The Perverse Incentives of SPACs

Author(s):  
Lora Dimitrova
Keyword(s):  
2018 ◽  
Vol 35 (02) ◽  
pp. 221-241
Author(s):  
Daniel M. Weinstock

Abstract:In this essay I argue that adversarial institutional systems, such as multi-party democracy, present a distinctive risk of institutional corruption, one that is particularly difficult to counteract. Institutional corruption often results not from individual malfeasance, but from perverse incentives that make it the case that agents within an institutional framework have rival institutional interests that risk pitting individual advantage against the functioning of the institution in question. Sometimes, these perverse incentives are only contingently related to the central animating logic of an institution. In these cases, immunizing institutions from the risk of corruption is not a theoretically difficult exercise. In other cases, institutions generate perverse or rival incentives in virtue of some central feature of the institution’s design, one that is also responsible for some of the institution’s more positive traits. In multi-party democratic systems, partisanship risks giving rise to too close an identification of the partisan’s interest with that of the party, to the detriment of the democratic system as a whole. But partisanship is also necessary to the functioning of such a system. Creating bulwarks that allow the positive aspects of partisanship to manifest themselves, while offsetting the aspects of partisanship through which individual advantage of democratic agents is linked too closely to party success, is a central task for the theory and practice of the institutional design of democracy.


Author(s):  
Jaap Bos

After Reading This Chapter, You Will: Understand how political factors impact modern science Appreciate in what ways the replication crisis endangers the values of science Know how publication pressure and perverse incentives challenge scientific practices See why teaching ethics requires reactive, proactive, and reflexive education


2018 ◽  
Vol 33 (1) ◽  
pp. 64-89 ◽  
Author(s):  
Bryane Michael ◽  
Mark Williams

Purpose The purpose of this paper is to understand why managers, internal auditors and compliance staff (in financial firms specifically and using Malaysia as a concrete example) can want to ignore compliance-related legislation (a law on anticompetitive behaviour in this case). Design/methodology/approach The authors review, discuss and critique the literature on compliance and institutions in the light of existing data from Malaysia’s financial industry (literally confronting theory with data). Findings Legislative design can actually encourage managers and their auditors disobey/ignore the law for reasons which previous theories cannot explain. Research limitations/implications This research does not use the regression techniques in vogue now. The findings, nevertheless, imply that attempts to explain phenomenon in management auditing should start with the laws governing managerial activity. Practical implications Auditors may use the methods used in this study to assess the extent to which financial services firms’ managers have incentives to comply with laws. Similarly, this research can quantify the extent to which internal auditors in these firms have incentives to find untoward conduct. Social implications Poorly designed laws affecting managerial auditing derive from pre-existing social relationships, as well as help shape them (as shown using data). Identifying areas of non-compliance may actually signal deeper problems in the way businessmen and lawmakers make and enforce laws requiring compliance and self-assessment. Originality/value The authors know of no study looking at the economic incentives driving internal auditors’ behaviour – particularly in the area of antitrust. They show how law shapes management and auditors’ incentives, quantify these incentives and show how/why previous research fails to explain these incentives.


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