{
 "failure_mode": "agency-cost-and-managerial-opportunism",
 "specific_names": [
  "Agent Expropriation Of Firm Reputation",
  "Breach triggered by shift in DAO prospects",
  "CoCo pay as compensation supplement only",
  "Control rights fail against ex post opportunism",
  "Erosion of professional trust",
  "Extrinsic motivation principal agent spiral",
  "Fee driven incentive distortion",
  "Fee structure unjustified by net of fee performance",
  "Fiduciary duties insufficient against large payoffs",
  "Governance-blind CoCo compensation designs",
  "High fees paired with underperformance",
  "Inside debt has no solvency preserving mechanism",
  "Insufficient volume for dilution or recapitalization",
  "Lapsing award destroys the liquidation value stake",
  "Lawyer as transaction obstacle",
  "Minimum compliance degeneration",
  "PR ability displaces allocation skill",
  "Post investment managerial opportunism",
  "Representative incentive misalignment",
  "Side-by-side management conflict",
  "absence of crowd controls over reviewer preference",
  "adversarial-competitor-voting",
  "advisor-home-bias",
  "agent-incomprehension",
  "central-authority-neglect",
  "code-only-agency-breakdown",
  "code-only-governance-in-complex-relationships",
  "decentralization-does-not-cure-trust",
  "defense-driven entrenchment",
  "delegated diligence collapse",
  "director-self-interest-blocks-corporate-claims",
  "enforcement-cost-exceeds-benefit",
  "failure of comprehensive contracting",
  "inability to adapt to unforeseen contingencies",
  "incomplete-contracting",
  "intermediary perverse incentive",
  "irreducible-agency-conflict",
  "irreducible-agency-problem",
  "management-entrenchment-through-standstill",
  "misaimed conflict focus",
  "residual-loss",
  "rule gaming after value loss",
  "selective issuance disloyalty",
  "settlement entrenchment",
  "shareholder empowerment misfire",
  "trust deficit ceiling on adoption",
  "unaccountable delegation",
  "universal-solution-mismatch",
  "unmonitorable-rating-agent",
  "unresolved separation of ownership and control"
 ],
 "count": 50,
 "claims": [
  {
   "id": "kaal:claim:617681-019",
   "url": "https://wulfkaal.github.io/claims/617681-019",
   "claim": "European lawyers may advise clients to incorporate at home simply because those lawyers do not want to deal with the courts and lawyers of another Member State, which suppresses cross border incorporation independently of statute quality.",
   "specific_name": "advisor-home-bias",
   "conditions": [
    "European legal education and practice, where procedural differences across Member States are large"
   ],
   "source": "Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro",
   "year": "2004",
   "quote": "European lawyers thus may advise clients to incorporate at home simply because these lawyers do not want to deal with the courts and lawyers of another Member State.",
   "citation": "Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681"
  },
  {
   "id": "kaal:claim:1428387-022",
   "url": "https://wulfkaal.github.io/claims/1428387-022",
   "claim": "Moral hazard is worsened when the financial products traded are so complex that the agents, mostly on the buy side, do not entirely understand them and trade for the principal on the basis of incomplete and asymmetric information.",
   "specific_name": "agent-incomprehension",
   "conditions": [
    "where instruments are highly complex",
    "buy side agents in particular"
   ],
   "source": "Hedge Fund Valuation Retailization, Regulation, and Investor Suitability",
   "year": "2009",
   "quote": "The moral hazard problem is further exacerbated when the financial products involved in many of these transactions are so highly complex that the agents, mostly on the buy side, do not entirely understand them and trade for the principal based on incomplete and asymmetric information.",
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387"
  },
  {
   "id": "kaal:claim:1428387-024",
   "url": "https://wulfkaal.github.io/claims/1428387-024",
   "claim": "The issuer-buyer relationship and the incentives inside it are unlikely to be able to adequately control the principal-agent relationship between issuer and rating agency so as to ensure accurate ratings.",
   "specific_name": "unmonitorable-rating-agent",
   "conditions": [
    "under the issuer-pays rating model for CDOs"
   ],
   "source": "Hedge Fund Valuation Retailization, Regulation, and Investor Suitability",
   "year": "2009",
   "quote": "It seems unlikely that the issuer-buyer relationship and the incentives inherent within could adequately control the principal-agent relationship between issuer and rating agency to ensure accurate ratings.",
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387"
  },
  {
   "id": "kaal:claim:1558614-015",
   "url": "https://wulfkaal.github.io/claims/1558614-015",
   "claim": "German corporate law's historical focus on conflicts between controlling and minority shareholders leaves it poorly equipped to address managerial abuse of power, including excessive risk taking by managers.",
   "specific_name": "misaimed conflict focus",
   "conditions": [
    "systems where ownership is concentrated and the central conflict is shareholder against shareholder"
   ],
   "source": "Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in",
   "year": "2010",
   "quote": "Ar- guably, a legal system that focuses on the interaction of controlling and minority shareholders is not as well equipped to deal with mana- gerial abuse of power, including excessive risk taking by managers.",
   "citation": "Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614"
  },
  {
   "id": "kaal:claim:2097160-001",
   "url": "https://wulfkaal.github.io/claims/2097160-001",
   "claim": "Early European initiatives to put contingent convertible bonds into executive pay lack governance-improving designs; contingent convertible bonds with an early conversion trigger should be used in executive compensation instead.",
   "specific_name": "Governance-blind CoCo compensation designs",
   "conditions": [
    "systemically important financial institutions",
    "executive compensation packages"
   ],
   "source": "Contingent Capital in Executive Compensation",
   "year": "2012",
   "quote": "Early initiatives by European SIFIs to include contingent convertible bonds in executive compensation packages lack governance-improving designs. This Article suggests the use of contingent convertible bonds with an early conversion trigger in executive compensation.",
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160"
  },
  {
   "id": "kaal:claim:2097160-007",
   "url": "https://wulfkaal.github.io/claims/2097160-007",
   "claim": "Control rights in executive compensation contracts cannot sufficiently constrain ex post opportunism by executives, because of incomplete information, information asymmetry, bounded rationality, limited foresight, and transaction costs.",
   "specific_name": "Control rights fail against ex post opportunism",
   "conditions": [
    "principal agent relationship under incomplete contracting"
   ],
   "source": "Contingent Capital in Executive Compensation",
   "year": "2012",
   "quote": "bounded rationality of contracting parties, the parties' limited cognition and foresight, and transaction costs, control rights in executive compensation contracts cannot account sufficiently for ex post opportunism of agents.",
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160"
  },
  {
   "id": "kaal:claim:2097160-010",
   "url": "https://wulfkaal.github.io/claims/2097160-010",
   "claim": "Because the Barclays award falls away rather than converting, it does not create a fixed claim giving managers a stake in the firm's liquidation value, and therefore it does not lower agency cost.",
   "specific_name": "Lapsing award destroys the liquidation value stake",
   "conditions": [
    "contingent capital awards that lapse instead of converting"
   ],
   "source": "Contingent Capital in Executive Compensation",
   "year": "2012",
   "quote": "it does not create a fixed claim for managers with a stake in the firm's liquidation value because it falls away when converted.141 Barclays's CCA, therefore, also does not lower agency cost.",
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160"
  },
  {
   "id": "kaal:claim:2097160-011",
   "url": "https://wulfkaal.github.io/claims/2097160-011",
   "claim": "A contingent capital award to executives without a conversion feature yields only limited governance improvement and only limited incentive to lower risk-taking; in its current form it operates as a mere compensation supplement.",
   "specific_name": "CoCo pay as compensation supplement only",
   "conditions": [
    "contingent capital awards without conversion into equity"
   ],
   "source": "Contingent Capital in Executive Compensation",
   "year": "2012",
   "quote": "Barclays's issuance of contingent convertible bonds without a conversion feature to its executives shows limited governance improvements. Without a conversion to equity, Barclays provides only limited incentives for its executives to lower risk-taking.",
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160"
  },
  {
   "id": "kaal:claim:2097160-012",
   "url": "https://wulfkaal.github.io/claims/2097160-012",
   "claim": "Contingent convertible bonds issued to executives are typically too small in volume to dilute investors' equity holdings or to supply a meaningful equity infusion during a crisis, so copying investor CoCo designs for executive pay produces suboptimal outcomes.",
   "specific_name": "Insufficient volume for dilution or recapitalization",
   "conditions": [
    "contingent convertible bonds issued only to executives",
    "volumes smaller than investor issuances"
   ],
   "source": "Contingent Capital in Executive Compensation",
   "year": "2012",
   "quote": "contingent convertible bonds may be issued to executives in volumes that may not suffice to dilute investors' equity holdings. The lower volume of contingent convertible bonds issued to executives may not provide a sufficiently strong equity infusion during a crisis.",
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160"
  },
  {
   "id": "kaal:claim:2097160-028",
   "url": "https://wulfkaal.github.io/claims/2097160-028",
   "claim": "Where rules and regulatory guidance are absent, fiduciary duties are the only constraint on executives, and existing fiduciary duties could prove insufficient to limit opportunism and abuse when the payoff is substantial.",
   "specific_name": "Fiduciary duties insufficient against large payoffs",
   "conditions": [
    "no rules or regulatory guidance on contingent convertible bond design and issuance",
    "substantial payoff to executives"
   ],
   "source": "Contingent Capital in Executive Compensation",
   "year": "2012",
   "quote": "Without rules and regulatory guidance regarding the design and issuance of contingent convertible bonds, SIFI executives may only be curtailed by their fiduciary duties. Existing fiduciary duties could prove insufficient to limit opportunism and abuse if the payoff for executives is substantial.193",
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160"
  },
  {
   "id": "kaal:claim:2097160-032",
   "url": "https://wulfkaal.github.io/claims/2097160-032",
   "claim": "The governance benefits of traditional inside debt, incentive optimization and reduced agency costs, all depend on the entity remaining solvent, and inside debt supplies no mechanism of its own to ensure that solvency.",
   "specific_name": "Inside debt has no solvency preserving mechanism",
   "conditions": [
    "inside debt without a conversion feature, such as pensions and deferred compensation"
   ],
   "source": "Contingent Capital in Executive Compensation",
   "year": "2012",
   "quote": "value and the associated governance benefits215 incentive optimization216 and reduction of agency costs217 depend on the solvency of the respective entity. Inside debt without a conversion feature provides no mechanism to ensure the solvency of the entity.",
   "citation": "Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160"
  },
  {
   "id": "kaal:claim:1998455-022",
   "url": "https://wulfkaal.github.io/claims/1998455-022",
   "claim": "Absent cross holdings, the opposite conflict arises: institutions holding a competitor's converted contingent capital could be tempted to exercise their voting rights against the interests of that competitor.",
   "specific_name": "adversarial-competitor-voting",
   "conditions": [
    "where a SIFI holds a competitor's CCS without a reciprocal position",
    "after a conversion to equity has been triggered"
   ],
   "source": "Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance",
   "year": "2012",
   "quote": "Without CCS cross holdings, SIFIs could be tempted to exercise their voting rights against the interests of the competitor if a con- version to equity should have been triggered.",
   "citation": "Wulf A. Kaal, Initial Reflections on the Possible Application of Contingent Capital in Corporate Governance (2012). SSRN: https://ssrn.com/abstract=1998455"
  },
  {
   "id": "kaal:claim:2267560-033",
   "url": "https://wulfkaal.github.io/claims/2267560-033",
   "claim": "Opportunistic behavior, transaction costs, and bounded rationality undermine comprehensive contracting, so contracting parties do not specify all of their respective obligations ex-ante because anticipating all contingencies is too costly.",
   "specific_name": "failure of comprehensive contracting",
   "conditions": [],
   "source": "Evolution of Law Dynamic Regulation in a New Institutional Economics Framework",
   "year": "2013",
   "quote": "Because it is too costly for contracting parties to anticipate all contingencies and to agree to necessary contract adaptations in advance (Williamson 1985), the contracting parties in the incomplete contract model do not specify all of their respective obligations under the contract ex-ante.",
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560"
  },
  {
   "id": "kaal:claim:2267560-044",
   "url": "https://wulfkaal.github.io/claims/2267560-044",
   "claim": "Parties in the incomplete contract model cannot adapt to unforeseen contingencies because they cannot specify ex-ante how those contingencies will be met, and transactions may be foregone or become too expensive if participants cannot rely on efficient and equitable adaptation.",
   "specific_name": "inability to adapt to unforeseen contingencies",
   "conditions": [],
   "source": "Evolution of Law Dynamic Regulation in a New Institutional Economics Framework",
   "year": "2013",
   "quote": "At the same time, parties in the incomplete contract model cannot adapt to unforeseen contingencies because they cannot specify ex-ante how those contingencies will be met (Kreps 1990, 93).",
   "citation": "Wulf A. Kaal, Evolution of Law Dynamic Regulation in a New Institutional Economics Framework (2013). SSRN: https://ssrn.com/abstract=2267560"
  },
  {
   "id": "kaal:claim:2715083-023",
   "url": "https://wulfkaal.github.io/claims/2715083-023",
   "claim": "The inherent conflict of interest facing an adviser who simultaneously runs a mutual fund and a hedge fund is an important limiting factor on the continued rise of side-by-side management.",
   "specific_name": "Side-by-side management conflict",
   "conditions": [
    "side-by-side management of a mutual fund and a hedge fund by the same adviser"
   ],
   "source": "Confluence of Mutual and Private Funds",
   "year": "2016",
   "quote": "An important limiting factor in the steady rise of side-by-side management is the inherent conflict of interest for the investment manager (SEC (2003), Chen & Chen (2009) and Cici et al. (2010)).",
   "citation": "Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083"
  },
  {
   "id": "kaal:claim:2811718-027",
   "url": "https://wulfkaal.github.io/claims/2811718-027",
   "claim": "Madoff's reliance on large feeder funds created a massive industry of investor due diligence lawsuits, because those funds collected high advisory fees as due diligence experts yet caused large numbers of investors to lose their investments.",
   "specific_name": "delegated diligence collapse",
   "conditions": [
    "post 2008 Madoff related litigation"
   ],
   "source": "Private Fund Investor Due Diligence – Evidence from 1995 to 2015",
   "year": "2016",
   "quote": "created a massive industry for IDD lawsuits.148 The feeder funds had collected high advisory fees as due diligence experts, but caused large numbers of investors to lose their investments as a result of the Madoff fraud.",
   "citation": "Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718"
  },
  {
   "id": "kaal:claim:2811729-009",
   "url": "https://wulfkaal.github.io/claims/2811729-009",
   "claim": "Average unconstrained mutual fund performance over the three years preceding the study was lower than the return on the ten-year Treasury, and poor performance was often accompanied by high fees and increased credit risk.",
   "specific_name": "High fees paired with underperformance",
   "conditions": [
    "three-year period preceding the study"
   ],
   "source": "Unconstrained Mutual Funds and Retail Investor Protection",
   "year": "2016",
   "quote": "On average, UMF performance has disappointed over the last three years, with returns lower than the return on the ten-year Treasury.43 Often, poor UMF performance has been accompanied by high fees and increased credit risk.",
   "citation": "Wulf A. Kaal, Unconstrained Mutual Funds and Retail Investor Protection (2016). SSRN: https://ssrn.com/abstract=2811729"
  },
  {
   "id": "kaal:claim:2959730-011",
   "url": "https://wulfkaal.github.io/claims/2959730-011",
   "claim": "In the Buffett and Seides wager on net of fee returns, the passive S&P 500 index position produced a 7.1% compounded annual return after nine years against 2.2% for the five hedge funds of funds, evidence that industry performance does not justify the 2/20 fee structure.",
   "specific_name": "Fee structure unjustified by net of fee performance",
   "conditions": [
    "nine years into the ten year 2008 to 2017 wager",
    "returns measured net of fees"
   ],
   "source": "Blockchain Applications and Fee Structure Developments in Private Investment Funds",
   "year": "2017",
   "quote": "A year before the end of the wager, Buffet's nine-year result is a 7.1 % compounded annual return compared to Seides's 2.2%.",
   "citation": "Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730"
  },
  {
   "id": "kaal:claim:3017612-015",
   "url": "https://wulfkaal.github.io/claims/3017612-015",
   "claim": "Corporate claims frequently go unpursued because the decision to sue rests with directors who are often the wrongdoers themselves, which is why shareholders resort to derivative actions.",
   "specific_name": "director-self-interest-blocks-corporate-claims",
   "conditions": [
    "injury is to the corporation rather than to shareholders individually"
   ],
   "source": "Shareholder Agreements - National Report of the United States of America",
   "year": "2017",
   "quote": "When the corporation is harmed, it is the corporation that has the claim, but directors are often unwilling to pursue claims, especially when they are the wrongdoers.",
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612"
  },
  {
   "id": "kaal:claim:3017612-029",
   "url": "https://wulfkaal.github.io/claims/3017612-029",
   "claim": "Standstill agreements entrench management and can lead a company into stagnation, so they may operate prejudicially on shareholders' property rights.",
   "specific_name": "management-entrenchment-through-standstill",
   "conditions": [
    "standstill agreements restricting voting"
   ],
   "source": "Shareholder Agreements - National Report of the United States of America",
   "year": "2017",
   "quote": "These agreements tend to entrench management and can lead to stagnation for the company, so they sometimes \"operate prejudicially upon\" shareholders' property rights.",
   "citation": "Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612"
  },
  {
   "id": "kaal:claim:2922176-007",
   "url": "https://wulfkaal.github.io/claims/2922176-007",
   "claim": "Reforms that increase executive accountability to shareholders and increase shareholder control over executives do not solve the problem of corporate short-term focus.",
   "specific_name": "shareholder empowerment misfire",
   "conditions": [
    "post-2000 shareholder-empowerment reforms"
   ],
   "source": "The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies",
   "year": "2017",
   "quote": "Increasing the accountability of corporate executives to shareholders and increasing shareholder control over executives does not address the problem of short-term focus.",
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P. M. Vermeulen, The ‘Unmediated’ and ‘Tech-Driven’ Corporate Governance of Today's Winning Companies (2017). SSRN: https://ssrn.com/abstract=2922176"
  },
  {
   "id": "kaal:claim:3227967-008",
   "url": "https://wulfkaal.github.io/claims/3227967-008",
   "claim": "Lawyers have often failed to perform the function of active transaction engineer and have instead become a hindrance or obstacle to transactions.",
   "specific_name": "Lawyer as transaction obstacle",
   "conditions": [],
   "source": "Legal Education in a Digital Age Why 'Coding for Lawyers' Matters",
   "year": "2018",
   "quote": "The problem, however, is that lawyers have often failed to perform this function of being active transaction engineers and have become a hindrance or obstacle to transactions.",
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967"
  },
  {
   "id": "kaal:claim:3227967-010",
   "url": "https://wulfkaal.github.io/claims/3227967-010",
   "claim": "The result of this pattern is reputational: lawyers have developed a reputation as the least trusted of professions.",
   "specific_name": "Erosion of professional trust",
   "conditions": [],
   "source": "Legal Education in a Digital Age Why 'Coding for Lawyers' Matters",
   "year": "2018",
   "quote": "As a result, lawyers have developed a reputation as the least trusted of professions.",
   "citation": "Mark Fenwick, Wulf A. Kaal, Erik P.M. Vermeulen, Legal Education in a Digital Age Why 'Coding for Lawyers' Matters (2018). SSRN: https://ssrn.com/abstract=3227967"
  },
  {
   "id": "kaal:claim:3266953-001",
   "url": "https://wulfkaal.github.io/claims/3266953-001",
   "claim": "Internet based platform businesses and distributed ledger technology businesses have not reached their full potential, and the core factor holding them back is worldwide decreasing trust in the internet together with under developed trust in decentralized technology solutions.",
   "specific_name": "trust deficit ceiling on adoption",
   "conditions": [
    "internet based platform businesses",
    "distributed ledger technology businesses"
   ],
   "source": "Reputation Protocol for the Internet of Trust - Conceptual Whitepaper",
   "year": "2018",
   "quote": "Multiple studies, data, and anecdotal evidence suggest that one core factor that undermines their evolution is the worldwide decreasing trust in the internet and under-developed trust in decentralized technology solutions.",
   "citation": "Craig Calcaterra, Wulf A. Kaal, Gopinath Sivalingam, Reputation Protocol for the Internet of Trust - Conceptual Whitepaper (2018). SSRN: https://ssrn.com/abstract=3266953"
  },
  {
   "id": "kaal:claim:3441904-001",
   "url": "https://wulfkaal.github.io/claims/3441904-001",
   "claim": "The core underlying agency problems of corporate governance cannot be fully resolved within the existing theoretical and legal infrastructure, despite decades of governance experiments and extensive rule revisions.",
   "specific_name": "irreducible-agency-problem",
   "conditions": [
    "existing corporate law and theory of the firm infrastructure"
   ],
   "source": "Blockchain-Based Corporate Governance",
   "year": "2019",
   "quote": "Despite decades of governance experiments and extensive rule revisions, the existing scope of agency problems suggest that the core underlying agency problems cannot fully be resolved within the existing theoretical and legal infrastructure.",
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904"
  },
  {
   "id": "kaal:claim:3441904-028",
   "url": "https://wulfkaal.github.io/claims/3441904-028",
   "claim": "The notion that smart contract agency relationships run exactly as coded with no possibility of agent opportunism is less likely to hold in complex agency relationships, so a decentralized human backstop to code becomes necessary as those relationships grow more complex.",
   "specific_name": "code-only-agency-breakdown",
   "conditions": [
    "complex decentralized agency relationships"
   ],
   "source": "Blockchain-Based Corporate Governance",
   "year": "2019",
   "quote": "The notion that agency relationships in smart contracts run exactly as coded without any possibility of opportunistic behavior of the agent is less likely to uphold in complex agency relationships.",
   "citation": "Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904"
  },
  {
   "id": "kaal:claim:3373393-003",
   "url": "https://wulfkaal.github.io/claims/3373393-003",
   "claim": "The core agency conflicts that emanate from the separation of ownership by shareholder principals and control by manager agents cannot be fully addressed by the existing theoretical and legal framework, because monitoring agents is inevitably costly and transaction costs abound.",
   "specific_name": "irreducible-agency-conflict",
   "conditions": [
    "under the existing theoretical and legal framework for corporate governance"
   ],
   "source": "Blockchain Solutions for Agency Problems in Corporate Governance",
   "year": "2019",
   "quote": "However, the core agency conflicts emanating from the separation of ownership (shareholder principal) and control (manager agent) cannot be fully addressed by the existing theoretical and legal framework.",
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393"
  },
  {
   "id": "kaal:claim:3373393-008",
   "url": "https://wulfkaal.github.io/claims/3373393-008",
   "claim": "Because of bounded rationality, incomplete foresight, and information asymmetries, it is impossible for principals to contract for every possible action or inaction of the agent so as to induce the agent to act in the principal's best interests.",
   "specific_name": "incomplete-contracting",
   "conditions": [
    "where principals and agents face bounded rationality and incomplete foresight"
   ],
   "source": "Blockchain Solutions for Agency Problems in Corporate Governance",
   "year": "2019",
   "quote": "it is impossible for principals to contract for every possible action or inaction of the agent in order to induce the agent to act in the best interests of the principal.",
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393"
  },
  {
   "id": "kaal:claim:3373393-009",
   "url": "https://wulfkaal.github.io/claims/3373393-009",
   "claim": "The interests of manager agents and shareholder principals are never fully aligned despite best efforts at monitoring and bonding, so agency losses in the form of residual loss inevitably arise.",
   "specific_name": "residual-loss",
   "conditions": [],
   "source": "Blockchain Solutions for Agency Problems in Corporate Governance",
   "year": "2019",
   "quote": "Despite best efforts at monitoring and bonding, the interest of manager agents and shareholder principals in corporate governance are never fully aligned and agency losses inevitably arise from conflicts of interest between principals and agents, known as residual loss.",
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393"
  },
  {
   "id": "kaal:claim:3373393-010",
   "url": "https://wulfkaal.github.io/claims/3373393-010",
   "claim": "Residual loss arises because the cost of enforcing suboptimal contracts between principals and agents always exceeds the benefits of performing the contractual obligations.",
   "specific_name": "enforcement-cost-exceeds-benefit",
   "conditions": [],
   "source": "Blockchain Solutions for Agency Problems in Corporate Governance",
   "year": "2019",
   "quote": "Residual loss arises because the cost of enforcing suboptimal contracts between principals and agents always exceed the benefits of performing the contractual obligations.",
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393"
  },
  {
   "id": "kaal:claim:3373393-016",
   "url": "https://wulfkaal.github.io/claims/3373393-016",
   "claim": "Existing governance mechanisms work well in some firms but are ineffective in others, because agency conflicts and their specific scope differ from firm to firm.",
   "specific_name": "universal-solution-mismatch",
   "conditions": [
    "across a heterogeneous population of firms"
   ],
   "source": "Blockchain Solutions for Agency Problems in Corporate Governance",
   "year": "2019",
   "quote": "However, existing governance mechanisms work well in some firms but are ineffective in others.",
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393"
  },
  {
   "id": "kaal:claim:3373393-037",
   "url": "https://wulfkaal.github.io/claims/3373393-037",
   "claim": "As agency relationships become more complex, a backstop for human behavior becomes necessary, and the claim that smart contract agency relationships run exactly as coded with no possibility of agent opportunism is less likely to hold in complex agency relationships.",
   "specific_name": "code-only-governance-in-complex-relationships",
   "conditions": [
    "complex agency relationships"
   ],
   "source": "Blockchain Solutions for Agency Problems in Corporate Governance",
   "year": "2019",
   "quote": "As agency relationships become more complex, a backstop for human behavior in agency relationships becomes necessary.",
   "citation": "Wulf A. Kaal, Blockchain Solutions for Agency Problems in Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3373393"
  },
  {
   "id": "kaal:claim:3405401-015",
   "url": "https://wulfkaal.github.io/claims/3405401-015",
   "claim": "Although smart contracting in decentralized systems is perceived as creating trust through preordained coded coordination without agency problems, decentralized commerce is equally afflicted with trust issues.",
   "specific_name": "decentralization-does-not-cure-trust",
   "conditions": [],
   "source": "Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed",
   "year": "2019",
   "quote": "While smart contracting in decentralized system can be perceived as creating trust through mathematical and coded — preordained coordination without agency problems, several factors suggest that decentralized commerce via decentralized solutions is equally afflicted with trust issues.",
   "citation": "Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401"
  },
  {
   "id": "kaal:claim:3396542-014",
   "url": "https://wulfkaal.github.io/claims/3396542-014",
   "claim": "Breach by underwriters will in general happen only after a dramatic shift in the DAO's future prospects, such as a sharp decrease in expected future revenues or a sharp increase in expected payments on outstanding policies.",
   "specific_name": "Breach triggered by shift in DAO prospects",
   "conditions": [
    "dramatic shift in the DAO's future prospects"
   ],
   "source": "Decentralized Underwriting",
   "year": "2019",
   "quote": "In general, this will happen only if there is a dramatic shift in the future prospects of the DAO, such as a sharp decrease in expected future revenues or a sharp increase in expected payments on outstanding policies.",
   "citation": "Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Decentralized Underwriting (2019). SSRN: https://ssrn.com/abstract=3396542"
  },
  {
   "id": "kaal:claim:3808852-010",
   "url": "https://wulfkaal.github.io/claims/3808852-010",
   "claim": "Agency theory and the existing legal framework have failed to resolve the core agency conflict arising from the separation of ownership and control, so peaceable and productive coordination of human behavior remains wanting.",
   "specific_name": "unresolved separation of ownership and control",
   "conditions": [
    "applies to limited liability entities and their constituents"
   ],
   "source": "Decentralization and Feedback Effects",
   "year": "2021",
   "quote": "Theory and practice have not successfully addressed the outstanding issues. For example, the core agency conflicts emanating from the separation of ownership (shareholder principal) and control (manager agent) cannot be fully addressed by the existing theoretical and legal framework.",
   "citation": "Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852"
  },
  {
   "id": "kaal:claim:3782214-037",
   "url": "https://wulfkaal.github.io/claims/3782214-037",
   "claim": "Without the ability to hold representatives to account, representatives are not incentivized to vote for outcomes reflecting their constituency's wishes and needs, but instead promote agendas that serve their personal interests and preserve their own power.",
   "specific_name": "unaccountable delegation",
   "conditions": [
    "modern societies where voters do not know their representatives personally"
   ],
   "source": "Decentralized Governance",
   "year": "2021",
   "quote": "Without the ability to hold them to account, representatives are not incentivized to vote for outcomes that reflect the presumptive wishes and needs of their larger constituency, but for promoting the agendas which benefit their per- sonal interests and maintaining their own power.",
   "citation": "Craig Calcaterra, Wulf A. Kaal, Decentralized Governance (2021). SSRN: https://ssrn.com/abstract=3782214"
  },
  {
   "id": "kaal:claim:3782201-017",
   "url": "https://wulfkaal.github.io/claims/3782201-017",
   "claim": "Human middlemen have an incentive not to entirely eliminate the corruption they are paid to overcome, which is one reason they become falsely identified with the friction itself.",
   "specific_name": "intermediary perverse incentive",
   "conditions": [],
   "source": "Future of Decentralization",
   "year": "2021",
   "quote": "These middlemen are paid to overcome these corruptions and frictions. Unfortunately, they have an incentive to not entirely eliminate the corrup- tion.",
   "citation": "Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201"
  },
  {
   "id": "kaal:claim:3995709-016",
   "url": "https://wulfkaal.github.io/claims/3995709-016",
   "claim": "Without crowd controls, the reviewer's views and the author's intent are at odds and the reviewer can impose their own logic, forcing the author to rewrite functionally sound code repeatedly, which is highly time consuming and inefficient.",
   "specific_name": "absence of crowd controls over reviewer preference",
   "conditions": [
    "legacy code review processes lacking crowd control"
   ],
   "source": "How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards",
   "year": "2021",
   "quote": "Because the code reviewer may wish to impose their own logic on the code author, the code author may be required to rewrite code over and over even though the core functionality of the code is sound and dangerous issues were controlled for. This can be highly time consuming and inefficient.",
   "citation": "Wulf A. Kaal, How DAOs Optimize Open-Source Code Reviews and Create Open-Source Standards (2021). SSRN: https://ssrn.com/abstract=3995709"
  },
  {
   "id": "kaal:claim:3808867-013",
   "url": "https://wulfkaal.github.io/claims/3808867-013",
   "claim": "Elected representatives are incentivized to maintain their own power of office rather than to vote for outcomes reflecting the presumptive wishes and needs of their constituents.",
   "specific_name": "Representative incentive misalignment",
   "conditions": [
    "representative democracies"
   ],
   "source": "How Decentralized Systems Can Upgrade AI",
   "year": "2021",
   "quote": "Voted representatives are not incentivized to vote for outcomes that reflect the presumptive wishes and needs of their constituents but for maintaining their own power of office.",
   "citation": "Wulf A. Kaal, How Decentralized Systems Can Upgrade AI (2021). SSRN: https://ssrn.com/abstract=3808867"
  },
  {
   "id": "kaal:claim:3949098-021",
   "url": "https://wulfkaal.github.io/claims/3949098-021",
   "claim": "Traditional underwriting also fails at the agent level, because individual agents within an underwriter may sacrifice the underwriter's overall reputation for personal gain, for example by putting out a fraudulent offering.",
   "specific_name": "Agent Expropriation Of Firm Reputation",
   "conditions": [
    "traditional underwriting firms where agent and firm incentives diverge"
   ],
   "source": "Reputation as Capital – How DAOs Upgrade Finance",
   "year": "2021",
   "quote": "individual agents within an underwriter may decide to sacrifice the underwriter's overall reputation for personal gain.",
   "citation": "Wulf A. Kaal, Reputation as Capital – How DAOs Upgrade Finance (2021). SSRN: https://ssrn.com/abstract=3949098"
  },
  {
   "id": "kaal:claim:3962614-006",
   "url": "https://wulfkaal.github.io/claims/3962614-006",
   "claim": "Because time spent raising capital from limited partners is time taken away from portfolio company due diligence, the current VC model tends to reflect the networking and public relations ability of the general partner instead of their capital allocation ability.",
   "specific_name": "PR ability displaces allocation skill",
   "conditions": [
    "traditional fiat VC funds that must continuously raise capital from limited partners"
   ],
   "source": "REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu",
   "year": "2021",
   "quote": "Because of this dynamic, the current VC model tends to reflect the networking and public relations ability of the VC's general partner instead of their capital allocation ability.",
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614"
  },
  {
   "id": "kaal:claim:3962614-010",
   "url": "https://wulfkaal.github.io/claims/3962614-010",
   "claim": "Significant information asymmetries in venture capital can lead portfolio company managers to engage in opportunistic behavior after an investment is made.",
   "specific_name": "Post investment managerial opportunism",
   "conditions": [
    "post investment stage of a VC financing"
   ],
   "source": "REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu",
   "year": "2021",
   "quote": "Finally, significant information asymmetries can lead managers to engage in opportunistic behavior after an investment is made.",
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614"
  },
  {
   "id": "kaal:claim:3962614-019",
   "url": "https://wulfkaal.github.io/claims/3962614-019",
   "claim": "The typical VC fee based compensation structure can lead to serious shortcomings, including excessive fundraising, suboptimal investments, misevaluation, and overfunding of portfolio companies during a fund's holding period.",
   "specific_name": "Fee driven incentive distortion",
   "conditions": [
    "fee based VC compensation arrangements"
   ],
   "source": "REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu",
   "year": "2021",
   "quote": "The typical VC fee-based compensation structure can lead to serious shortcomings, including excessive fundraising, suboptimal investments, misevaluation, and overfunding of the portfolio companies during a fund's holding period.",
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614"
  },
  {
   "id": "kaal:claim:3782217-026",
   "url": "https://wulfkaal.github.io/claims/3782217-026",
   "claim": "A central authority is perfectly well incentivized to ignore minor problems that only partially eat into its profits, so long as it maintains ultimate control of those profits, which is why platform level abuses persist under centralized ownership.",
   "specific_name": "central-authority-neglect",
   "conditions": [
    "platforms with centralized profit control"
   ],
   "source": "The Importance of History In Decentralization",
   "year": "2021",
   "quote": "A central authority is perfectly well incentivized to ignore minor problems which only partially eat into their profits, as long as they maintain ultimate control of profits.",
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of History In Decentralization (2021). SSRN: https://ssrn.com/abstract=3782217"
  },
  {
   "id": "kaal:claim:3782210-041",
   "url": "https://wulfkaal.github.io/claims/3782210-041",
   "claim": "Without the promise of improving reputation, a zero-sum mentality dominates a contractual arrangement and each party's best strategy becomes exerting the absolute minimum effort while still technically fulfilling the contract, which destroys the business atmosphere.",
   "specific_name": "Minimum compliance degeneration",
   "conditions": [
    "contracts between parties with no expectation of reputational gain"
   ],
   "source": "The Importance of Reputation for the Evolution of Decentralization",
   "year": "2021",
   "quote": "With- out the promise of improving your reputation, a zero-sum mentality dominates the arrangement. Both parties' best strategy becomes exerting the absolute minimum of effort while still technically fulfilling the stipulations of the contract.",
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210"
  },
  {
   "id": "kaal:claim:3782220-031",
   "url": "https://wulfkaal.github.io/claims/3782220-031",
   "claim": "As an organization loses touch with its transcendental values, members use the rules to jockey for position in the hierarchy and corruption erodes the organization's effectiveness.",
   "specific_name": "rule gaming after value loss",
   "conditions": [
    "organizations that have lost contact with their founding values"
   ],
   "source": "The Importance of Transcendental Unifying Values for Decentralization",
   "year": "2021",
   "quote": "As an organization loses touch with its transcendental values, members use the rules to jockey for position in the hierarchy, and corruption erodes the effective- ness of the organization.",
   "citation": "Craig Calcaterra, Wulf A. Kaal, The Importance of Transcendental Unifying Values for Decentralization (2021). SSRN: https://ssrn.com/abstract=3782220"
  },
  {
   "id": "kaal:claim:4067783-030",
   "url": "https://wulfkaal.github.io/claims/4067783-030",
   "claim": "Traditional work in centralized structures is prone to extrinsically motivated engagement, which intensifies principal agent problems and produces suboptimal outcomes because a principal dictates where, what, and when workers perform.",
   "specific_name": "Extrinsic motivation principal agent spiral",
   "conditions": [
    "centralized employment structures with a directing principal"
   ],
   "source": "DAO Fallacies",
   "year": "2022",
   "quote": "The traditional work environment in centralized structures is prone to extrinsically motivated work engagement which intensifies principal agent problems.",
   "citation": "Wulf A. Kaal, DAO Fallacies (2022). SSRN: https://ssrn.com/abstract=4067783"
  },
  {
   "id": "kaal:claim:5583610-001",
   "url": "https://wulfkaal.github.io/claims/5583610-001",
   "claim": "Traditional board defenses such as staggered boards and poison pills protect incumbent boards at the cost of value creation and reduce board accountability to shareholders, even when they succeed in defeating an activist campaign.",
   "specific_name": "defense-driven entrenchment",
   "conditions": [
    "conventional takeover and activism defenses",
    "U.S. public companies"
   ],
   "source": "Liquid Equity Rewards in Corporate America",
   "year": "2025",
   "quote": "Staggered boards and poison pills are examples of defenses that frequently shield boards at the price of value generation and lessen accountability to shareholders.",
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610"
  },
  {
   "id": "kaal:claim:5583610-005",
   "url": "https://wulfkaal.github.io/claims/5583610-005",
   "claim": "Negotiated settlements that hand activists board seats risk entrenching incumbents, whereas LER's consumptive utilities are designed to produce consensus and alignment without ceding board representation.",
   "specific_name": "settlement entrenchment",
   "conditions": [
    "settlement-based responses to activist campaigns"
   ],
   "source": "Liquid Equity Rewards in Corporate America",
   "year": "2025",
   "quote": "Unlike negotiated settlements that, in granting activists board seats, risk incumbent entrenchment,15 LERs incentivize consensus and alignment through LER's consumptive utilities, thus, reducing conflict while enhancing shareholder engagement.",
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610"
  },
  {
   "id": "kaal:claim:5583610-014",
   "url": "https://wulfkaal.github.io/claims/5583610-014",
   "claim": "Issuing LER selectively to management-aligned shareholders while excluding others breaches the duty of loyalty by creating an uneven playing field, so rewards must be allocated uniformly on objective criteria such as ownership tenure.",
   "specific_name": "selective issuance disloyalty",
   "conditions": [
    "proxy fights",
    "duty of loyalty analysis under Delaware law"
   ],
   "source": "Liquid Equity Rewards in Corporate America",
   "year": "2025",
   "quote": "Therefore, LER voucher rewards cannot be issued selectively to shareholders who are aligned with management while excluding others. LER allocations to prioritize incumbent interests would constitute a breach by creating an uneven playing field.",
   "citation": "Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610"
  }
 ]
}