IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Fly by Night or Face the Music? Premature Dissolution and the Desirability of Extended Liability

  • James Boyd
  • Daniel E. Ingberman

Premature dissolution can be a rational corporate response to the threat of future liability. Although early dissolution is costly to a firm, liability may be more so. The way in which liability rules can exacerbate this extreme form of liability avoidance is of interest, since "fly-by-night" firms generate particularly large social costs. In particular, we explore the consequences of liability that is extended to the business partners of an insolvent or absent tortfeasor--a relatively common legal response when tortfeasors abandon obligations. Extended liability can be desirable; however, if extended liability is anticipated, business partners themselves may choose to fly by night. We show how the preferred liability rule, including no liability, depends on the relative costs of premature dissolution and future obligations. The analysis also sheds light on a set of interrelated legal issues, such as the role of the trust fund doctrine and state dissolution statutes. Copyright 2003, Oxford University Press.

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Article provided by Oxford University Press in its journal American Law and Economics Review.

Volume (Year): 5 (2003)
Issue (Month): 1 ()
Pages: 189-232

as
in new window

Handle: RePEc:oup:amlawe:v:5:y:2003:i:1:p:189-232
Contact details of provider: Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
Fax: 01865 267 985
Web page: http://www.aler.oupjournals.org/
Email:

Order Information: Web: http://www.oup.co.uk/journals

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:oup:amlawe:v:5:y:2003:i:1:p:189-232. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)

or (Christopher F. Baum)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.