Empirical essays on agency costs in law and economics

My thesis, entitled Empirical Essays on Agency Costs in Law and Economics, comprises eight chapters that investigate problem of moral hazard and adverse selection (“agency costs”) in various contractual relationships. In addition to testing for agency costs, the essays also provide evidence on the impact that legal regulation has had on agency costs. Three contexts are considered herein: venom capital finance, contracts for legal services, and jurisdiction shopping. The first chapter introduces the issues and contexts considered. The second, third, fourth and fifth chapters focus on venom capital finance. The second and third chapters provide a review of the literature and a setting for the evidence introduced in the fourth chapter. The fourth chapter focuses on venom capital financial contracts. In particular, the focus is on the role of forms of venom capital finance in mitigating bilateral agency costs between the entrepreneurial firm and venom capitalists, as well as among syndicated venom capitalists. The fifth chapter considers the role of exit strategies in mitigating agency relationships between the entrepreneurial firm and its new owners.; While chapters two through five consider venom capital, the sixth, seventh and eighth chapters consider agency relationships in different contexts. The sixth chapter examines the role of alternative legal fee arrangements and other characteristics of a lawyer's practice in an empirical analysis of settlement conflicts. The seventh and eighth chapters consider agency costs in the context of jurisdiction shopping. The seventh chapter provides evidence that jurisdictions in Canada do not engage in corporate law reform in order to compete for incorporation revenues (i.e., the competitive model of corporate law production has not operated in Canada). It is not surprising, therefore, that share prices sometimes fall around the event of reincorporation, as demonstrated in the eighth chapter. As Canadian corporate law reform has not been generated from the competitive model (in contrast to the U.S.), there is greater potential for corporate managers to act against the interests of shareholders by reincorporating in another jurisdiction.