Professor’s Scholarship Among 10 Best Corporate Law Articles of the Year

University of Virginia School of Law professor Cathy Hwang’s paper showing that most empirical corporate governance scholarship is based on bad data has been named one of the top 10 corporate and securities law articles of 2022.

In a poll conducted for Corporate Practice Commentator, Hwang’s fellow academics voted the paper “Cleaning Corporate Governance” as one of the top 10 among more than 400 entries.

The paper, published in the University of Pennsylvania Law Review, is co-authored by law professors Jens Frankenreiter of Washington University in St. Louis, Yaron Nili of the University of Wisconsin and Eric L. Talley of Columbia University. With data gathered by dozens of law students and scholars, the paper makes available its collection of three decades’ worth of corporate charters for thousands of public companies.

By examining the new dataset, the team found that scholars’ reliance on a preexisting set of corporate governance data had been misplaced.

“We demonstrate that several of the most heavily relied upon datasets suffer from inaccuracies so extensive as to call into question some of the landmark insights in the field” of empirical corporate governance research, the authors write in their introduction.

The new database, the CCG dataset, offers a clearer picture of the power dynamics that control corporations and what that might imply in terms of profit potential, valuation and long-term prospects, among other business factors, according to Hwang.

“There are so many questions that arise out of this,” Hwang said in a Q&A. “One that’s really interesting to me is the role of stakeholders in the firm. Existing datasets have focused on shareholder governance, but using CCG, a researcher could figure out a way to measure stakeholder involvement and test whether it impacts factors like investment return.”

The authors’ initial analysis of that question found that it doesn’t — at least not directly — and their finding upends scholars’ longstanding faith in the ubiquitous corporate governance index, dubbed the “G-Index.”

Corporate Practice Commentator is a set of journals featuring articles written on all aspects of corporate law. The articles poll began in 1994. Past polls have also recognized Professors Michal Barzuza, Quinn Curtis, George S. Geis, Edmund W. Kitch and Paul G. Mahoney.

Hwang, who joined the law faculty in 2020, is the Barron F. Black Research Professor of Law and directs the school’s John W. Glynn Jr. Law & Business Program. Her research and teaching focus on business law, including mergers and acquisitions, corporate contracts and corporate governance. She is also a co-host of the Law School podcast “Common Law” with Dean Risa Goluboff.

Hwang and Professor Kristen Eichensehr presented their paper, “National Security Creep in Corporate Transactions,” at the 2022 Harvard/Yale/Stanford Junior Faculty Forum. Hwang was appointed a research member of the European Corporate Governance Institute earlier this year.

The same poll recognized three other papers of Hwang’s as among the top 10 for their years: “Shadow Governance” for 2021, “Deal Momentum” for 2018 and “Unbundled Bargains: Multi-Agreement Dealmaking in Complex Mergers and Acquisitions” for 2017.