Professor Petri Mäntysaari's research while affiliated with Hanken School of Economics and other places
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Publications (72)
The purpose of this chapter is to show that many existing doctrinal disciplines can be upgraded into scientific disciplines if you use the scientific framework of User-friendly Legal Science. Moreover, User-friendly Legal Science can help to address some anomalies of normal legal science. This chapter shows that legal rhetoric, international law an...
All scientific research is theory based. A scientific discipline must be based on a theory that defines its characteristics. It must have a field, its own point of view, concepts and a way of applying scientific methods. The purpose of this chapter is to define the characteristics and core concepts of User-friendly Legal Science.
The choice of the new point of view of User-friendly Legal Science can lead to new findings. The user-friendly research approach can contribute to a better understanding of user objectives, the users’ legal tools and practices as well as the pragmatic syllogisms combining the objectives with the means to reach them. The findings can therefore be us...
The presentation of a system is an obvious task for any scientific discipline. Legal science is no exception. User-friendly Legal Science can build its own systems. It can produce new systematic orders because of its unique point of view. The new systems include systems of law, language, contexts and theories.
Scientific research is theory based. There are various kinds of discipline-specific requirements relating to the choice of theories, research questions and methods. In User-friendly Legal Science, the choice of the research question, the theoretical framework and the methods must reflect the discipline’s particular characteristics. There are fundam...
User-friendly Legal Science differs in fundamental ways from earlier attempts to turn the study of law into an empirical science. It is almost the opposite of law and economics. It has more in common with legal history and comparative law. The purpose of this chapter is to study the earlier approaches in order to learn more about what is new about...
This chapter gives an introduction to some fundamental aspects of the regulation of electricity markets in EU law.
This chapter focuses on the characteristic legal aspects of financial electricity contracts (derivatives). Financial electricity contracts do not result in the physical supply of electricity. Financial contracts are traded either on electricity exchanges or over the counter (OTC). The majority of counterparties are electricity firms. Other counterp...
The choice of products for hedging transmission risk depends on how transmission capacity is allocated.
The TSO uses contracts to facilitate the maintenance of the system frequency, that is, balance in the system. One can roughly distinguish between two kinds of contracts.
This book aims to describe the mechanisms of the internal wholesale electricity market in terms of the legal tools and practices used by electricity producers, the most important market participants. In this regard, the focus is on Northwestern Europe. Because of the book’s functional perspective, it is not limited to the external regulation of ele...
Because of physical constraints, electricity markets have been national or regional. Electricity firms can nevertheless benefit from a larger market. Market coupling is a way to integrate neighbouring physical markets. Market coupling increases the market’s size and liquidity and makes it attractive to participants. Market coupling belongs to the c...
Electricity supply contracts can be (1) standardised, mainly short-term, and traded in an organised way; or (2) not standardised, rather long-term, and agreed bilaterally. Standardised contracts are more likely to be traded on an exchange or a regulated marketplace. They can be simple contracts traded in the spot market (Sect. 4. 5). Standardised c...
The purpose of this chapter is to give a broad introduction to the structure and participants of electricity markets (Sect. 2.2), introduce the business models of electricity producers and related wholesale market participants (Sect. 2.3), give a brief introduction to the relevant physical laws (Sect. 2.4), introduce the characteristic issues that...
Transmission capacity is allocated in the transmission marketplace. The allocation methods can be market-based (explicit or implicit auctions) or not market-based (bilateral contracting). One can also distinguish between primary and secondary capacity markets.
Competitive electricity markets can be structured in two basic ways. Electricity trading can be direct (bilateral) or centralised (exchanges and other organised marketplaces). This chapter focuses on the latter. OTC contracts are discussed later in this book.
Electricity cannot be supplied without connecting wires and transmission capacity. Physical transmission contracts are contracts for the supply of transmission capacity.
EU law has increased investment in the generation of electricity from renewable sources (RES-E). There are different kinds of promotion strategies for renewables. They can be (1) regulatory or voluntary and (2) direct or indirect. Moreover, they can address (3) price or quantity. They can also foster (4) investment or generation.
The theoretical basis of commercial law, corporate governance law, and corporate law is still unsatisfactory. There essentially is no theory of commercial law, and existing theories of corporate governance and corporate law cannot explain the behaviour of firms or the contents of existing regulation. This book proposes a coordinated solution for al...
We can now move on to theories of corporate law. Corporate law belongs to the traditional branches of commercial law in continental Europe. Both the Napoleonic Code de commerce and the German Handelsgesetzbuch address company law issues. Whereas norm-based commercial law is largely untheorised as a much too heterogenic branch of law, there is more...
Economic theories of the firm have provided much of the language and concepts of modern corporate governance and corporate law discourse. Alternative mechanism. According to economic theories of the firm, the default form of economic exchanges is through the market. The mechanism of market prices is assumed to allocate resources to their most effec...
Theories of the firm and theories of corporate law or corporations provide the basis for the study of corporate governance. One can say that all such theories address at least some questions that are interesting in this context. The purpose of this chapter is to provide a critique of the existing theories. A new theory will be proposed in the next...
We can start seeking the new ways by studying the theory of commercial law first. We can begin with past approaches. A new theory will be proposed in Chap. 4. Commercial law has something to do with firms. One might assume that there could be a connection between theories of commercial law and theories of the firm. Unfortunately, there has not been...
Because of the failings of the mainstream approaches, there is room for a new legal corporate governance theory. The proposed theory is an application of Management-based Commercial Law (MBCL) and defines the law of corporate governance as a functional area of law and a branch of MBCL. Unlike most corporate governance theories, the proposed theory...
Earlier in this book previous theories of corporate law were divided into theories of corporate law and theories of corporations. Both have their characteristic failings. Theories of corporations tend to be narrow and based on a small group of existing norms. Theories of corporate law tend to be broader but not perfectly aligned with existing norms...
It is not enough to have a governance structure that is self-enforcing. The firm’s long-term survival is not possible without continuous adaptation. The sustainability of the firm is increased, if the firm is able to innovate. Innovation means more than mere maximising, optimising, or reacting to changes in circumstances. Innovation is a form of us...
The legal corporate governance theory proposed in Chap. 7 explains what issues must be managed in some way or another, and for what purpose they should be managed. However, it does not explain how exactly they should be managed. How should one organise the firm?
This chapter studies financial contracting from the perspective of the firm. It is assumed that the firm can be regarded as the principal and that it tries to control the behaviour of its investors. The purpose of the chapter is, therefore to study some customary legal ways for the firm to reduce agency costs and manage risk in its dealings with in...
The purpose of this chapter is to identify the most common legal ways for the principal to manage agency relationships. They will be applied in the chapter on corporate risk management and the chapter on corporate governance.
The takeover of a company whose shares have been admitted to trading on a regulated market is subject to a larger and more detailed regulatory regime under Community law. This chapter will provide a summary of the most important rules. These questions have partly been discussed in other parts of this book. Many of them can better be discussed in sp...
The basic acquisition form is the acquisition of shares in a privately-owned company by one private acquirer for cash. In this chapter, some preliminary questions relating to the acquisition process will be studied mainly in that context.
The core of contract law consists of three components: (1) a sanction system which can be applied when a party to a contract does not fulfil its contractual obligations (section 6.3); (2) basic requirements as to form and enforceability (section 5.6); and (3) rules on legal capacity, representation, agency, and similar matters (section 6.2; for the...
Business acquisitions belong to the largest transactions that the firm will make, and they are individually-negotiated. This increases the importance of information management, due diligence, and disclosures. At a general level, two large legal topics are of particular interest in the context of due diligence and disclosures: legal risks related to...
The purpose of Chapters 2–7 is to discuss the legal aspects of the most important forms of funding from the perspective of a non-financial firm. There are various forms of external funding ranging from traditional debt and shareholders’ capital to mezzanine capital. The firm can also release capital and retain earnings. The purpose of this chapter...
Business acquisitions can raise questions of the existence of the target firm. For the acquiring firm, business acquisitions are among the largest investments that it will make. Takeovers are one of the available corporate growth strategies and they tend to be popular in periods of general economic expansions.1 Scale-increasing technological change...
An intertemporal value transfer gives rise to agency problems and counterparty credit risk.
The management of risk depends on the type of investment. Also the regulation of exit depends on the form of investment. In the context of exit, there are three types of investors: asset investors; debt investors; and shareholders.
Risk is one of the main concepts in corporate finance and helping the firm to manage risk belongs to the core functions of corporate finance law.
Returning funds to investors is the third of the four big decisions that can influence the firm’s finances (investment, funding, exit, and existential decisions). This chapter will discuss how funds are returned to various kinds of external investors. Many risks are exit-related.
Questions of agency, corporate risk management, information management, and corporate governance are in many ways interrelated in the law of corporate finance.
Mezzanine financing is regarded as a form of financing that contains elements of both quity and debt. From the perspective of the investor, typical mezzanine investments are subject to a higher risk than traditional debt instruments but to a lower risk than traditional shares. For this reason, mezzanine investors tend to require a higher return on...
An entity’s “equity” is usually defined as a residual claim to its net assets. It ranks after liabilities as a claim to the entity’s assets. “Equity” is contrasted with liabilities. Liabilities are claims that must be met before a distribution can be made to equity holders in the event of an entity being wound up.
In the previous chapter, it was said that cash flow and risk are important concepts in corporate finance law. This chapter will explain the particular nature of the management of cash flow.
Payment obligations raise the same legal issues as contracts in general. Some questions are characteristic of payment obligations. Traditional legal questions relate to currency as well as the time, place and other modalities of payment. These questions have already been discussed in legal literature in detail.1 It suffices to focus on the main poi...
Business acquisitions belong to the largest investments that the firm makes. Acquisition finance means the use of debt, equity and mezzanine instruments to achieve the firm’s general strategic objectives and the firm’s specific acquisition and refinancing objectives.
Business acquisitions raise questions about board members’ duties. For example, in whose interests should board members act according to general company law rules? Do members of the target’s board have a duty to be “neutral” in the context of acquisitions? Do members of the target’s board have a right or duty to use takeover defences, or are takeov...
The key provisions of the acquisition agreement regulate the structure of the acquisition, the separation of signing and closing, the disclosure of information, the specifications of the object (representations, warranties, covenants), the price, remedies in the event of breach of contract, the effect of the acquisition on employees, and tax.1
The purpose of the final chapter of the first volume of this book is to explain the role, regulation and management of information in corporate finance law. A distinction is made between the management of incoming and outgoing information. This chapter will also discuss the rather broad question of how Community law influences the management of inf...
In a limited-liability company, the exit of shareholders is constrained by a large number of mandatory provisions of company law. In Community law, many of such provisions belong to the core of the European legal capital regime. However, there can only be piece-meal harmonisation of exit-related questions in the EU because of the wide range of diff...
Pyramid structures and other control-enhancing mechanisms can provide a means to control legal entities with a smaller capital investment.1 An external study commissioned by the Commission examined ownership and control of companies listed in the EU as well as the range and prevalence of legally available controlenhancing mechanisms (CEMs) in them....
The purpose of this book is to study corporate finance law from the perspective of the firm. As discussed earlier in this book, there is always a risk that the firm’s agents will not act in the interests of the firm. The management of agency relationships is therefore an important part of the firm’s risk management. The management of agency also pl...
The firm can influence its external funding needs in many ways. The firm can retain earnings. The firm can manage its investment in tangible and intangible assets as well as the amount of its working capital. The firm can use its existing liquidity better (cash management). In addition, financial institutions which are subject to minimum capital re...
The purpose of this short chapter is to provide a brief introduction to problems relating to multi-party contracts. Syndicated loans are a well-known form of multi-party contracts. They will be discussed in Volume III in more detail. In addition to multi-party contracts, this chapter will highlight some contract law aspects of Islamic finance.
Legal uncertainty is an important source of legal risk. Legal risks can be divided into three main categories: general legal risks; transaction-specific legal risks; and contributory legal risks. General legal risks can be divided into two categories: (1) risks inherent in the country’s legal system and law in general; and (2) risks that relate to...
In all contracts, part of the general legal risk relates to the parties’ statements rather than the legal system as a whole or laws in general. In addition to the risk inherent in the interpretation of contracts (section 5.2), the risks that relate to the statements of the parties include the risk that terms are not binding as intended (section 5.3...
Good drafting practices can help the firm to agree on the same cash flow with a lower exposure to risk. Bad drafting practices increase the firm’s exposure to legal risk and – as legal considerations contribute to other risks and influence the behaviour of the firm’s contract party – even its exposure to other risks.
This chapter will give an introduction to how the firm can manage its own agency relationships. This chapter will also explain the legal corporate governance tools available to a controlling shareholder who wants to change the behaviour of its own agents and how even a non-controlling shareholder can use some corporate governance tools to manage ag...
In this three-volume book, the law of corporate finance is defined in a modern way and studied from the perspective of a non-financial firm. The law of corporate finance helps the firm to manage cash flow, risk, principal-agency relationships, and information in the context of all decisions that influence the firm's finances. The first volume intro...
Merger control and competition law in general belong to things that lawyers will focus on in legal due diligence. It is therefore useful to have a look at the effects of European merger control on acquisitions.
The purpose of the following chapters is to discuss the particular legal nature of payment obligations and the management of credit risk. The existence of various kinds of payment claims is characteristic of corporate finance. Payment claims give rise to a credit risk.
Legal background rules regulate information in various ways. For example, it has been said that “the bulk of contract-related secondary EC legislation is about finding intelligent information mechanisms and thus to extend the area of party autonomy”.1
Counterparty risk is normally understood as the risk that the other party fails to fulfil its contractual obligations. Managing the firm’s exposure to counterparty risk means managing the principal-agency relationship with the firm as principal and its contract party as agent.
Much of corporate finance law is about the management of risk. This chapter will discuss the nature of legal risks as well as the most general ways to manage legal risks and other risks by legal means. For example, the importance of legal compliance programmes in the management of legal risks will be explained. It will also be argued that incorpora...
This volume will focus on the most abstract principles of corporate finance law. This chapter will explain the definition of corporate finance law presented in the preface. The nature of corporate finance law can be explained on the premiss that the law of corporate finance is regarded as an autonomous discipline. The law of corporate finance has a...
In this three-volume book, the law of corporate finance is defined in a modern way and studied from the perspective of a non-financial firm. The law of corporate finance helps the firm to manage cash flow, risk, principal-agency relationships, and information in the context of all decisions that influence the firm's finances. The first volume intro...
The target’s board of directors functions as a “gatekeeper” in all acquisitions which require the consent of the target. Mergers, asset deals, and reverse takeovers are always friendly. A potential acquirer can circumvent such constraints by making an offer directly to the target’s shareholders contrary to the intentions of the target’s board. Part...
Sovereign wealth funds, foreign state-owned monopolies, and the national champions of other countries have emerged as an important group of buyers in the takeover market. This has increased regulatory concerns in the targets’ home countries and made governments more cautious than before.
Traditional legal rules governing payment obligations have been designed for the most basic form of payment obligations: the obligation to pay a fixed sum of money.
Legal practitioners often write about legal things that are useful for their clients or employers, i.e., firms. However, they apply no theory of commercial law. Law professors tend to apply theories, but they have been unable to design a theory of commercial law. As a result, their work is less useful for firms than it could be, and legal science h...
Citations
... Proceeding from various legal definitions, it can be formulated that procedural legal succession is the replacement of an individual or legal entity in a case in accordance with the legally established procedure with the transfer of all procedural rights and obligations of the legal intermediary to it (Mäntysaari, 2010). ...
... 2.0 Literature review 2.1 Definition of delisting Benny and Hutagaol (2016:28) annotated: [Mantysaari (2009), as well as Black (1990), defines delisting as the termination of the securities which formerly admitted to trading on a certain market. In addition, Siddaiah (2011) also stated delisting of securities as permanent removal of securities of a listed company from a stock exchange. ...
... Teori keagenan diperkenalkan oleh Jensen & Meckling (1976) dengan membawa konsep hubungan keagenan antara prinsipal dan agen yang berujung pada masalah dan konflik keagenan. Suatu hubungan keagenan diawali dengan adanya pendelegasian wewenang dari prinsipal kepada agen untuk melakukan kepentingan atas nama prinsipal (Mäntysaari, 2010). Namun, agen akan cenderung memaksimalkan kepentingannya sendiri dibandingkan memenuhi kepentingan prinsipal (Mitnick, 2011). ...
... The theory is more output-centric, where significant flexibility and autonomy is granted and, therefore the stewards, who are the managers, are satisfied when they achieve the objectives over which they have authority (Madhani, 2017). Agency theory is more about how the principal and agent maintain an aligned relationship, whereas the stewardship theory emerges from the organizational psychology and sociology and emphasizes the psychological satisfaction of taking autonomous decision-making and the feeling of achievement when aligned objectives are met (Mäntysaari, 2011). This happens because the person feels authoritative when a steward secures and amplifies investors' abundance through firm execution on the grounds that the steward's utility capacities are boosted (Clarke, 2016;Yusoff & Alhaji, 2012). ...
... Mäntysaari, P. (2015). EU electricity trade law: The legal tools of electricity producers in the internal electricity market. ...
