Is there enough empiricism in corporate law?

Today’s Wall Street Journal contains an essay by Bill Gates that starts with the proposition that:

From the fight against polio to fixing education, what's missing is often good measurement and a commitment to follow the data. We can do better. We have the tools at hand.

The essay caught my attention in part because I’ve been pondering the extent to which corporate law is justified by data as opposed to more generalized notions of, e.g., fairness, efficiency, freedom of contract, or power (i.e., the race to the bottom).  My impression is that at least in the cases we use to teach our students, there is a dearth of supporting data.  I’ve taken a stab at this issue before in my article, “Is Puffery Material to Investors? Maybe We Should Ask Them,” wherein I presented investors with statements deemed to be immaterial puffery as a matter of law by judges ruling on pre-trial motions.  I asked the investors to make their own materiality determinations and my results showed that “anywhere from 33% to 84% of them found the statements to be material” (as compared to what were in essence judicial predictions of 0%).  Based on this data, I argued that “surveys should play a role in materiality determinations in securities litigation similar to the role they already play in Lanham Act cases.”

Of course, relying on empirical data is not without its own shortcomings.  As Stephen Bainbridge recently noted: “Empirical analysis all too often is flawed by GIGO, design errors, selection bias, and a host of other problems.”  Furthermore, one can arguably become so enamored with empirical proof that progress grinds to a halt as there is always one more study to be done to make sure the results are accurate.  At least some have read the D.C. Circuit’s Business Roundtable decision, and the renewed calls for enhanced cost-benefit analysis in SEC rule-making, as nothing more than a backdoor means to tie the SEC’s hands as a regulator.  Nonetheless, I think I’m going to start trying to add the question, “How would you prove that?” to my in-class discussions concerning policy rationales.

Finally, a couple of random related points:

One of my favorite examples of empirical legal research:  Andrew Torrance, The Patent Game: Experiments in the Cathedral of Law.

A good place to go if you’re interested in learning more about empirical legal scholarship: Conducting Empirical Legal Scholarship Workshop.