Digital Commons Network^™

Person, State Or Not: The Place Of Business Corporations In Our Constitutional Order, Daniel J.H. Greenwood

Daniel J.H. Greenwood

Business corporations are critical institutions in our democratic republican market-based economic order. The United States Constitution, however, is completely silent as to their status in our system. The Supreme Court has filled this silence by repeatedly granting corporations rights against the citizenry and its elected representatives.

Instead, we ought to view business corporations, like municipal corporations, as governance structures created by We the People to promote our general Welfare. On this social contract view, corporations should have the constitutional rights specified in the text: none. Instead, we should be debating which rights of citizens against governmental agencies should also apply …

Deferred Corporate Prosecution As Corrupt Regime: The Case For Prison

Lawrence E. Mitchell

Abstract: This paper looks at the growing phenomenon of deferred corporate criminal prosecutions from a new perspective. The literature accepts the practice and is largely concerned with the degree to which efficient and effective criminal deterrence is achieved through pretrial diversion. I examine the practice and conclude that it presents, from a structural perspective, a case of a corrupt law enforcement regime centered in the United States Department of Justice. The regime works in effective –if unintentional-- conspiracy with corporate officials to produce an inefficient enforcement regime that disregards democratic processes and threatens a loss of respect for the rule …

Systemic Harms And Shareholder Value, Jeffrey N. Gordon

Jeffrey N Gordon

The financial crisis has demonstrated serious flaws in the corporate governance of systemically important financial firms. In particular, the Shareholder Value norm, which has guided corporate governance reform for a generation, proves to be a faulty guide for managerial action in systemically important firms. This is not only because the failure of such firms will have spillovers that defy the cost-internalization of the tort system but also because these spillovers will harm their own majoritarian shareholders. The interests of diversified shareholders fundamentally diverge from the interests of managers and other controllers because the failure of a systemically important financial firm …

Sovereign Investing And Corporate Governance: Evidence And Policy, Paul Rose

Paul Rose

Discussions of corporate governance often focus solely on the attractiveness of firms to investors, but it is also true that firms seek out preferred investors. What, then, are the characteristics of an attractive investor? With nearly $6 trillion in assets, sovereign wealth funds (SWFs) are increasingly important players in equity markets in the United States and abroad, and possess characteristics that firms prize: deep pockets, long-term (and for some, theoretically infinite) investment horizons, and potential network benefits that many other shareholders cannot offer. However, despite their economic power, their reach, and their general desirability as investors, SWFs are almost entirely …