organization. Edward B. Rock Saul A. Fox Distinguished Professor of Business Law; Co-Director, Institute for Law and Economics; Associate Dean, University of Pennsylvania Law School Professor Rock received his J.D. from the University of Pennsylvania in 1983. He joined the Penn faculty in 1989 from the Philadelphia law firm of Fine, Kaplan and Black, where he specialized in antitrust, corporate and securities litigation. He has written widely in corporate law, on topics including: hedge funds; the role of institutional investors in corporate governance; close corporations; the role of norms in corporate law; the overlap between corporate law and antitrust; the over-

associate faculty

lap between corporate law and labor law; comparative corporate law; and the regulation of mutual funds. In 1994, Professor Rock was a Visiting Professor of International Banking and Capital Markets at the Institut für Arbeits-, Wirtschafts- und Zivil Recht, Johann Wolfgang Goethe - Universität, Frankfurt am Main, Germany. During the 1995-96 academic year, he was a Fulbright Senior Scholar and Visiting Professor of Law at the Law Faculty of the Hebrew University of Jerusalem, Israel. In 2001, he was appointed the first Saul A. Fox Distinguished Professor of Business Law. During 2005-06, he was again a Visiting Professor of Law, and Lady Davis Fellow, at Hebrew University. Professor Rock’s current research focuses on mergers and acquisitions, hedge funds, and corporate voting. Chris W. Sanchirico Professor of Law; Professor of Business and Public Policy, The Wharton School Professor Sanchirico received his A.B. from Princeton and both his law degree and his Ph.D. in economics from Yale. Before joining the Penn Law and Wharton faculties in 2003, he was a law professor at the University of Virginia and an economics professor at Columbia. Professor Sanchirico has written widely on the information problems of legal enforcement, as manifest in the rules governing trial evidence and pretrial discovery. His other interests include distributive justice and tax policy, and the evolution and stability of social norms. Professor Sanchirico has published extensively in top law reviews as well as the premier peer-reviewed journals in both law and economics and economic theory. Reed Shuldiner Alvin L. Snowiss Professor of Law Professor Shuldiner is a recognized expert in the taxation of financial instruments and transactions. His area of research is taxation and tax policy. His current research includes the taxation of risk under income, wealth and consumption taxes and the viability and effects of a federal wealth tax (with David Shakow). Professor Shuldiner served as Associate Dean at Penn Law from 2000–02. During Spring 2005,

Professor Shuldiner was the William K. Jacobs, Jr. Visiting Professor of Law at Harvard Law School. He was a Visiting Assistant Professor at Yale Law School during 1994–95. Before joining the Penn law faculty in 1990, he served in the Office of Tax Legislative Counsel of the U.S. Department of the Treasury, was counsel to the law firm of Cadwalader, Wickersham and Taft, and was an associate with the Washington, D.C., law firm of Wilmer, Cutler and Pickering. Professor Shuldiner received his J.D. from Harvard University in 1983 and his Ph.D. in economics from the Massachusetts Institute of Technology in 1985. David A. Skeel, Jr. S. Samuel Arsht Professor of Corporate Law Professor Skeel joined the Penn faculty in 1999. He graduated in 1987 from the University of Virginia School of Law, where he was editor of the Virginia Law Review and a member of the Order of the Coif. He clerked for the Honorable Walter K. Stapleton on the U.S. Court of Appeals for the Third Circuit, and practiced for several years at Duane, Morris & Heckscher in Philadelphia, before joining the Temple University School of Law in 1990. Professor Skeel has also held visiting appointments at the University of Wisconsin Law School (1993–94), the University of Virginia School of Law (spring 1994), Georgetown University Law Center (fall 2004), and the University of Pennsylvania Law School (fall 1997). Professor Skeel specializes in corporate and commercial law and has written widely on corporate law, bankruptcy and sovereign debt, etc. He has also written several essays on poetry-and-law. Michael L. Wachter William B. Johnson Professor of Law and Economics and Co-Director, Institute for Law and Economics Professor Wachter received his Ph.D. in economics from Harvard University and joined the Penn faculty in 1970. He has held full professorships in three of Penn’s schools: the School of Arts and Sciences, where he has been professor of economics since 1976;

the Wharton School, where he was professor of management, 1980–92; and the Law School, where he became professor of law and economics in 1984. He has been senior advisor to the Brookings Panel on Economic Activity in addition to consulting for the Federal Reserve’s Board of Governors and the Council of Economic Advisors. He has also served as a member of the National Council on Employment Policy and as a commissioner on the Minimum Wage Study Commission. Professor Wachter served as Deputy Provost of the University of Pennsylvania from July 1995 to January 1998, and as Interim Provost from January to December 1998. He is the author of numerous articles in law and economics as well as in corporation law and labor law and economics. Susan M. Wachter Richard B. Worley Professor of Financial Management; Professor of Real Estate and Finance, The Wharton School; Co-Director of the Institute for Urban Research From 1998 to 2001, as Assistant Secretary for Policy Development and Research, U.S. Department of Housing and Urban Development, Dr. Wachter served as the senior urban policy official and principal advisor to the Secretary on overall HUD policies and programs. At Wharton, Dr. Wachter was Chairperson of the Real Estate Department and Professor of Real Estate and Finance from July 1997 until her 1998 appointment to HUD. She founded and currently serves as Director of Wharton’s Geographical Information Systems Lab. Dr. Wachter served as a member of the Board of Directors of the Beneficial Corporation from 1985 to 1998 and of the MIG Residential REIT from 1994 to 1998. She was the editor of Real Estate Economics from 1997 to 1999 and serves on the editorial boards for several real estate journals. Dr. Wachter has been a member of the Advanced Studies Institute of the Homer Hoyt Institute since 1989. She is author of more than 100 scholarly publications and is the recipient of several awards for teaching excellence at the Wharton School.

R. Polk Wagner Professor of Law Professor Wagner focuses his research and teaching in intellectual property law and policy, with a special interest in patent law. He is the author of over fifteen articles on topics ranging from an empirical analysis of judicial decision-making in the patent law to the First Amendment status of software programs. His work has appeared in the Stanford Law Review, the Columbia Law Review, and the University of Pennsylvania Law Review, among several others. He is a frequent lecturer on intellectual property topics, presenting his research at both academic institutions (such as Harvard, Stanford, Columbia, University of Michigan, University of Virginia, University of California at Berkeley) and prominent industry groups (such as the Intellectual Property Owner’s Organization, the American Intellectual Property Law Association, and the Association of Corporate Patent Counsel). Prior to joining the Penn faculty in 2000, Wagner served as a clerk to Judge Raymond C. Clevenger III of the United States Court of Appeals for the Federal Circuit. He holds a law degree from Stanford, an engineering degree from the University of Michigan, and was the 1994–95 Roger M. Jones Fellow at the London School of Economics. Amy Wax Robert Mundheim Professor of Law A graduate of Yale College and Harvard Medical School, Professor Wax trained as a neurologist at New York Hospital before completing a law degree at Columbia Law School in 1987. She served as a clerk to the Honorable Abner J. Mikva of the U.S. Court of Appeals for the D.C. Circuit and worked for six years at the Office of the Solicitor General at the U.S. Department of Justice, where she argued 15 cases before the U.S. Supreme Court. She taught from 1994 to 2001 at the University of Virginia Law School. Her areas of teaching and research included civil procedure, remedies, labor and employment law, poverty law and welfare policy, the law and economics of work and family, and social science and the law. Professor Wax joined the Penn Law Faculty in fall 2001.

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unding for the Institute for Law and Economics comes from a diverse group of individuals, law firms, corporations, and foundations who endorse our work each year. We are pleased and privileged to recognize and thank the ILE Investors whose generous contributions underwrite the activities described in this report. We deeply appreciate their support and their active participation in Institute programs.

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