Lynn A. Stout is the Paul Hastings Professor of Corporate and Securities Law at the University of California, Los Angeles School of Law. She specializes in researching, writing on, and teaching about corporate law

Corporate law

Corporate law is the study of how shareholders, directors, employees, creditors, and other stakeholders such as consumers, the community and the environment interact with one another. Corporate law is a part of a broader companies law...

, securities and derivatives regulation, law and economics, and prosocial behavior and law.

Career

Stout holds a B.A. summa cum laude from Princeton University

Princeton University

Princeton University is a private research university located in Princeton, New Jersey, United States. The school is one of the eight universities of the Ivy League, and is one of the nine Colonial Colleges founded before the American Revolution....

 as well as a Master's in Public Policy

Master of Public Policy

The Master of Public Policy , one of several public policy degrees, is a master's level professional degree that provides training in policy analysis and program evaluation at public policy schools. The MPP program places a focus on the systematic analysis of issues related to public policy and the...

 from Princeton's Woodrow Wilson School and a J.D. from the Yale Law School

Yale Law School

Yale Law School, or YLS, is the law school of Yale University in New Haven, Connecticut, United States. Established in 1824, it offers the J.D., LL.M., J.S.D. and M.S.L. degrees in law. It also hosts visiting scholars, visiting researchers and a number of legal research centers...

. Until 2001 she was a Professor of Law at Georgetown University

Georgetown University

Georgetown University is a private, Jesuit, research university whose main campus is in the Georgetown neighborhood of Washington, D.C. Founded in 1789, it is the oldest Catholic university in the United States...

 Law School, after which she joined the UCLA School of Law, where she became the Paul Hastings Professor. She has also taught at George Washington Law School, New York University

New York University

New York University is a private, nonsectarian research university based in New York City. NYU's main campus is situated in the Greenwich Village section of Manhattan...

 Law School, and Harvard Law School

Harvard Law School

Harvard Law School is one of the professional graduate schools of Harvard University. Located in Cambridge, Massachusetts, it is the oldest continually-operating law school in the United States and is home to the largest academic law library in the world. The school is routinely ranked by the U.S...

, and served as a Guest Scholar at the Brookings Institution

Brookings Institution

The Brookings Institution is a nonprofit public policy organization based in Washington, D.C., in the United States. One of Washington's oldest think tanks, Brookings conducts research and education in the social sciences, primarily in economics, metropolitan policy, governance, foreign policy, and...

. She has served as an Independent Trustee of the Eaton Vance Mutual Funds since 1998 and on the Advisory Board of the Aspen Institute's Business and Society Program since 2009. She is a frequent guest contributor to the New York Times, the Wall Street Journal, the Financial Times

Financial Times

The Financial Times is an international business newspaper. It is a morning daily newspaper published in London and printed in 24 cities around the world. Its primary rival is the Wall Street Journal, published in New York City....

, National Public Radio, and the PBS Newshour.

The importance of human conscience to peace, prosperity, and the rule of law

Stout is one of the first to apply the scientific evidence on unselfish prosocial behavior (“conscience”) to our understanding of how legal rules shape behavior. Cultivating Conscience: How Good Laws Make Good People (Princeton University Press, 2011) critiques the “homo economicus” assumption of rational selfishness and surveys behavioral science evidence demonstrating how and when people sacrifice their own material welfare to help or to avoid harming others. It applies the lessons of behavioral science to the questions of how tort, contract, and criminal law rules shape behavior, and suggests how to use law and rules more effectively by recruiting the force of conscience, not just material incentives, to encourage cooperative, ethical, and law-abiding behavior. Stout has also published articles on the importance of unselfish prosocial behavior in analyzing judicial behavior, corporate boards, and corporate and securities law.

The economic hazards of speculative derivatives trading and the common-law solution

Since the 1990s, Stout has argued in several articles that “over-the-counter” (OTC) speculative trading in financial derivatives increases risks and erodes returns in financial markets. She argues for a return to the common-law approach of distinguishing between true hedging and insurance contracts (which were legally enforceable at common law) and purely speculative “wagering” contracts (which could be enforced only when entered on private exchanges that used membership, capital, and margin requirements to control risks). Stout warned against the deregulation of OTC derivatives trading in 1998. She testified before the Senate Agriculture Committee in 2009 on the need to move speculative trading onto private exchanges and clearinghouses to prevent future financial institution failures.

Uncertainty, Subjective Disagreement, and Financial Markets

Stout has published numerous articles on how economic uncertainty permits subjective disagreement that leads to wasteful, risk-increasing speculative trading in stocks, commodities, and derivatives. She was one of the first legal scholars to explore how subjective disagreement can prevent stock market prices from accurately reflecting fundamental economic values.

Team Production Theory and other Challenges to “Shareholder Primacy”

With her co-author economist Margaret Blair, Stout has proposed a “team production” theory of the corporation that posits that corporate boards enjoy a broad range of discretion in setting corporate policy and allocating corporate surplus because they are in the best position to preserve and protect important firm-specific investments of not only shareholders, but also creditors, employees, and the larger community. Stout’s and Blair’s team production model was cited by U.S. Supreme Court Justice Stevens in his dissenting opinion in Citizens United v. FCC. Stout has also published numerous other articles on the empirical and theoretical weakness in the “shareholder primacy” view that corporations should be run to maximize shareholder wealth as measured by share price.

Publications

Selected books

• Cultivating Conscience: How Good Laws Make Good People (Princeton University Press, 2011)
• Cases and Materials on Law and Economics (with David Barnes, West 1992)

Selected Articles

• Fiduciary Duties for Activist Shareholders (with Iman Anabtawi), 60 Stan. L. Rev. 1255 (2008) (selected in Corporate Practice Commentator’s annual poll as one of the ten best corporate and securities law articles published in 2008)
• Shareholder Control and Corporate Boards' (2 March 2007) The Washington Post
• On the Nature of Corporations (2005) SSRN
• Do Antitakeover Defenses Decrease Shareholder Wealth? The Ex Post/Ex Ante Valuation Problem (2003) SSRN
• The Shareholder As Ulysses: Some Empirical Evidence on Why Investors In Public Corporations Tolerate Board Governance, 152 U. Pa. L. Rev. 667 (2003)
• The Mechanisms of Market Inefficiency: An Introduction to the New Finance, 28 J. Corp. L. 635 (2003) (selected in Corporate Practice Commentator’s annual poll as one of the ten best corporate and securities law articles published in 2003)
• Bad and Not-So-Bad Arguments for Shareholder Primacy, 75 S. Cal. L. Rev. 1189 (2002)
• Trust, Trustworthiness, and the Behavioral Foundations of Corporate Law, 149 U. Penn. L. Rev. 1735 (2001) (with Margaret Blair)
• Why The Law Hates Speculators: Regulation and Private Ordering in the Market for OTC Derivatives, 48 Duke L. J. 701 (1999)
• A Team Production Theory of Corporate Law, 85 Va. L. Rev. 247 (1999) (with Margaret Blair) (selected in Corporate Practice Commentator’s annual poll as one of the ten best corporate and securities law articles published in 1999)
• Are Stock Markets Costly Casinos? Disagreement, Market Failure, and Securities Regulation, 81 Va. L. Rev. 611 (1995) (selected in the Corporate Practice Commentator’s annual poll as one of the ten best corporate and securities law articles published in 1995)
• Betting The Bank: How Derivatives Trading Under Conditions of Uncertainty Can Increase Risks and Erode Returns in Financial Markets, 21 J. Corp. L. 53 (1995)
• Are Takeover Premiums Really Premiums? Market Price, Fair Value, and Corporate Law, 99 Yale L. J. 1235 (1990)
• The Unimportance of Being Efficient: An Economic Analysis of Stock Market Pricing and Securities Regulation, 87 Mich. L. Rev. 613 (1988)

External links

• Webpage at UCLA