Reviewing Directors’ Business Judgements: Views from the Field

Directors take decisions that can have significant impacts on others, as illustrated by the global financial crisis and the collapse of Thomas Cook Group plc. Yet many academics argue that courts should not review or impose liability on directors for poor business judgements. These arguments often rely on untested empirical assumptions about directors’ behaviour and attitudes. Through semi-structured interviews and focus groups, we explored the responses of directors, legal practitioners, company secretaries, and board headhunters to the prospect of judicial review of directors’ business judgements. Our findings challenge orthodox thinking: many directors supported some form of review and the impact of review may not be as great as the literature predicts, nor necessarily detrimental. The debate about whether courts should review directors’ business judgements should therefore move away from reliance on negative empirical assumptions about the impact of review, to clearly articulating, and engaging with, normative positions that underpin opposition to, and support for, review.     

Justice by Other Means: Venue Sorting in Parole Revocation

We consider the factors that shape venue sorting, the process by which a legal case can be handled through different organizational arrangements with distinct procedures, institutional cultures, and sanctioning constraints. The empirical area for our investigation of venue sorting is California's parole revocation system, in which parolees accused of new crimes can be returned to prison by either criminal courts or the parole board. We find that seriousness of the alleged offense partially predicts the venue through which parolees are sanctioned. However, venue sorting is further explained by decision makers' perceptions of parolee threat, as well as concerns about organizational efficiency and legitimacy. We conclude by discussing how these findings may relate to the general phenomenon of venue sorting across a range of legal situations.     

PAROLEE RECIDIVISM IN CALIFORNIA: THE EFFECT OF NEIGHBORHOOD CONTEXT AND SOCIAL SERVICE AGENCY CHARACTERISTICS*

We studied a sample of reentering parolees in California in 2005–2006 to examine whether the social structural context of the census tract, as well as nearby tracts, along with the relative physical closeness of social service providers affects serious recidivism resulting in imprisonment. We found that a 1 standard deviation increase in the presence of nearby social service providers (within 2 miles) decreases the likelihood of recidivating 41 percent and that this protective effect was particularly strong for African American parolees. This protective effect was diminished by overtaxed services (as proxied by potential demand). We found that higher concentrated disadvantage and social disorder (as measured by bar and liquor store capacity) in the tract increases recidivism and that higher levels of disadvantage and disorder in nearby tracts increase recidivism. A 1 standard deviation increase in the concentrated disadvantage of the focal neighborhood and the surrounding neighborhoods increases the likelihood of recidivating by 26 percent. The findings suggest that the social context to which parolees return (both in their own neighborhood and in nearby neighborhoods), as well as the geographic accessibility of social service agencies, play important roles in their successful reintegration.     

Regulatory Assessment of Investments by Telephone and Electric Utilities*

A utility's investments are included in the rate base if the expenditures can pass the “prudent” or “used and useful” tests. Regulators have a difficult time applying these tests to telephone companies because little is known about the demand for new services. Under current regulatory procedures, telephone companies face an incentive system which rewards the firm for successful entry into new markets, but because of the lack of information about the demand for new services, the cost of failures is absorbed by customers of existing services. We propose a rate-making standard that would insure that existing subscribers of telecommunications services will not subsidize the new services that are being introduced by local exchange telephone companies.     

PERSONAL EXPERIENCE AND THE EVALUATION OF PARTICIPATORY INSTRUMENTS IN SPANISH CITIES

The article examines the role that personal experience with participatory mechanisms plays in the explanation of the perceived efficacy of these instruments. The first part demonstrates that , contrary to most expectations, citizens who have direct experience with these processes have a more negative evaluation of their performance. Where does this frustration effect come from? The second part analyzes three potential explanations of why this pattern emerges: (1) overly high prior expectations; (2) the existence of an underdeveloped institutional participatory context; and (3) the design of participatory mechanisms. We use a public opinion survey representative of the Spanish adult population living in medium sized cities to test these hypotheses. Results show that participants' overly high expectations are not crucial. On the other hand, people who live in more participatory cities and those who participate in individually based mechanisms do not feel the same disappointment with participatory experiences.