Behavioral Ethics Meets Corporate Governance: Paradigm Shift?

chess

Behavioral Ethics Meets Corporate Governance: Paradigm Shift?

September 1, 2020 – June 30, 2021

Organizer:

Adi Libson (Bar-Ilan University)

 

Research Group Assistant: Barak Or

 

Over the last few years, there has been a growing academic interest in the field of behavioral ethics: people’s ethical biases in decision making. This scholarship has focused on the behavioral mechanisms that explain why ordinary unethicality is so common among people who view themselves as law-abiding individuals.

A recently published book by Professor Yuval Feldman (2008) systematically explored the far-reaching implications of this literature to the legal field: Instead of assuming that its primary target are "bad people" which the law must deter from maximizing their own self-interest, the law should aim to address "good people." These changes require a better understanding of the mechanisms which cause good people to do wrong. Better understanding will also lead to better ways of addressing this problem, by designing the situation in ways which would reduce people’s unethicality, such as verifying they have fewer justifications to behave unethically or ensuring they have a clear view of who are they harming.

The proposed research is aimed at examining the interaction of the behavioral ethics literature with the legal field which provides the most fertile ground for its acceptance: corporate law and governance. The corporate context serves as a 'perfect storm' combining and exacerbating several aspects emphasized in the behavioral ethics literature that lead individuals to act wrongly, such as doing things for the benefit of others, diffusion of responsibility, remoteness of the victim and contagiousness.

Furthermore, addressing the issue of conflict-of-interests and agency problems is central to the field of corporate law. As such, the understanding that a central way for curbing conflicts-of-interest is by increasing the saliency of the conflict-of-interest in the eyes of the agent may have far-reaching implications in the realm of corporate law and completely alter the arsenal of its tools. In many instances, such an analysis may reach opposite conclusions to that of the conventional law and economics framework on the effectiveness of certain instruments in curbing conflict-of-interest problems. Are independent directors an effective tool for monitoring conflicts-of-interests? How significant should be the role of fiduciary duties in dealing with the agency problem? What effects does the group dynamics of boards have on the monitoring of conflict-of-interests? Two types of implications of behavioral ethics on corporate governance will be examined: structural implications and procedural implications.

The central goal of the group is to facilitate a reciprocal engagement: examining the possible contribution of behavioral ethics to the corporate governance literature and the contribution of corporate governance to the organizational psychology literature. Behavioral ethics has many potential implications for corporate governance and can yield various feasible policy applications. Legal corporate scholars can also contribute to behavioral ethics scholars, by providing real-world contexts and suggesting additional experiments which can validate experimental findings in the field of behavioral ethics. This is an important contribution to the behavioral ethics literature, which faces a serious challenge concerning the extent of its external validity.

 

Members

michal

Michal Barzuza

FELLOW
University of Virginia
Read More

Professor Michal Barzuza researches and teaches corporate law, corporate governance, corporate finance, regulatory competition and law and economics. Her scholarship studies the optimal balance between regulation and laissez-faire in corporate law, focusing on issues such as the effects of interstate competition on the shape of corporate law, firm heterogeneity and the choice of corporate governance terms, cross-listing, boardroom dynamics, outside directors and the general counsel, and firms with controlling shareholders.

Read more about Prof. Michal Barzuza here.

Read Less
Yuval Feldman

Yuval Feldman

FELLOW
Bar-Ilan University
Read More

Yuval Feldman is The Mori Lazarof professor of legal research at Bar-Ilan University Faculty of Law. He obtained his Ph.D. ( Jurisprudence and Social Policy) from the UC Berkeley in 2004 after receiving his L.L.B. and B.A (Psychology) from Bar-Ilan University.

He teaches Employment Law, Law and Psychology, Law and Behavioral Economics and Empirical Legal Methods. His areas of research include Behavioral Analysis of Law, Experimental Law and Economics, Ethical Decision-Making, Regulatory Impact and Social Norms, Compliance, Formal and Non-Formal Enforcement Strategies.

Read more about Prof. Yuval Feldman here.

Read Less
poster

Ewout Meijer

FELLOW
Maastricht University
Read More
Ewout Meijer has been active in forensic psychological research for 15 years. He obtained his PhD in 2008 from the Faculty of Psychology, Maastricht University, and has published about a variety of topics, including deception detection and investigative interviewing. He served as a research fellow at the Hebrew University of Jerusalem in 2011-2012, and chaired the Forensic Psychology section at Maastricht University in 2015-2017.
Read Less
spamann holger

Holger Spamann

FELLOW
Harvard University
Read More

 

Prof. Holger Spamann is the Lawrence R. Grove Professor of Law at Harvard Law School, where he teaches corporate law and corporate finance. His research focuses on the law and economics of corporate governance and financial markets, judicial behavior, and comparative law. Before embarking on his academic career, he practiced with Debevoise & Plimpton in New York and clerked for two years in Europe. He holds too many degrees, among them a Ph.D. in economics from Harvard University. He is a member of the bar of New York and qualified for the German bar.

Read more about Prof. Holger Spamann here.

Read Less
simone tang

Simone Tang

FELLOW
Cornell University
Read More

 

I am interested in morality and ethics in organizational contexts. In one program of research, I study how humanizing organizations (thinking that organizations are similar to human beings) influences how people perceive and judge them. These include, for example, how people assign responsibility, empathize, and trust the organizations. In another area of research, I study how moral motivations, such as loyalty, influence people's attitudes and behaviors. Outside research, I like going to the theatre, such as musicals and plays, going to museums, exploring cities by doing restaurant crawls, hiking, running, going to classical concerts and going to comedy shows. I love playing the piano.

 

 

Read more about Professor Simone Tang here.

 

 

Read Less

Events

Seminars

Weekly Seminar: Behavioral Ethics Meets Corporate Governance: Paradigm Shift?

We are pleased to invite you to join the weekly seminars of the research group Behavioral Ethics Meets Corporate Governance: Paradigm Shift?” at the Israeli Institute of Advanced Studies of Jerusalem.

 

The group consists of researchers from Israel and abroad whose research focuses on various aspects of corporate governance and behavioral ethics. Our research group includes researchers from the fields of law, psychology, business administration and economy.