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Professor Bratton examines judicial regulation of issuer-bondholder conflicts of interest within three different, but closely related doctrinal frameworks: neoclassical contract interpretation; contract avoidance; and corporate law fiduciary restraint. After discussing the elements of convertible bond valuation and their interaction with issuer actions giving rise to conflicts of interest, he evaluates the case for judicial intervention to protect bondholder interests. He concludes that ·bondholder protective intervention is fair and tolerably efficient, provided it is kept within the bounds of contract interpretation. But he finds that more aggressive judicial intervention under the frameworks of contract avoidance and fiduciary restraint carries an unnecessary risk of causing substantial costs in the marketplace. Thus, he advocates that intervention under the latter two approaches be avoided.


Law and Economics, Jurisprudence, Corporation Law, Securities Law

Publication Title

Wis. Law Review

Publication Citation

1984 Wis. L. Rev. 667 (1984).