Corporate & Securities Law

Rewarding Gatekeepers

By Stephen Bainbridge

The latest Minnesota Law Review incldues an interesting article by Larry Cunningham, Beyond Liability: Rewarding Effective Gatekeepers, which argues that the law can and should adopt a carrots approach to corporate gatekeeprs in addition to the existing stocks model:

The expanding interest in positive incentives for capital market gatekeepers dovetails with a broader and older trend in the regulation literature. This trend reflects a philosophical shift away from traditional deterrence-oriented strategies toward more cooperative and rewards-oriented systems to promote compliance. This approach joins market and regulatory accountability mechanisms that are described using terms such as cooperative compliance, interactive compliance, responsive regulation, collaborative governance, and cooperative implementation.  Empirical psychological evidence suggesting that positive incentives may be more likely to promote desired behavior than negative threats is an important inspiration for this shift.

Recommended reading.

Full post as published by BusinessAssociationsBlog.com on January 29, 2008 (boomark / email).