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New research on law from Harvard Business School faculty on issues including law enforcement, lawfulness, and lawsuits and litigation practices.
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Examining Race and Mass Incarceration in the United States

The late 20th century saw dramatic growth in incarceration rates in the United States. Of the more than 2.3 million people in US prisons, jails, and detention centers in 2020, 60 percent were Black or Latinx. Harvard Business School assistant professor Reshmaan Hussam probes the assumptions underlying the current prison system, with its huge racial disparities, and considers what could be done to address the crisis of the American criminal justice system in her case, “Race and Mass Incarceration in the United States.” Open for comment; Comment(s) posted.

Bankruptcy and the COVID-19 Crisis

by Jialan Wang, Jeyul Yang, Benjamin Iverson, and Ray Kluender

Analyzing the impact of the COVID-19 crisis on bankruptcy filing rates in the United States, this study finds that large businesses, small businesses, and consumers experience very different effects of the crisis.

Why Investors Often Lose When They Sue Their Financial Adviser

by Danielle Kost

Forty percent of American investors rely on financial advisers, but the COVID-19 market rollercoaster may have highlighted a weakness when disputes arise. The system favors the financial industry, says Mark Egan. Open for comment; Comment(s) posted.

Weak Credit Covenants

by Victoria Ivashina and Boris Vallée

Prior to the 2020 pandemic, the leveraged loan market experienced an unprecedented boom, which came hand in hand with significant changes in contracting terms. This study presents large-sample evidence of what constitutes contractual weakness from the creditors’ perspective.

Product Disasters Can Be Fertile Ground for Innovation

by Michael Blanding

Rather than chilling innovation, product accidents may provide companies an unexpected opportunity to develop new technologies desired by consumers, according to Hong Luo and Alberto Galasso. Open for comment; Comment(s) posted.

Should Non-Compete Clauses Be Abolished?

by James Heskett

SUMMING UP: Non-compete clauses need to be rewritten, especially when they are applied to lower-income workers, respond James Heskett's readers. Open for comment; Comment(s) posted.

Investor Lawsuits Against Auditors Are Falling, and That's Bad News for Capital Markets

by Martha Lagace

It's becoming more difficult for investors to sue corporate auditors. The result? A weakening of trust in US capital markets, says Suraj Srinivasan. Open for comment; Comment(s) posted.

The Changing Landscape of Auditor Litigation and Its Implications for Audit Quality

by Colleen Honigsberg, Shivaram Rajgopal, and Suraj Srinivasan

Data from 1996 to 2016 shows that shareholder litigation against auditors has declined in recent years. Empirical evidence shows that Rule 10b-5, the Securities Act statute used for class action lawsuits, has lost its bite for use against auditors. This decline is driven, at least in part, by the US Supreme Court’s narrowing of liability standards. These findings suggest weakened shareholder protection with profound implications for investors.

The Unexpected Way Whistleblowers Reduce Government Fraud

by Kristen Senz

Even unfounded allegations by whistleblowers can force government contractors to renegotiate their terms, say Jonas Heese and Gerardo Perez Cavazos. Open for comment; Comment(s) posted.

Consumers Blame Business for Global Health Problems. Can Business Become the Solution?

by Danielle Kost

Millions of people have been harmed by cigarettes, defective merchandise, pollution, addiction and other business by-products. now, pioneering companies are exploring healthier ways to operate, say Amy C. Edmondson and Dr. Howard K. Koh. Open for comment; Comment(s) posted.

The Creation and Evolution of Entrepreneurial Public Markets

by Shai Bernstein, Abhishek Dev, and Josh Lerner

Since 1990, new stock exchanges geared toward fast-growing, entrepreneurial companies have proliferated around the world. This analysis shows that exchanges in countries with better shareholder protection allowed younger and less profitable companies to raise more capital. These markets alone cannot boost entrepreneurial activity but need enabling institutions.

Arbitration with Uninformed Consumers

by Mark Egan, Gregor Matvos, and Amit Seru

Using data on securities disputes, this study of information advantages in consumer arbitration finds that industry-friendly arbitrators are 40 percent more likely than consumer-friendly arbitrators to be selected to take on arbitration cases. Limiting respondents’ and claimants’ inputs over the selection process could improve outcomes for consumers.

How Does Product Liability Risk Affect Innovation? Evidence from Medical Implants

by Alberto Galasso and Hong Luo

This analysis examines how a surge in liability risk faced by upstream suppliers of general purpose technologies (polymers) affected downstream innovation in implant technologies. Implant patenting dropped by 36 percent relative to non-implant technologies.

Buying the Verdict

by Lauren H. Cohen and Umit G. Gurun

This paper documents systematic evidence that firms engage in specialized, locally targeted advertising when taken to a court trial in a given location. Policymakers should consider what impact such targeted advertising is having—and whether it is a desired impact—on juries and the judicial process more generally.

Why South Korea's Samsung Built the Only Outdoor Skating Rink in Texas

by Michael Blanding

New research by Lauren Cohen and Umit Gurun finds that when some companies are sued, they put their advertising dollars to work in unusual ways to influence local juries. Meet 'TiVo,' the championship steer. Open for comment; Comment(s) posted.

Transaction Costs and the Duration of Contracts

by Alexander MacKay

When buyers transact with sellers, they select not only whom to transact with but also for how long. This paper develops a model of optimal contract duration arising from underlying supply costs and transaction costs. The model allows for the quantification of transaction costs, which are often unobserved, and the impact of these costs on welfare.

Handgun Waiting Periods Prevent Hundreds of Homicides Each Year

by Dina Gerdeman

Waiting-period laws reduce gun-related homicides by 17 percent and gun-related suicides by up to 11 percent, according to a study by Deepak Malhotra, Michael Luca, and Christopher Poliquin. Open for comment; Comment(s) posted.

How an African History Scholar Became a Modern Righter of Wrongs

by Carmen Nobel

A scholar of colonial-era African history, Caroline M. Elkins had dramatic success turning prior knowledge into real-world action—namely, with a groundbreaking lawsuit against the British government, which revealed a chillingly bureaucratic process for destroying evidence of torture. Open for comment; Comment(s) posted.

Tort Reform and Innovation

by Alberto Galasso and Hong Luo

This paper investigates how tort reforms might affect the development of new medical device technologies. The authors find that caps on non-economic damages (such as pain and suffering) are associated with an average decline in patenting for medical instrument technologies. The effect, however, is highly varied and depends on the characteristics of both the devices and the medical fields.

When Mass Shootings Lead to Looser Gun Restrictions

by Carmen Nobel

Do mass shootings lead to more gun-related legislation? The answer is yes, with an important twist, according to new research by Michael Luca, Deepak Malhotra, and Christopher Poliquin. Open for comment; Comment(s) posted.