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Cloud applications are becoming central and critical to the delivery of financial services. Despite their significance, banks face increased exposure to transaction risks related to the use of cloud services and internal and external pressures to improve their risk management practices. In this study, we use a unique data set from a bank's cloud register to examine the effectiveness of internal governance on an ongoing cloud outsourcing transaction between a bank and cloud service provider. We employ structural equation modeling and a simple linear regression to test for transaction misalignment and causes of governance inefficiencies. We find that a strong degree of misalignment is largely due to poor design of internal controls and a weak control system that does not provide acceptable indications of residual risk likelihood. The findings indicate that cloud risks are driven not only by agency costs, but also by firm-specific risks which contribute to a number of transaction uncertainties and governance misalignment. [ABSTRACT FROM AUTHOR]

This paper aims to reassess the dogma of creditor protection in light of the corporate finance principles and theories. To this end, I set forth two methodological premises to reach a substantive conclusion on the optimal creditor protection strategies. First, I draw a double-layered taxonomy of classes of creditors; second, I underscore the importance of legal systems and the statutory allocation of powers and authority on creditor-sensitive corporate decisions. The corporate finance literature shows that (1) debt matters for the firm's value maximization and governance and (2) the optimal capital structure is influenced by various determinants. Creditor protection and debt governance serve as determinants of financial behaviour. Legal strategies can positively or negatively determine the cost of capital. Against this framework, I argue that ex ante corporate law techniques of creditor protection hamper firms' financing maximization, whereas ex ante contractual arrangements bolster optimal capital supply. Ex post creditor protection is applicable only to distressed firms and has positive effects on capital structure when it involves directors, whereas it is rather cumbersome and unjustified when it impinges upon stockholders. Alternative, non-corporate law techniques may efficiently outperform strategies based on unlimited shareholder liability. I conclude that, while creditor protection techniques are a function of the interplay between legal environment and the specific features of each class of creditors, the case against ex ante corporate law, and toward ex ante contractual strategies, is substantial. Corporate finance forces should drive the legal design and assessment of this function. [ABSTRACT FROM AUTHOR]

This article deals with the exclusion of non-profit-making entities from the right of freedom of establishment of Articles 49 and 54 TFEU. It analyses the historical reasons for this exclusion. It is argued that the exclusion from freedom of establishment is no longer justified on the basis of two elements. Firstly, the development of the jurisprudence of the European Court of Justice in the fields of competition law, free movement of capital and tax law makes such exclusion systematically no longer tenable. Secondly, a law and economics treatment of non-profit firms as organisations that efficiently provide services in alternative to for-profit firms weakens the reasons for the exclusion. The article proposes a uniform, European notion of non-profit entity based on a law and economics analysis of this type of firm for the purposes of Article 54 TFEU as opposed to possible different national notions. This is followed by a brief analysis of the hypothesis of regulatory competition among jurisdictions for the law regulating the corporate governance of non-profit entities. [ABSTRACT FROM AUTHOR]

This article examines the regulation of directors' remuneration in EU, UK and Belgian law. The author argues that there are two categorises of norms for the regulatory framework of directors' remuneration: one is market-based, market efficiency norms of agency costs; the other is socio-legal norms. The paper argues that agency costs – a responsive mode of governance – alone cannot adequately address the problems of directors' remuneration. On the other hand, socio-legal norms – which are value and ethics-focused – can better construct a paradigm capable of addressing a broader issue of directors' remuneration in the EU context. Agency costs-based regulation has been used by the EU whereas socio-legal matters have been left to Member States. The article shows how socio-legal norms could form the underlying basis of the regulatory regime by examining the laws in the UK and Belgium. It is concluded that the European Court of Justice will need to carry out the role of negative integration by harmonising these social values in developing EU company law. [ABSTRACT FROM PUBLISHER]

We apply the paradigm of the firm as a nexus of contracts to the debate on regulatory competition vs. unification of law as an alternative way of regulating the business corporation. This approach views the business corporation as a set of coordinated contracts among different parties. Agency problems and related agency costs are the result of this interaction. The economic analysis of corporate law, securities regulation and bankruptcy law identifies law as a means to minimise such agency costs. In this paper, we develop a model where companies are heterogeneous in their preferences about the legal regulation of contractual relationships. We then compare a regime of regulatory competition with one of single supply of regulation and we analyse their relative costs and benefits. [ABSTRACT FROM AUTHOR]