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Law and Finance — Overview

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The MSc in Law and Finance (MLF) is taught jointly by the Faculty of Law and Saïd Business School the University of Oxford. The MLF is a full-time, 10-month programme which offers students with a prior background in law the chance to develop an advanced inter-disciplinary understanding of issues at the intersection of law, economic and finance.

The MLF combines a highly analytic academic core with tailor-made practical applications derived from continuing collaboration with professional and regulatory organisations.

The MLF will particularly appeal to those with a legal background who want to advance their career in corporate law, finance, regulation or financial policy making.

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For more detailed information about our work in this area, see also the dedicated Oxford Finance network website

This theme contains two subjects, namely: Law and Finance and Principles of Financial Regulation

Law and Finance


European Corporate Insolvency: Restructuring the European Business Enterprise

photo of Horst Eidenmüller

On Friday 8 May, Freshfields Professor of Commercial Law Horst Eidenmüller and Clifford Chance Associate Professor of Law and Finance Kristin van Zwieten welcomed academics, policymakers and practitioners from six European jurisdictions (the UK, Italy, Germany, France, the Netherlands and Denmark) to St Hugh’s College for a conference on restructuring and insolvency reform projects in Europe […]

MLF Open Day

Every year we run an open day for prospective MLF applicants, to give them an opportunity to come to Oxford, visit the Law Faculty and Saïd Business School, and to meet with some of the MLF tutors and current students […]

Doctoral funding opportunities in Law and Finance

The Global Network in Law and Finance (GLawFiN) is an interdisciplinary network of scholars located at
Columbia Law School (New York), the University of Oxford (Oxford), and the House of Finance of Goethe-
University (Frankfurt) exploring issues at the intersection of law and finance […]

Discussion Groups

These self-sustaining groups are an essential part of the life of our graduate school. They are organised in some cases by graduate students and in others by Faculty members and meet regularly during term, typically over a sandwich lunch, when one of the group presents work in progress or introduces a discussion of a particular issue or new case. They may also encompass guest speakers from the faculty and beyond.

Law and Finance Workshop

These self-sustaining groups are an essential part of the life of our graduate school. They are organised in some cases by graduate students and in others by Faculty members and meet regularly during term, typically over a sandwich lunch, when one of the group presents work in progress or introduces a discussion of a particular issue or new case. They may also encompass guest speakers from the faculty and beyond.

Business Law Workshop


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Showing all 37 Law and Finance publications currently held in our database
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Journal Articles


D Awrey, 'Law and Finance in the Chinese Shadow Banking System' (2015) 48 Cornell International Law Journal [forthcoming]

L Enriques and D Zetzsche, 'Quack Corporate Governance, Round III? Bank Board Regulation Under the New European Capital Requirement Directive ' (2015) Theoretical Inquiries in Law 211 [...]

After a crisis, broad and sweeping reforms are enacted to restore trust. Following the 2007-2008 Great Financial Crisis, the European Union has engaged in an ambitious overhaul of banking regulation. One of its centrepieces, the 2013 Fourth Capital Requirements Directive (CRD IV), tackles, amongst other things, the perceived pre-crisis failings in the governance of banks. We focus on the provisions that are aimed at reshaping bank boards’ composition, functioning, and their members’ liabilities, and argue that they are unlikely to improve bank boards’ effectiveness or prevent excessive risk-taking. We criticize some of them for mandating solutions, like board diversity and the separation of chairman and CEO, that may be good for some banks but are bad for others, in the absence of any convincing argument that their overall effect is positive. We also criticize enhanced board liability by showing that it may increase the risk of herd behaviour and lead to more serious harm in the event of managerial mistakes. We also highlight that the push towards unfriendly boards may negatively affect board dynamics and make boards as dysfunctional as when the CEO dominates them. We further argue that limits on directorships and diversity requirements will worsen the shortage of bank directors, while requirements for induction and training and board evaluation exercises will more likely lead to tick-the-box exercises than under the current situation in which they are just best practices. We conclude that European policymakers and supervisors should avoid using a heavy hand, respectively, when issuing rules implementing CRD IV provisions with regard to bank boards and when enforcing them.

ISBN: 1565-3404

J S Getzler, 'Two Timing the Law' (2015) 163 University of Pennsylvania Law Review Online 355 [...]

A response to Edward B. Rock, Corporate Law Doctrine and the Legacy of American Legal Realism, 163 U. Pa. L. Rev. ___ (2015). In this paper I suggest how English lawyers evade the realist embrace of policy by projecting law "inter-temporally" — that is, allowing the law to inhabit two successive times and allowing one time state to affect the other — in order to yield legal results and ultimately effect change in the legal system itself. I assess Edward Rock’s juxtaposition of the Delaware courts’ realist approach and the formalist techniques of leading English commercial judges when dealing with some of the more difficult areas of corporate doctrine.

ISBN: 0041-9907

WG Ringe, 'Capital Markets Union for Europe - A Political Message to the UK' (2015) 9 Law & Financial Markets Review 5 [...]

The economic case for the recent proposal on a European ‘Capital Markets Union’ is obvious. However, the name is more symbolic than real, and the substance falls short of proposing a fully unified capital market across the EU. This short paper identifies several shortcomings of the project. In particular, the unclear methodological approach of the CMU project, and the lack of a clear commitment to a European enforcement or institutional mechanism weaken the benefits of the overall concept. Instead, the merits of the proposal lie in its political importance: above all, the CMU project is an attempt to repair the relationship with the UK and to win back support from the City of London for the European Single Market. As such, the project as a whole is certainly laudable, and it might turn out to be the right step at the right time.


D Awrey, 'Toward a Supply-side Theory of Financial Innovation' (2013) 41:2 Journal of Comparative Economics 401

WG Ringe, 'Hedge Funds and Risk-Decoupling – The Empty Voting Problem in the European Union' (2013) 36 Seattle University Law Review 1027 [...]

Negative risk-decoupling, otherwise known as empty voting, is a popular strategy amongst hedge funds and other activist investors. In short, it is the attempt to decouple the economic risk from the share’s ownership position, retaining in particular the voting right without risk. This paper uses three perspectives to analyse the problems created by negative risk-decoupling: an agency costs approach, an analysis of information costs, and a perspective from corporate finance. It shows how risk-decoupling is a type of market behaviour that creates significant costs for market participants, in particular existing shareholders and potential investors. The paper then develops regulatory responses, envisaged particularly for EU level lawmaking, but also raises underlying issues on a more general level. Whilst several proposed regulatory tools are rejected, the paper prefers a solution that uses continuous transparency as the cornerstone. In addition, it suggests that in certain individual cases, national regulators should be empowered to suspend activists’ voting rights. The paper concludes by offering a concrete legislative proposal, amending the European Transparency Directive.

ISBN: 1078-1927


J Armour, BS Black and BR Cheffins, 'Is Delaware Losing its Cases?' (2012) 9 Journal of Empirical Legal Studies 605 [...]

DOI: 10.1111/j.1740-1461.2012.01268.x

Delaware’s expert courts are seen as an integral part of the state’s success in attracting incorporation by public companies. However, the benefit that Delaware companies derive from this expertise depends on whether corporate lawsuits against Delaware companies are brought before the Delaware courts. We report evidence that these suits are increasingly brought outside Delaware. We investigate changes in where suits are brought using four hand-collected data sets capturing different types of suits: class action lawsuits filed in (1) large M&A and (2) leveraged buyout transactions over 1994–2010; (3) derivative suits alleging option backdating; and (4) cases against public company directors that generate one or more publicly available opinions between 1995 and 2009. We find a secular increase in litigation rates for all companies in large M&A transactions and for Delaware companies in LBO transactions. We also see trends toward (1) suits being filed outside Delaware in both large M&A and LBO transactions and in cases generating opinions; and (2) suits being filed both in Delaware and elsewhere in large M&A transactions. Overall, Delaware courts are losing market share in lawsuits, and Delaware companies are gaining lawsuits, often filed elsewhere. We find some evidence that the timing of specific Delaware court decisions that affect plaintiffs’ firms coincides with the movement of cases out of Delaware. Our evidence suggests that serious as well as nuisance cases are leaving Delaware. The trends we report potentially present a challenge to Delaware’s competitiveness in the market for incorporations.

ISBN: 1740-1461

J Armour, Audrey Hsu and Adrian Walters, 'The Costs and Benefits of Secured Creditor Control in Bankruptcy: Evidence from the UK' (2012) 8 Review of Law and Economics 101 [...]

DOI: 10.1515/1555-5879.1507

The theoretical literature debates whether debtors should be permitted to contract with lenders over control rights in bankruptcy. Proponents point to coordination benefits from concentrating control rights; detractors point to inter-creditor agency costs. A recent reform of UK bankruptcy law provides an opportunity to test these theories. Until 2003, UK bankruptcy law permitted firms to give complete ex post control to secured creditors, through a procedure known as “receivership.” A bankruptcy reform then required firms to use a different procedure, “administration,” which confers greater control on unsecured creditors. We present empirical findings from a hand-coded sample of 340 bankruptcies from both before and after the change in the law. Whilst gross realizations have increased following the change in the law, these have tended to be eaten up by increased bankruptcy costs. We infer that dispersed and concentrated creditor governance in bankruptcy may be functionally equivalent.

ISBN: 1555-5879

M Kettunen and WG Ringe, 'Disclosure Regulation of Cash-Settled Equity Derivatives – an Intentions-Based Approach' [2012] Lloyd's Maritime and Commercial Law Quarterly 227 [...]

In capital markets around the world, calls for greater transparency regarding holdings of cash-settled equity derivatives (in particular Contracts for Difference, CfDs) have arisen due to the increased use of CfDs to gain control or to influence the management of prominent companies on all major European stock exchanges. They have been used in this manner due to an emerging practice that permits a CfD holder to capture the shares to which the CfD arrangement relates (without entering into any further express or implied agreements to do so), thereby acquiring a de facto control position in the target company. The UK was among the first countries to extend its shareholder disclosure regime to cover CfDs. Positions above the trigger threshold of 3 per cent must be disclosed as if they were shares enti-tling the holder to voting rights in the target company. Two alternatives were considered when pre-paring this new regulation: firstly, a general disclosure obligation of all economic long positions and secondly, a safe harbour regulation with exemptions from the requirement to disclose certain CfD transactions. Ultimately, the first option was preferred, yet not on the basis of its own merits but be-cause the safe harbour alternative was considered too complicated and difficult to enforce. This paper evaluates disclosure regulation of cash-settled equity derivatives and assesses the ef-fectiveness and suitability of the disclosure regulation under chapter 5 of Disclosure and Transparency Rules (DTR) in the UK with comparison to the relevant US rules and case law. We argue that the UK made the wrong choice of disclosure regime for CfDs. It fundamentally misunderstood the nature of the underlying problem relating to CfDs. As this article explains, the key problem related to CfDs is not the economic interest which CfDs convey per se, but rather the hedging structures that market participants have developed to facilitate the use of CfDs to acquire control of companies by stealth. This particular mischief would have been better targeted by an intentions-based disclosure regulation requiring disclosure of CfD positions only in cases where the CfD holder intends to launch a takeover or to otherwise influence the target company’s strategy and operations. Instead, the UK market is saddled with a general disclosure obligation with only very limited exceptions. This disclosure obligation is too wide in scope, places an undue burden on market partici-pants and ultimately acts as a deterrent to CfD transactions. This article argues that the UK should move away from the current general disclosure obligation towards intentions-based disclosure to re-move the current fetter on the CfD market, while still tackling the underlying mischief.

ISBN: 1859789781


J Armour and W.-G. Ringe, 'European Corporate Law 1999-2010: Renaissance and Crisis' (2011) 48 Common Market Law Review 125 [...]

European corporate law has enjoyed a renaissance in the past decade. Fifteen years ago, this would have seemed most implausible. In the mid–1990s, the early integration strategy of seeking to harmonize substantive company law seemed to have been stalled by the need to reconcile fundamental differences in approaches to corporate governance. Little was happening, and the grand vision of the early pioneers appeared more dream than ambition. Yet since then, a combination of adventurous decisions by the Court of Justice, innovative approaches to legislation by the Commission, and disastrous crises in capital markets has produced a headlong rush of reform activity. The volume and pace of change has been such that few have had time to digest it: not least policymakers, with the consequence that the developments have not always been well coordinated. The recent financial crisis has yet again thrown many – quite fundamental – issues into question. In this article, we offer an overview that puts the most significant developments of this decade into context, alongside each other and the changing patterns of corporate structure in European countries. Such developments cover, for instance, corporate mobility, corporate freedom of establishment, golden shares case law, as well as the Commission’s Company Law Action Plan CLAP and Financial Services Action Plan FSAP. Harmonization of Member States’ company laws on the rules governing listed companies and the facilitation of cross-border restructuring are also examined.

ISBN: 0165-0750

J Armour, J. Jacobs and C. Milhaupt, 'The Evolution of Hostile Takeover Regimes in Developed and Emerging Markets: An Analytical Framework' (2011) 52 Harvard International Law Journal 219 [...]

n each of the three largest economies with dispersed ownership of public companies—the United States, the United Kingdom, and Japan—hostile takeovers emerged under a common set of circumstances. Yet the national regulatory responses to these new market developments diverged substantially. In the United States, the Delaware judiciary became the principal source and enforcer of rules on hostile takeovers. These rules give substantial discretion to target company boards in responding to unsolicited bids. In the United Kingdom, by contrast, a private body consisting of market professionals was formed to adopt and enforce the rules on hostile bids and defenses. In contrast to those of the United States, the U.K. rules give the shareholders primary decisionmaking authority in responding to hostile takeover attempts. The hostile takeover regime in Japan, which developed recently and is still evolving, combines substantive rules with elements drawn from both the United States (Delaware) and the United Kingdom, while adding distinctive elements, including an independent enforcement role for Japan’s stock exchange. This Article provides an analytical framework for business law development to explain the diversity in hostile takeover regimes in these three countries. The framework identifies a range of supply and demand dynamics that drives the evolution of business law in response to new market developments. It emphasizes the common role of subordinate lawmakers in filling the vacuum left by legislative inaction, and it highlights the prevalence of “preemptive lawmaking” to avoid legislation that may be contrary to the interests of important corporate governance players. Extrapolating from the analysis of developed economies, the framework also illuminates the current state and plausible future trajectory of hostile takeover regulation in the important emerging markets of China, India, and Brazil. A noteworthy pattern that the analysis reveals is the ostensible adoption—and adaptation—of “best practices” for hostile takeover regulation derived from Delaware and the United Kingdom in ways that protect important interests within each emerging market’s national corporate governance system.

ISBN: 0017-8063

B.R. Cheffins and J Armour, 'The Past, Present and Future of Shareholder Activism by Hedge Funds' (2011) 37 Journal of Corporation Law 51 [...]

The forthright brand of shareholder activism hedge funds deploy emerged by the mid-2000s as a major corporate governance phenomenon. This Article explains the rise of hedge fund activism and offers predictions about future developments. The Article begins by distinguishing the “offensive” form of activism hedge funds engage in from “defensive” interventions “mainstream” institutional investors (e.g. pension funds or mutual funds) undertake. Variables influencing the prevalence of offensive shareholder activism are then identified using a heuristic device, “the market for corporate influence.” The rise of hedge funds as practitioners of offensive shareholder activism is traced by reference to the “supply” and “demand” sides of this market, with the basic chronology being that, while there were direct antecedents of hedge fund activists as far back as the 1980s, hedge funds did not move to the activism forefront until the 2000s. The Article brings matters up-to-date by discussing the impact of the recent financial crisis on hedge fund activism and draws upon the market for corporate influence heuristic to predict that activism by hedge funds is likely to remain an important element of corporate governance going forward.

ISBN: 0360-795X

WG Ringe and A Hellgardt, 'An international dimension of issuer liability - Liability and choice of law from a transatlantic perspective' (2011) 31 Oxford Journal of Legal Studies 23 [...]

The integration of the European capital markets makes progress and has led both issuers and investors being active on various markets on both sides of the Atlantic. In times of financial crises, this brings one question into the centre of attention which had not been discussed exhaustively before: In the situation of a securities liability towards investors in an international context, which is the applicable law to the liability claim? The harmonisation of private international law rules in Europe gives rise to new reflections on the problem of international issuer liability. In the United States, on the other hand, the Supreme Court has just granted certiorari in a ‘foreign-cubed’ securi-ties class action case and will thus rule for the first time on matters relating to the inter-national application of the US securities regulation soon. This paper understands the role of issuer liability in a broader context as a ‘corporate governance’ device and, from this starting point, develops a new approach to the legal problem of cross-border securities liability.

ISBN: 0143-6503


J Armour, S Deakin, V Mollica and M Siems, 'Law and Financial Development: What We are Learning from Time Series Evidence' (2010) Brigham Young University Law Review 1435 [...]

The legal origins hypothesis is one of the most important and influential ideas to emerge in the social sciences in the past decade. However, the empirical base of the legal origins claim has always been contestable, as it largely consists of cross-sectional datasets, which provide evidence on the state of the law only at limited points in time. There is now a growing body of data derived from techniques for coding crossnational legal variation over time. This time-series evidence is reviewed here and is shown to cast new light on some of the central claims of legal origins theory. Legal origins are shown to be of little help in explaining trends in the law relating to shareholder protection, although the classification of legal systems into English-, French-, and German origin “families” has greater explanatory force in the context of creditor rights. The widely-held view that increases in shareholder rights foster financial development is not supported by time-series analyses. More generally, the new evidence casts doubt on the suggestion that legal origins operate as an “exogenous” force, independently shaping both the content of laws and economic outcomes. It is more plausible to see legal systems as evolving in parallel with changes in economic conditions and political structures at national level.

D Awrey, 'The FSA, Integrated Regulation and the Curious Case of OTC Derivatives' (2010) 13:1 University of Pennsylvania Journal of Business Law 101


J Armour, S Deakin, P Lele and M Siems, 'How Do Legal Rules Evolve? Evidence from a Cross-Country Comparison of hareholder, Creditor and Worker Protection' (2009) 57 American Journal of Comparative Law 579 [...]

Much attention has been devoted in recent literature to the claim that a country’s ‘legal origin’ may make a difference to its pattern of financial development and more generally to its economic growth path. Proponents of this view assert that the ‘family’ within which a country’s legal system originated, be it common law, or one of the varieties of civil law, has a significant impact upon the quality of its legal protection of shareholders, which in turn impacts upon economic growth, through the channel of firms’ access to external finance. Complementary studies of creditors’ rights and labour regulation have buttressed the core claim that different legal families have different dynamic properties. Specifically, common law systems are thought to be better able to respond to the changing needs of a market economy than are civilian systems. This literature has, however, largely been based upon cross-sectional studies of the quality of corporate, insolvency and labour law at particular points in the late 1990s. In this paper, we report findings based on newly constructed indices which track legal change over time in the areas of shareholder, creditor and worker protection. The indices cover five systems for the period 1970-2005: three ‘parent’ systems, the UK, France and Germany; the world’s most developed economy, the US; and its largest democracy, India. The results cast doubt on the legal origin hypothesis in so far as they show that civil law systems have seen substantial increases in shareholder protection over the period in question. The pattern of change differs depending on the area which is being examined, with the law on creditor and worker protection demonstrating more divergence and heterogeneity than that relationg to shareholders. The results for worker protection are more consistent with the legal origin claim than in the other two cases, but this overall result conceals significant diversity within the two ‘legal families,' with different countries relying on different institutional mechanisms to regulate labour. Until the late 1980s the law of the five countries was diverging, but in the last 10-15 years there has been some convergence, particularly in relation to shareholder protection.

J Armour and P Lele, 'Law, Finance and Politics: The Case of India' (2009) 43 Law and Society Review 491 [...]

DOI: 10.1111/j.1540-5893.2009.00380.x

The process of liberalisation of India's economy since 1991 has brought with it considerable development both of its financial markets and the legal institutions which support these. An influential body of recent economic work asserts that a country's 'legal origin'-as a civilian or common law jurisdiction-plays an important part in determining the development of its investor protection regulations, and consequently its financial development. An alternative theory claims that the determinants of investor protection are political, rather than legal. We use the case of India to test these theories. We find little support for the idea that India's legal heritage as a common law country has been influential in speeding the path of regulatory reforms and financial development. There is a complementarity between (i) India's relative success in services and software, (ii) the relative strength of its financial markets for outside equity, as opposed to outside debt, and (iii) the relative success of stock market regulation, as opposed to reforms of creditor rights. We conclude that political explanations have more traction in explaining the case of India than do theories based on 'legal origins'.

ISBN: 0023-9216

J Armour, S Deakin, P Sarkar, M Siems and A Singh, 'Shareholder Protection and Stock Market Development: An Empirical Test of the Legal Origins Hypothesis' (2009) 6 Journal of Empirical Legal Studies 343 [...]

DOI: 10.1111/j.1740-1461.2009.01146.x

Using a panel data set covering a range of developed and developing countries, we show that common-law systems were more protective of shareholder interests than civil-law ones in the period 1995–2005. However, civilian systems were catching up, suggesting that legal origin was not much of an obstacle to formal convergence in shareholder protection law. We find no evidence of a positive impact of these legal changes on stock market development. Possible explanations are that laws have been overly protective of shareholders and that transplanted laws have not worked well in contexts for which they were not suited.

ISBN: 1740-1453



J Armour, R Kraakman, P Davies, L Enriques, H Hansmann, G Hertig and K Hopt, H Kanda, E Rock, The Anatomy of Corporate Law (Oxford University Press 2009)



J Armour, A Menezes, M Uttamchandani and K van Zwieten, 'How Creditor Rights Matter for Debt Finance? A Review of Empirical Evidence' in F Dahan (ed), Research Handbook on Secured Financing in Commercial Transactions (Edward Elgar 2015)


L Gullifer, 'Compulsory Central Clearing of OTC Derivatives: The Changing Face of the Provision of Collateral ' in Louise Gullifer and Stefan Vogenauer (eds), English and European Perspectives in Contract and Commercial Law (Hart Publishing 2014) [...]

The EU Regulation introducing compulsory central clearing in Europe (‘EMIR’), takes an ambivalent attitude towards collateral. On one hand, it makes the provision of collateral to central counterparties (‘CCPs’) compulsory, in order to protect CCPs from credit risk if their counterparties default. On the other hand, it mandates particular collateral holding models, in order to protect counterparties from the risk of CCP insolvency, and to protect clients from the risk of their clearing broker’s insolvency. This paper critically examines the EMIR rules for the provision of collateral,as well as some of the market solutions to the new regime, analyses the legal position of each under English law and the resulting mix of risks and protections offered by each technique.


J Armour, 'The Rise of the Pre-Pack: Corporate Restructuring in the UK and Proposals for Reform' in R.P. Austin and Fady J.G. Aoun (eds), Restructuring Companies in Troubled Times: Director and Creditor Perspectives (Ross Parsons Centre Sydney Law School 2012)


J Armour and B.R. Cheffins, 'Origins of Offensive Shareholder Activism in the United States' in J.G.S. Koppell (ed), Origins of Shareholder Advocacy (Palgrave Macmillan 2011) [...]

“Offensive shareholder activism” involves buying up sizeable stakes in underperforming companies and agitating for changes predicted to increase shareholder returns. Though hedge funds are currently highly publicized practitioners of this corporate governance tactic, there has been no analysis of the extent to which managers of U.S. public companies were faced with challenges of this nature during the first half of the 20th century. This paper correspondingly examines instances during this period where investors engaged in offensive shareholder activism, based on a hand collected dataset of proxy contests occurring between 1900 and 1949. Our findings indicate that offensive shareholder activism, while not commonplace, did occur and was considerably more prevalent in the 1930s and 1940s than in earlier decades. We explain our results by reference to a simple model of offensive shareholder activism and argue that the ebb and flow of takeover activity may have been the primary determinant of the trends we observe.

ISBN: 978-0230107328


J Armour, 'Enforcement Strategies in UK Corporate Governance: A Roadmap and Empirical Assessment' in John Armour and Jennifer Payne (eds), Rationality in Company Law (Hart Publishing 2009) [...]

Shares in publicly-quoted UK companies are, similarly to those in their US counterparts, dispersed amongst many holders. The central problem of corporate governance for UK listed firms is therefore rendering managers accountable to shareholders. This paper investigates the way in which the mechanisms used to control these managerial agency problems are enforced. It provides a roadmap of the enforcement strategies employed, and a first approximation of their empirical significance. The results suggest three stylised facts about the UK corporate governance system. First, shareholder lawsuits are conspicuous by their absence. Formal private enforcement plays little or no role in controlling managers. Secondly, and contrary to leading accounts in the economic literature, it is public, rather than private, enforcement which dominates in relation to listed companies. However, the lion's share of the interventions by the relevant agencies - the Takeover Panel, the Financial Reporting Review Panel, and the Financial Services Authority - is of an informal character, not resulting in any legal action. Suasion, rather than sanction, is the order of the day. Thirdly, a simple divide between public and private enforcement fails fully to take account of the role played by institutional investors in the UK, who have engaged systematically in informal private enforcement activity. Strong informal private enforcement has historically therefore been the flipside, in the UK, of weak formal private enforcement.

ISBN: 9781841138060

J Armour, 'European Insolvency Proceedings and Party Choice: Comment' in L Gullifer, W-G Ringe and P Thery (eds), Current Issues in European Financial and InsolvencY Law (Hart Publishing 2009)

Edited books


J Armour and J. Payne (eds), Rationality in Company Law (Hart Publishing 2009) [...]

This collection of essays is a festschrift to honour Professor Dan Prentice who retired in 2008 from the Allen & Overy Professorship of Company Law in the University of Oxford. Dan Prentice has been deeply involved in corporate law from all perspectives: as a scholar, teacher, law reformer and practising member of Erskine Chambers. His interests have covered the full range of corporate law, finance and insolvency. The occasion of his retirement from his Professorship has afforded a number of leading corporate law experts from around the world, many of whom are his former students and colleagues, an opportunity to address some of the most important issues in corporate law today, in his honour. Corporate law has always been a fast-moving area, but the present pace of change seems quicker than ever. The Companies Act 2006, by some way the longest piece of legislation ever passed by the UK Parliament, is reshaping the landscape of domestic company law. At the same time, legislative and judicial developments at the European level in corporate and securities law are of unprecedented importance for corporate lawyers based in the UK. This outstanding series of papers addresses a number of the most important issues currently facing the subject, including the impact of the new Companies Act on directors' duties, shareholder litigation and capital maintenance; aspects of insolvency and banking regulation, the Capital Requirements Directive, and a new Convention on Intermediated securities. It will be essential reading for all those interested in the field.

Internet Publications


J Armour and others, 'Principles of Financial Regulation' (2014) SSRN [...]

Abstract: Inadequate regulation of the financial system is widely thought to have contributed to the financial crisis. The purpose of the book is to articulate a framework within which financial regulation can be analysed in a coherent and comprehensive fashion. The book’s approach is distinctive in several respects. First, it views the subject from a multidisciplinary perspective of economics, finance and law. Second, it takes a holistic approach, starting from the premise that financial regulation is best understood in the context of an appreciation of the entire financial system. Third it is international and comparative in nature, contrasting approaches, in particular in the EU and US. The book focuses on underlying policies and the objectives of regulation, using specific regulatory measures as examples. This allows the reader to compare choices in respect of the same policy issue in different regulatory frameworks. This introductory chapter sets out the motivation for the project and outlines the book’s analytic framework and contents.


The courses we offer in this field are:


MSc (Master's in Law and Finance)

Finance I

This course lays out the foundations of Finance with a particular emphasis on the financial decisions taken by firms. We begin by developing a framework for the financial evaluation of investment decisions. We introduce the concept of discounting and the net present value as a tool for investment appraisal. The course then moves on to develop a measure of risk and presents a model that allows us to evaluate risk (the Capital Asset Pricing Model). We then introduce another important financial decision by the firm, namely through what source (debt, equity etc.) to fund its activities. We will use insights from the modelling of risk to understand how different sources of finance affect the riskiness and therefore the price of financial claims issued by the firm. The course then shows how the previous models and concepts can be used by firms to evaluate investment proposals and take optimal capital budgeting decisions. Finally, we will discuss tax implications and corporate governance issues related to firms’ financial decisions.

Finance II

This course builds on and develops the concepts covered in Finance I. We consider asymmetric information and capital structure; dividend and share repurchase policy; issues in capital budgeting; the concept of adjusted present value; the nature and pricing of financial and real options, and the valuation of complex capital investment projects. Students are also expected to carry out a case analysis of payout policy.

First Principles of Financial Economics

This class builds the conceptual foundation required for the economic analysis of corporate financial policy, competitive asset markets and the regulation of both corporations and financial markets. The course?s lectures will focus on: rationality, the Coase Theorem, property rights, competitive markets, the market for risk, market failures, asymmetries of information, and aggregation of information.

Law and Economics of Corporate Transactions

This course, which runs during the Hilary and Trinity terms, gives students a toolkit for structuring common corporate transactions. It acts as the fulcrum for the programme as a whole. We begin with sessions on the economic theory of contracting: the nature of the agency, hold-up costs, and other strategic behaviour to be expected in a contracting relationship. We then move on to consider six practical applications to well-known corporate transactions. In each case, an overview of the relevant legal background is introduced in class, and students are then given document packs based on real transactions to work on in a group before presenting their work to the class and academics from the disciplines of law, finance and economics. Practitioners from the leading law firms who completed the transactions under review will then talk to students about the case studies, giving their views and explaining what happened in the real scenario.


Law and Finance teaching is organized by a Subject Group convened by:

John Armour: Hogan Lovells Professor of Law and Finance

in conjunction with:

Dan Awrey: Associate Professor of Law and Finance
Paul Davies: Senior Research Fellow
Judith Freedman: Pinsent Masons Professor of Taxation Law
Louise Gullifer: Professor of Commercial Law
Jennifer Payne: Professor of Corporate Finance Law
John Vella: Associate Professor and Senior Research Fellow

Also working in this field, but not involved in its teaching programme:

Jeremias Prassl: Associate Professor of Law
Wolf-Georg Ringe: Visiting Professor
Kristin van Zwieten: Clifford Chance Associate Professor of Law and Finance

Graduate students working in this field:

Anton Didenko: DPhil Law student
Sajjad Khoshroo: DPhil Socio-Legal Studies student
Jenifer Varzaly: DPhil Law student


Principles of Financial Regulation


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Showing all 12 Principles of Financial Regulation publications currently held in our database
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Journal Articles

D Awrey, 'The Limits of Private Ordering Within Modern Financial Markets' (2015) 34:1 Review of Banking and Financial Law 183

Jeffrey N. Gordon and WG Ringe, 'Bank Resolution in Europe: The Unfinished Agenda of Structural Reform' (2015) ECGI Working Paper 282/2015 [...]

This paper argues that the work of the European Banking Union remains incomplete in one important respect, the structural re-organization of large European financial firms that would make “resolution” of a systemically important financial firm a credible alternative to bail-out or some other sort of taxpayer assistance. A holding company structure in which the public parent holds unsecured term debt sufficient to cover losses at an operating financial subsidiary would facilitate a “Single Point of Entry” resolution procedure that would minimize knock-on effects from the failure of a systemically important financial institution. Resolution through such a structure would minimize run risk from short term creditors and minimize destructive ring-fencing by national regulators. Although structural reform in the EU could be achieved by supervisory implementation of the “living wills” requirement for effective resolution or irresistible incentives through capital charges, it would be best obtained through addition to the EU’s Proposed Structural Measures Regulation now under consideration.

J Gordon and WG Ringe, 'Bank Resolution in the European Banking Union: A Transatlantic Perspective on What it Would Take' (2015) 115 Columbia Law Review 1297 [...]

The project of creating a Banking Union is designed to overcome the fatal link between sovereigns and their banks in the Eurozone. As part of this project, political agreement for a common supervision framework and a common resolution scheme has been reached with difficulty. However, the resolution framework is weak, underfunded and exhibits some serious flaws. Further, Member States’ disagreements appear to rule out a federalized deposit insurance scheme, commonly regarded as the necessary third pillar of a successful Banking Union. This paper argues for an organizational and capital structure substitute for these two shortcomings that can minimize the systemic distress costs of the failure of a large financial institution. We borrow from the approach the Federal Deposit Insurance Corporation (FDIC) has devised in the implementation of the “Orderly Liquidation Authority” under the Dodd Frank Act. The FDIC’s experience teaches us three important lessons: first, systemically important institutions need to have in their liability structure sufficient unsecured (or otherwise subordinated) term debt so that in the event of bank failure, the conversion of debt into equity will be sufficient to absorb asset losses without impairing deposits and other short term credit; second, the organizational structure of the financial institution needs to permit such a debt conversion without putting core financial constituents through a bankruptcy, and third, a federal funding mechanism deployable at the discretion of the resolution authority must be available to supply liquidity to a reorganizing bank. On these conditions, a viable and realistic Banking Union would be within reach—and the resolution of global financial institutions would be greatly facilitated, not least in a transatlantic perspective.

J Armour and JN Gordon, 'Systemic Harms and Shareholder Value' (2014) 6 Journal of Legal Analysis 37 [...]

The financial crisis has demonstrated serious flaws in the corporate governance of systemically important financial firms. In particular, the norm that managers should seek to maximize shareholder value, as measured by the stock price, proves to be a faulty guide for managerial action in systemically important firms. This is not only because the failure of such firms will have spillovers that defy the cost-internalization of the tort system, but also because these spillovers will harm their own majoritarian shareholders. The interests of diversified shareholders fundamentally diverge from the interests of managers and other controllers because the failure of a systemically important financial firm will produce losses throughout a diversified portfolio, not just own-firm losses. Among the consequences: the business judgment rule protection that makes sense for officers and directors of a non-financial firm leads to excessive risk-taking in a systemically important financial firm. To encourage appropriate modification of incentives, we propose officer and director liability rules as a complement to (and substitute for) the prescriptive rules that have emerged from the financial crisis.

ISBN: 21617201

D Awrey, W Blair and D Kershaw, 'Between Law and Markets: Is there a Role for Culture and Ethics in Financial Regulation?' (2013) 38:1 Delaware Journal of Corporate Law 191

P Davies, 'Federal Deposit Insurance Corporation and Bank of England memorandum on resolving globally active systemically important financial institutions' (2013) 7 Law and Financial Markets Review 304 [...]

DOI: 10.5235/17521440.7.6.304

The cross-border co-ordination necessary for the successful resolution of global systemically important financial institutions (G-SIFIs) has emerged as a major issue in the post-crisis reforms. In particular, the Financial Stability Board addressed this issue in its “Key Attributes of Effective Resolution for Financial Institutions”, adopted in 2011. However, little exists by way of operational machinery to give effect to the Key Attributes. The memorandum of December 2012 setting out the understandings of the resolution authorities in the US and the UK as to how they will effect a “single point of entry” resolution of a G-SIFI is thus an important first step. This article analyses the agreement, identifying the conditions necessary for it to operate successfully. It is noted that, for understandable reasons, both countries have also put in place resolution mechanisms which do not depend upon appropriate action by the home-state regulator.

ISBN: ISSN 1752-1440

D Awrey, 'Complexity, Innovation and the Regulation of Modern Financial Markets' (2012) 2:2 Harvard Business Law Review 235

D Awrey, 'Regulating Financial Innovation: A More Principles-based Alternative?' (2011) 5:2 Brooklyn Journal of Corporate, Financial and Commercial Law 273

D Awrey, 'The Limits of EU Hedge Fund Regulation' (2011) 5:2 Law and Financial Markets Review 119


WG Ringe and PM Huber, Legal Challenges in the Global Financial Crisis: Bail-outs, the Euro and Regulation (Hart Publishing, Oxford 2014) [...]

The global financial and economic crisis which started in 2008 has had devastating effects around the globe. It has caused a rethinking in different areas of law, and posed new challenges to regulators and private actors alike. One of the emerging issues is the apparent eclipse of boundaries between different legal disciplines: financial and corporate lawyers have to learn how public law instruments can complement their traditional governance tools; conversely, public lawyers have had to come to understand the specificities of the financial markets they intend to regulate. While commentary on financial regulation and the global financial crisis abounds, it tends to remain within disciplinary boundaries. This volume not only brings together scholarship from different areas of law (constitutional and administrative law, EU law, financial law and regulation), but also from a variety of backgrounds (academia, practice, policy-making) and a number of different jurisdictions. The volume illustrates how interdisciplinary scholarship belongs at the centre of any discussion of the economic crisis, and indeed regulation theory more generally. This is a timely exploration of cutting-edge issues of financial regulation.


J Armour, 'Making Bank Resolution Credible' in The Oxford Handbook of Financial Regulation (ed), E Ferran, N Moloney and J Payne ( 2015) [...]

Financial difficulties at large financial institutions present governments and regulators with an unenviable dilemma. On the one hand, they are afraid to permit such a firm to enter 'ordinary' insolvency proceedings, lest this transmit financial shock to other, connected, institutions. Yet every voter can grasp the moral hazard problems and distributional inequity associated with government handouts for the financial sector. Consequently many jurisdictions have introduced, or are designing, 'special resolution' mechanisms for financial institutions. The first generation of such mechanisms were based on the US FDIC receivership regime. They focus on waiving property rights so as to effect a very rapid transfer of complex assets and short-term liabilities to a purchaser who will be able to stand behind those liabilities and thereby ensure stability. This model works well for small to medium sized domestic banks, but is insufficient to provide a credible alternative to bailouts for large, complex financial institutions. As a result, a series of new measures — which we have termed 'second generation' resolution mechanisms — have been developed. First, there has been a realization that the level of complexity is such that resolution ex post is impossible without careful planning by supervisors ex ante. Second, this planning process can be used not only to understand, but also to modify, the structure of complex financial institutions and their regulatory oversight so as to facilitate resolution should it be necessary. Third, the use of 'bail-in' or mandated debt to equity swaps provides a potentially very useful additional resolution tool when used in conjunction with such forward planning and oversight. Fourth, in the context of international financial institutions, coordination and allocation of responsibility amongst national regulators is an integral part of the planning process. The implications of this shift are clear. For the resolution of large complex financial institutions to be credible, it must be thought of as an integral part of the ongoing oversight of financial institutions by regulators, and not as simply a set of mechanisms that are kept for troubled times. Investment in regulatory capacity — recruitment and training to build human capital in the regulatory sector — is therefore crucial to ensuring the success of resolution.

ISBN: 9780199687206


J Armour and D Awrey, 'Prioritizing the Implementation of International Financial Regulation ' (Commonwealth Secretariat Economic Papers 95 2015) [...]

The global financial crisis of 2007–08 triggered a plethora of regulatory reforms under the auspices of international bodies such as the G20 and Financial Stability Board. Yet the implementation of these reforms remains a task for individual countries. This paper presents a risk-based framework for implementing international financial regulation within national economies, in particular in small states. It shows how these countries can navigate the standard setting processes used by the relevant international bodies. It includes case studies to illustrate how the framework can be integrated with standard setting processes to improve outcomes for small states.

ISBN: 9781849291408


The courses we offer in this field are:



Our taught postgraduate programme, designed to serve outstanding law students from common-law backgrounds

Principles of Financial Regulation

Financial regulation is subject to rapid change, and its optimal content is hotly debated. This course will introduce you to the underlying principles which various forms of financial regulation seek to implement. The focus is on the financing of firms and their interaction with capital markets. Students completing this course will be able to understand the regulatory goals of market efficiency, investor protection, financial stability and competition, and the principal regulatory strategies that are employed to try to bring these about in relation to financial markets and financial institutions. The course will conclude with a consideration of the structure of financial regulators, both at the domestic and international level. Students having taken the course will be able to assess critically new developments in financial regulation and their implementation in novel contexts.


Our taught postgraduate programme, designed to serve outstanding law students from civil law backgrounds.

Principles of Financial Regulation

Financial regulation is subject to rapid change, and its optimal content is hotly debated. This course will introduce you to the underlying principles which various forms of financial regulation seek to implement. The focus is on the financing of firms and their interaction with capital markets. Students completing this course will be able to understand the regulatory goals of market efficiency, investor protection, financial stability and competition, and the principal regulatory strategies that are employed to try to bring these about in relation to financial markets and financial institutions. The course will conclude with a consideration of the structure of financial regulators, both at the domestic and international level. Students having taken the course will be able to assess critically new developments in financial regulation and their implementation in novel contexts.

MSc (Master's in Law and Finance)

Principles of Financial Regulation

Financial regulation is subject to rapid change, and its optimal content is hotly debated. This course will introduce you to the underlying principles which various forms of financial regulation seek to implement. The focus is on the financing of firms and their interaction with capital markets. Students completing this course will be able to understand the regulatory goals of market efficiency, investor protection, financial stability and competition, and the principal regulatory strategies that are employed to try to bring these about in relation to financial markets and financial institutions. The course will conclude with a consideration of the structure of financial regulators, both at the domestic and international level. Students having taken the course will be able to assess critically new developments in financial regulation and their implementation in novel contexts.


Principles of Financial Regulation teaching is organized by a Subject Group convened by:

John Armour: Hogan Lovells Professor of Law and Finance

in conjunction with:

Dan Awrey: Associate Professor of Law and Finance
Paul Davies: Senior Research Fellow
Jennifer Payne: Professor of Corporate Finance Law
Wolf-Georg Ringe: Visiting Professor


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