05 April 2009

It's always nice to get published, and this article has been waiting in line at ARSP for about a year to get printed so it was nice to finally see it inked


This article demonstrates the effect of legal self-efficacy on the use of sanctions against defaulting clients. The follow-up Legal self-efficacy and Business Risk is in the pipeline and I hope to have it finalized by next week. I will post it here for those of you eager to know the nature of legal self-efficacy and its effect on businessmens' behavior.

10 February 2009

The internet is fantastic when it comes to sharing material. I now share all of the six papers so far planned to be part of my thesis you can download them  here. 

Three papers are about legal self efficacy:

1. Legal Effectiveness: Theoretical Developments Concerning Legal Transplants.  Published in Archiv für Rechts und Sozialphilosophie (4) 2005.

2. Legal Self-efficacy and Managers' Use of Law.  Accepted for publication in Archiv für Rechts und Sozialphilosophie 2009.

3. The Law Businessman and the Trade Credit Decision. Published in The Uppsala Yearbook of East European Law (2008), p 226-266.

The remaining three are on the interrelation between legal rules and capital structure:

4. Legal Rights Matter: Evidence from Paneld Data on Creditor Protection and Debt. Published in International Finance Review 2008 (9) p. 303-336.

5. Capital Structure, Legal Rights, and Legal Origin. Presented on numerous conferences in Europea and the US.

6. The Structure of Ownership in Europe. Presented on numerous conferences in Europea and the US.

I am currently writing the seventh paper Legal Self-efficacy and the Protection of Property Rights as presented in the abstract below.

Feel free to download the papers and read them. I welcome your comments!

09 February 2009

Anyone doing research on self-efficacy?  I would like to exchange some ideas on this topic. 

My tedious research process: here it is, I might need help to improve it.  I am now writing my seventh paper for the dissertation and I am going through this procedure right now.

1. Find an interesting topic.

2. Find a theory you like to support

3. Find empirical support of the theory.

4. Read all there is to read about the topics involved in the paper.  For this paper this step has rendered me reading two strands of literature on Behavioural Law and Economics which I read in October, and the second strand is risk literature. I decided that I should include it since my paper is:

Legal Self-efficacy and the Protection of Property Rights

Eastern Europe is plagued by dysfunctional legal systems which don’t seem to provide reliable protection of property rights. Previous research has focused on the improvement of legal institutions such as courts and legal texts to adress this problem. This paper takes another approach to providing reliable protection of property rights in countries with dysfunctional legal systems by devising a new theory of the legal consciousness that applies to managers as the end users of law. The concept is called Legal self-efficacy (LSE). It is a measure of managers’ belief in their ability to use law as a tool for communication when doing business. In this paper I demonstrate that that LSE has a significant and positive impact on managers’ protection of property rights in terms of customer risk and managers’ protection against government nationalisation. The paper devises a new model that shows how LSE is related to a reduction of risk perception in the protection of property rights. The policy implications is that managers can be taught to improve their legal self-efficacy. Reliable protection of property rights in Eastern Europe can be improved by boosting the legal consciousness of managers. LSE is a legal effectiveness in a distributed sense, proving that law is effective only if it is in contact with society.

and the paper needs to incorporate a model. I have not done this previously, but I thougth it would be nice to bring something novel to the literature of behavioral law and economics. The paper connects risk literature to my concept LSE (see above).

5. Make the model look nice and beleivable.

6. Write the preconditions of the model and all previous research. 

7. Fill in the remainder of the paper including: introduction, presentation of problem, previous research, methodology, hypotheses including tests,  results,  summary and discussion, possibly even theoretical implications.

8. Read the paper

9. Reread the paper

10. Let someone else read the paper, and at least two more. 

11. Make changes. 

12. Read the paper again. 

13. Make changes. 

14. Read the paper. 

15. Submit to a journal in the proper format.

Cumbersome? Yes. Any tips?

08 February 2009

Curious about the interrelationship between law, legal families and debt structure?

Here's a paper my American colleague and I wrote 

Legal Rights Matter: Evidence from Panel Data on Creditor Protection and Debt published 2008 in volume 9 of International Finance Review. You can download it here.

At the outset of writing my thesis, this was what interested me most. However, in 2004-5 I realised that I could use a novel approach to show that it's people's understanding of the law that influences their use of law and decisions concering protection of their property rights. Therefore I decided to study the legal consciousness of the end users of law - entrepreneurs to find that there is a significant effect of legal consciousness on transactional behavior.

The papers on this issue you cannot download now, I will make them available soon.

30 January 2009

Want to do research and publish? - great - get the Why and the How from mr Schulman

Can't help laughing from readin this. But then again, it's only research.

27 January 2009

The simple logic of legal self-efficacy explained in brief

Here's the argument of my seventh paper.  I have written three papers on legal self-efficacy - and in this fourth one I have decided that I need to connect this concept with a discussion of risk. So now I read like ten papers and books on the subject - here are my tentative findings:

1. Risk is the product of likelihood of an event + consequences of that event. 

2. Subjective risk is the individual's perception of  risk and depends on the subjective probability of a particular event or performance of a task and the subjective dealing with the consequences of that event. Objective risk is the risk as measured by independent and recurrent calculations of a similar event. 

3. Self-efficacy is the belief of an individual in his/her own ability to performa  certain task.  This belief has an effect on the risk perception on that particular task. Therfore the person has a lower subjective risk of the task. In turn, the person is more likely not to shy away from carrying out that task. 


4. Legal self-efficacy lowers the subjective risk of an individual when making decisions about legal and financial transactions which themselves are a  risk.

Simple enough?  I think so. Simple is good. 

25 January 2009

Essays on Legal Self-efficacy and Finance

This is my latest preliminary title of my thesis. It feels good to have that down. Not too long. Not too short. Not too specific, not too general.

Writing a paper?

The best guide that I have found to help you do this is:

Kazdin, A. (1995) Preparing and Evaluating Research Reports.Psychological Assessment .Vol. 7, No. 3, 228-237.  

Download it here (Copyable and downloadable PDF):

Especially useful is page 232. Read it.

The most of your time and energy should be spent on the section that brings your novelty - what new findings or theories you bring to your field of research. Then literary review, method, and then introduction and conclusion.

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22 January 2009

Self-efficacy as an attitude that tones down risk: sounds interesting?

A mountain climber(Person MC) that has climbing self-efficacy (CSE) will see the prospect of climbing a mountain less risk than a person without such attitude.  This will make the risks involved seem more attainable and the possible consequences of a mishap less threatening. 

But will this attitude affect the risk propensity of the mountain climber when compared to a person without the attitude (normal person NP)?  Coudl the risk propensity could very well be the same?

Well, risk propensity in turn depends on risk perception - a person that sees no risk in prospects will be more risk prone since he sees less subjective risk. But the objective risk may be the same. After all climbing self-efficacy may not enable a person to climb a mountain better than a person without it.  The mountain is the same mountain.   Are risk perception and risk risk propensity mutually dependent on each other?

How to measure risk propensity independent of risk perception?  Perhaps we can test risp propensity in a situation where MC and NP have the same risk-perception such as crossing a river: the person who dares most with the same risk perception has more risk propensity. 

Risk propensity can lower risk perception so that a person's will perceive less risk when they are prone to try their luck.  Or what do you think?

18 January 2009

Här förklaras self-efficacy på Youtube


Legal self-efficacy: what does it imply?

Legal self-efficacy is a measure to which degree an individual is comfortable with the use of legal terminology in communication with other people.

Self-efficacy is a tried and tested theory of psychology,  for a lenghthier introduction see             http://en.wikipedia.org/wiki/Self-efficacy

My theory is an application of Hirschmann's theory of exit-voice-loyalty on law as a means of communication (http://en.wikipedia.org/wiki/Exit,_Voice,_and_Loyalty). It is also an application of Luhmann's theory of law as a means of communication.

The concept is a response to the law and economics approach to understanding the interplay between behaviour of businessmen and the law.  In two articles LLSC (1997, 1998) assess creditor protection in a number of common and civil law countries. They conclude that common law is more conducice to external finance of firms since it provides better creditor protection. Their approach was followed by a number of similar attempts (Pistor 2000) and similar approaches.  My take is that neither Law and Economics nor Legal sociology have developed the right tools for testing the vast array of theories in psychology on businessmens' transaction behavior. The world of neoclassical economics and ration actor theory still rules in Law and Economics.   We all know that humans do not possess perfect information and perfect rationality.  Humans are subject to bounded rationality and learned heuristics.  Humans are plagued by biases and are not able to make Bayesian calculations instantly, some even grasp what this concept means.  This is why the Coase theorem doesn't apply to real life as much as we would like to  since transaction costs are too high.  That's why we can use Legal self-efficacy as this is a  risk reduction.

My concept is used to test businessmen's use of law, granting of trade credit, and private property protection as well as customer structure in the forthcoming dissertation  tentively titled "Legal Self-efficacy". It will consist of five to seven papers, four already published and the one I write at present will be submitted for publication.

Right now I am writing my seventh and final paper for the dissertation. 

The preliminary title is "Legal self-efficacy and Property Rights". 

It demonstrates that Legal self-efficacy has a positive and significant impact on managers' protection of businesses' property rights.

I'm wrestling with the final format of this paper - I have decided that it should be written for European Journal of Law and Economics. Let's see if they agree. Not yet, they will have to wait for another two months or so.