Search results for "Limited liability"
showing 10 items of 19 documents
Another "French paradox": explaining why interest rates to microenterprises dit not increase with the change in French usury legislation
2015
Conventional wisdom indicates that the growth of credit may not materialize if credit rates remain capped by usury laws, as had long been the case in France. France therefore abolished usury ceilings on loans to microenterprise in an effort to increase financing for microentrepreneurs. This should have led to an increase in interest rates and increase in microcredit. However, we do not find any increase in interest rates and this is therefore a paradox. The paper provides a brief literature review and the salient features of the legislative changes in France. It follows this up with a presentation of interest rate movements. The discussion of possible explanations of the paradox includes cl…
Limiting Auditor Liability? - Experimental Evidence on Risk and Ambiguity Attitudes under Real Losses
2009
This paper is motivated by the current debate on limiting auditor liability. In a laboratory experiment, the effect of limited versus unlimited liability on behavior under risk and ambiguity is investigated for risks involving small probabilities. The amount of liability is manipulated in such a way that subjects can pay with their show-up fee under limited liability, but they can suffer out-of-pocket losses under unlimited liability. Findings are that both risk aversion and ambiguity aversion are higher under unlimited liability than under limited liability, and these two constructs are correlated under unlimited liability. These findings provide new empirical evidence for the intuition th…
Limiting Liability? — Risk and Ambiguity Attitudes Under Real Losses
2013
Using a laboratory experiment in which the unlimited liability treatment involves real out-of-pocket losses, we investigate and compare the behavioral effects of auditors’ limited and unlimited liability on behavior under risk and ambiguity. We find that aversion to both risk and ambiguity are higher under unlimited liability than under limited liability, and that these two constructs are correlated under unlimited liability. Our findings explain why some auditors might be hindered in performing their duties properly under unlimited liability. Further, our findings emphasize the importance of appropriately modeling risk and ambiguity attitudes in economic models on liability.
Optimal lending contracts
2016
This paper deals with financial contracting between a lender and a borrower with a project to finance. The borrower is protected by limited liability. We consider that the revenue from the project is observable and verifiable but its distribution is influenced by both the borrower’s choice of action and the project’s quality, which are private information. We find that debt contracts are endogenously optimal, as under moral hazard alone. Moreover, while moral hazard leads to credit rationing for the lowest-quality projects only, adding adverse selection creates a bang-bang result: either all projects or none are credit rationed.
Capital Regulation with Heterogeneous Banks
2013
We provide a general equilibrium analysis of potential consequences from the introduction of a binding leverage ratio, as proposed in Basel III. If banks differ in their monitoring skills and their ability to successfully complete a risky investment project, a tighter leverage ratio does not only mitigate moral hazard arising from limited liability, but also carries an unintended consequence: Banks are not allowed to absorb the entire supply of debt if they cannot raise new equity, which induces agents with a lower monitoring skill to open a bank. This decreases the average ability of operating banks. We further show that rising heterogeneity in the banking sector increases this negative ef…
Vicarious liability for the carrier by river ?
2007
AbstractA case-study of a litigation during the years 1566–1574 between merchants from Oudenaarde and the Corporation of Free Shippers in Ghent shows that the corporation's liability for damage caused by one of its members was controversial. Although art. 20 of the ordinance of 14 February 1541 appeared to phrase the corporation's vicarious or subsidiary liability in general terms, the corporation's counsel, assisted by consultancies from a.o. E. Leoninus and J. Wamesius, successfully argued that in the light of the ordinance's rationale, which limited the free shippers' privileges in the aftermath of Charles V's punishment of Ghent in 1540, the corporation's liability had correspondingly t…
A Synthetic View of Different Concepts of Creditor Protection - Or a High-Level Framework for Corporate Creditor Protection
2006
Protection of corporate creditors has become an important topic within the European Union. At EU level, discussion has been sparked by widespread dissatisfaction with some very rigid and cumbersome provisions, and even with the whole concept of the Second Company Law Directive. At EU Member State level, three landmark decisions by the European Court of Justice — Centros, Uberseering, and Inspire Art — opened the way for an all-out competition between the different company forms provided for by national company laws. At both levels, albeit for different reasons, British company law — and in particular the absence of any legal capital in the private limited company — acts as the main driving …
Companies and Company Law in England, 16th to 19th Centuries: Legal Personality, Limited Liability and Pink Unicorns
2020
the contribution explores the early developments of company law in England, from the Sixteenth century onwards, focusing especially on the emergence of the concepts of legal personality and limited liability
ALTERNATIVE MODELS FOR REGIONAL AIRPORTS IN LATVIA
2021
Regional airports play a significant role inpromotion of connectivity and regional development. This is one of reasons whyairports are treated as public assets and in 77 % cases (airportsproviding scheduled air transport services) owned and operated by public sectorin the EU. 71 % of these publicairports have corporatized airport operators. Latviahas threepublic civil aviation airports planned for scheduled flights until 2015: Riga InternationalAirport as well as Liepaja Airportand Ventspils Airport (Kurzeme planning region). Latviacurrently has decentralised operational model of airports. Riga InternationalAirport is owned by state and operatedby a joint stock company.Regional airports are…
La responsabilità degli amministratori di srl. Dalla diligenza del mandatario alla ragionevolezza delle scelte gestionali
2011
This Book deals with the duties of directors in the Italian “società a responsabilità limitata” (s.r.l.), corresponding to a limited liability company without shares, in order to focus on the logic and limits of the directors’ liability and to combat any abusive bringing of the remedies laid down to enforce the above-mentioned duties. For such a purpose, the Book contains: an analysis of the interests involved, both in a s.r.l. “in bonis” and in a s.r.l. in crisis; a comparison with the same issues and solutions in the USA, England, Germany and Switzerland; and the idea to interpret the legal framework in the light of a concept of reasonableness which is more elaborate than that employed by…