The Diffusion of Deal Innovations in Complex Contractual Networks

42 Pages Posted: 13 Jan 2023 Last revised: 7 Dec 2023

See all articles by Kristina Bishop

Kristina Bishop

Brigham Young University - J. Reuben Clark Law School

Matthew Jennejohn

Brigham Young University - J. Reuben Clark Law School

Cree Jones

BYU Law School

Date Written: December 27, 2022

Abstract

We introduce a new methodology for studying contractual evolution in complex markets. We situate the diffusion of a deal innovation within an advisory network and then provide methods for inferring a law firm's preference for adopting the innovation and for calculating each firm's proximity to prior adopters. This allows for granular analysis of firm-to-firm interactions as a diffusion mechanism.

To demonstrate, we study the top-up option’s diffusion in two-step tender offers from 1999 to 2013. Diffusion occurs readily when a firm is directly connected to a prior adopter of the option: directly connected firms are 274 percent more likely to adopt relative to unconnected firms. This correlation’s magnitude is akin to a firm changing its overall centrality within the advisory network from a median firm to a top-decile firm. These results demonstrate the importance of firm-to-firm information transfers to contractual evolution and underscore their study as a research priority.

Keywords: Contracts, Innovation, Evolution, Networks, Diffusion

JEL Classification: K12, K22

Suggested Citation

Bishop, Kristina and Jennejohn, Matthew and Jones, Cree, The Diffusion of Deal Innovations in Complex Contractual Networks (December 27, 2022). BYU Law Research Paper No. 23-22, Available at SSRN: https://ssrn.com/abstract=4313301 or http://dx.doi.org/10.2139/ssrn.4313301

Kristina Bishop

Brigham Young University - J. Reuben Clark Law School ( email )

430 JRCB
Brigham Young University
Provo, UT 84602
United States

Matthew Jennejohn (Contact Author)

Brigham Young University - J. Reuben Clark Law School ( email )

436 JRCB
Brigham Young University
Provo, UT 84602
United States
9175093028 (Phone)

Cree Jones

BYU Law School ( email )

430 JRCB
Brigham Young University
Provo, UT 84602
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
71
Abstract Views
438
Rank
589,797
PlumX Metrics