During the past decade, one of the most significant developments in the scientific study of law is work at the intersection of law and economics. Among those who have contributed to this area, Dr. Bebchuk is among the most respected for his innovative work and productivity. Under this project, Dr. Bebchuk plans to continue and extend his theoretical research on the economic analysis of law to a set of problems where economic principles can generate new knowledge about the effects of legal rules and the nature of law-related relations. Six problems will be addressed. Four of the projects are in the area of corporate law. The first concerns the rules that govern sale of control transactions in which a control block is sold by an existing controlling shareholder to a new controller. The second analyzes the effects of insider trading on managerial behavior. The third concerns the rules that establish managerial control over corporate agenda by prescribing that only the board of directors can initiate a shareholder vote on proposals for charter amendments and certain structural changes. The fourth examines the rules governing the allocation of the expenses incurred by contenders in proxy contests for corporate control. The research also includes two projects in the areas of litigation and contracts. One analyzes the effects of formal offer rules on the settlement terms reached by parties. The second concerns the classic contract rule of "interpretation against the draftsman," which is applied whenever a contract drafted by one of the parties to the contract is ambiguous on an issue. Dr. Bebchuk is performing an important role in cross-fertilizing thought in law and economics about takeovers, insider trading, and corporate control. All of the topics are addressed to important, yet neglected scientific issues. All examine a legal rule or practice with great significance. The research could lead to the reexamination of (or confirmation of) legal rules that have very substantial economic impact.
