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2023 Colum. Bus. L. Rev. 1 (2023)

handle is hein.journals/colb2023 and id is 1 raw text is: 










    CORPORATE LIABILITY, COLLATERAL
        CONSEQUENCES, AND CAPITAL
                     STRUCTURE

                     Nathan  Atkinson*

   Financial  penalties imposed  on malfeasant  corporations
can produce  collateral consequences, or unintended negative
impacts on employees, customers, and  society more broadly. I
show  that the vast majority of government bodies that assess
organizational  penalties have  adopted  policies to  reduce
corporate  liability where   collateral consequences  might
otherwise  result. Moreover, I demonstrate  that officials do
reduce  penalties in line with  these policies, undermining
deterrence and  compensation   of harmed  parties. However,
evidence  from  reductions  given  to publicly-traded  firms
suggests that officials are often wrong in their assessment of
firms' financial health, thereby awarding reductions to healthy
firms where  collateral consequences are unlikely to occur. I
discuss  how  officials should approach  imposing  penalties
when   they   are  concerned  about   prospective  collateral
consequences.

I. Introduction...........................................................................2


    * University of Wisconsin. Thank you to Anat Admati, Abhay Aneja,
Jennifer Arlen, Ronen Avraham, Steve Callander, Scott Ganz, Jacob Goldin,
Colleen Honigsberg, Curtis Milhaupt, Michael Ohlrogge, Paul Pfleiderer,
Mitch Polinsky, George Triantis, Aneesh Raghunandan, Michael Sarinsky,
Alan Schwartz, Kathy Spier, Alex Stremitzer, and seminar participants at
George Mason Law School, Stanford Law and Economics Free Lunch,
Oxford Faculty of Law, University of Texas Law School, ETH Zurich Center
for Law and Economics, University of Wisconsin Law School, Northwestern
Pritzker School of Law, the JLFA conference (NYU, 2019), the Law and
Economic Theory Conference (Texas, 2019), and the European Association
of Law and  Economics Conference (2020) for helpful comments and
discussions. Thank you to Cindy Alexander and Mark Cohen for sharing
data. This project uses data from the Corporate Research Project of Good
Jobs First's Violation Tracker. Contact: natkinson@wisc.edu

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