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Articles 1 - 30 of 44
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Publicizing Corporate Secrets, Christopher J. Morten
Publicizing Corporate Secrets, Christopher J. Morten
Faculty Scholarship
Federal regulatory agencies in the United States hold a treasure trove of valuable information essential to a functional society. Yet little of this immense and nominally “public” resource is accessible to the public. That worrying phenomenon is particularly true for the valuable information that agencies hold on powerful private actors. Corporations regularly shield vast swaths of the information they share with federal regulatory agencies from public view, claiming that the information contains legally protected trade secrets (or other proprietary “confidential commercial information”). Federal agencies themselves have largely acceded to these claims and even fueled them, by construing restrictively various doctrines …
Toward A Fair And Sustainable Corporate Governance System: Reflections On Leo Strine, Jr.'S Writing On Institutional Investors, Dorothy S. Lund
Toward A Fair And Sustainable Corporate Governance System: Reflections On Leo Strine, Jr.'S Writing On Institutional Investors, Dorothy S. Lund
Faculty Scholarship
It is a privilege to contribute to this Festschrift for my friend, mentor, and co-author, Leo Strine, Jr. It is also a pleasure to revisit his vast body of work and to re-experience the breadth and depth of his scholarship, as well as reflect on his unparalleled influence on the development of corporate law that he brought about while presiding over its most influential courts for twenty-one years.
In thinking about this essay, I recalled a conversation that I had with “CJS” when I was serving as his law clerk. In this conversation, he decried (with James Taylor blasting in …
Crime And The Corporation: Making The Punishment Fit The Corporation, John C. Coffee Jr.
Crime And The Corporation: Making The Punishment Fit The Corporation, John C. Coffee Jr.
Faculty Scholarship
The debate over corporate criminal liability has long involved a fight between proponents who argue that corporate liability is necessary for effective deterrence and opponents who claim that it “punishes the innocent.” This Article agrees and disagrees with both sides. Corporate criminal liability could play a critical role in establishing an effective deterrent to organizational misconduct, but today it largely fails. Currently, we have a system that combines Deferred Prosecution Agreements, Non-Prosecution Agreements, and extraordinarily generous sentencing credits for compliance plans that have failed, and the result is a system that is more carrots than sticks. The evidence seems clear …
Corporate Crime And Punishment: An Empirical Study, Dorothy S. Lund, Natasha Sarin
Corporate Crime And Punishment: An Empirical Study, Dorothy S. Lund, Natasha Sarin
Faculty Scholarship
For many years, law and economics scholars, as well as politicians and regulators, have debated whether corporate punishment chills beneficial corporate activity or, in the alternative, lets corporate criminals off too easily. A crucial and yet understudied aspect of this debate is empirical evidence. Unlike most other types of crime, the government does not measure corporate crime rates; therefore, the government and researchers alike cannot easily determine whether disputed policies are effectively deterring future incidents of corporate misconduct. In this Article, we take important first steps in addressing these questions. Specifically, we use three novel sources as proxies for corporate …
Cleaning Corporate Governance, Jens Frankenreiter, Cathy Hwang, Yaron Nili, Eric L. Talley
Cleaning Corporate Governance, Jens Frankenreiter, Cathy Hwang, Yaron Nili, Eric L. Talley
Faculty Scholarship
Although empirical scholarship dominates the field of law and finance, much of it shares a common vulnerability: an abiding faith in the accuracy and integrity of a small, specialized collection of corporate governance data. In this paper, we unveil a novel collection of three decades’ worth of corporate charters for thousands of public companies, which shows that this faith is misplaced.
We make three principal contributions to the literature. First, we label our corpus for a variety of firm- and state-level governance features. Doing so reveals significant infirmities within the most well-known corporate governance datasets, including an error rate exceeding …
Constructing Countervailing Power: Law And Organizing In An Era Of Political Inequality, Kate Andrias
Constructing Countervailing Power: Law And Organizing In An Era Of Political Inequality, Kate Andrias
Faculty Scholarship
This Article proposes an innovative approach to remedying the crisis of political inequality: using law to facilitate organizing by the poor and working class, not only as workers, but also as tenants, debtors, welfare beneficiaries, and others. The piece draws on the social-movements literature, and the successes and failures of labor law, to show how law can supplement the deficient regimes of campaign finance and lobbying reform and enable lower-income groups to build organizations capable of countervailing the political power of the wealthy. As such, the Article offers a new direction forward for the public-law literature on political power and …
Taking Compliance Seriously, John Armour, Jeffrey N. Gordon, Geeyoung Min
Taking Compliance Seriously, John Armour, Jeffrey N. Gordon, Geeyoung Min
Faculty Scholarship
How can we ensure corporations play by the “rules of the game” – that is, laws encouraging firms to avoid socially harmful conduct? Corporate compliance programs play a central role in society’s current response. Prosecutors give firms incentives – through discounts to penalties – to implement compliance programs that guide and monitor employees’ behavior. However, focusing on the incentives of firms overlooks the perspective of managers, who decide how much firms invest in compliance.
We show that stock-based pay, ubiquitous for corporate executives, creates systematic incentives to short-change compliance. Compliance is a long-term investment for firms, whereas managers’ time horizon …
The Covid-19 Pandemic And Business Law: A Series Of Posts From The Oxford Business Law Blog, Gert-Jan Boon, Markus K. Brunnermeier, Horst Eidenmueller, Luca Enriques, Aurelio Gurrea-Martínez, Kathryn Judge, Jean-Pierre Landau, Marco Pagano, Ricardo Reis, Kristin Van Zwieten
The Covid-19 Pandemic And Business Law: A Series Of Posts From The Oxford Business Law Blog, Gert-Jan Boon, Markus K. Brunnermeier, Horst Eidenmueller, Luca Enriques, Aurelio Gurrea-Martínez, Kathryn Judge, Jean-Pierre Landau, Marco Pagano, Ricardo Reis, Kristin Van Zwieten
Faculty Scholarship
The COVID-19 Pandemic is the biggest challenge for the world since World War Two, warned UN Secretary General, António Guterres, on 1 April 2020. Millions of lives may be lost. The threat to our livelihoods is extreme as well. Job losses worldwide may exceed 25 million.
Legal systems are under extreme stress too. Contracts are disrupted, judicial services suspended, and insolvency procedures tested. Quarantine regulations threaten constitutional liberties. However, laws can also be a powerful tool to contain the effects of the pandemic on our lives and reduce its economic fallout. To achieve this goal, rules designed for normal times …
The Curse Of Bigness: New Deal Supplement, Tim Wu
The Curse Of Bigness: New Deal Supplement, Tim Wu
Faculty Scholarship
This is a supplement to the book, The Curse of Bigness: Antitrust in the New Gilded Age. It covers the years between 1920 - 1945, with a focus on the New Deal, and represents material left out of the original book.
It is meant to be read together with the larger volume, but can also be read separately.
A Mission Statement For Mutual Funds In Shareholder Litigation, Sean J. Griffith, Dorothy S. Lund
A Mission Statement For Mutual Funds In Shareholder Litigation, Sean J. Griffith, Dorothy S. Lund
Faculty Scholarship
This Article analyzes the conduct of mutual funds in shareholder litigation. We begin by reviewing the basic forms of shareholder litigation and the benefits such claims might offer mutual fund investors. We then investigate, through an in-depth docket review, whether and how the ten largest mutual funds participate in shareholder litigation. We find that although shareholder suits offer potential benefits, the largest mutual funds have essentially forfeited their use of litigation. This finding is particularly striking given that index funds and other long-term oriented mutual funds generally cannot sell their shares when they are dissatisfied with company performance, leaving them …
Board Compliance, John Armour, Brandon L. Garrett, Jeffrey N. Gordon, Geeyoung Min
Board Compliance, John Armour, Brandon L. Garrett, Jeffrey N. Gordon, Geeyoung Min
Faculty Scholarship
What role do corporate boards play in compliance? Compliance programs are internal enforcement programs, whereby firms train, monitor and discipline employees with respect to applicable laws and regulations. Corporate enforcement and compliance failures could not be more high-profile, and have placed boards in the position of responding to systemic problems. Both case law on boards’ fiduciary duties and guidance from prosecutors suggest that the board should have a continuing role in overseeing compliance activity. Yet very little is actually known about the role of boards in compliance. This paper offers the first empirical account of public companies’ engagement with compliance …
The State's Role In The Regulation And Provision Of Legal Services In South Africa And The United States: Supporting, Nudging Or Interfering?, Helen Kruuse, Philip Genty
The State's Role In The Regulation And Provision Of Legal Services In South Africa And The United States: Supporting, Nudging Or Interfering?, Helen Kruuse, Philip Genty
Faculty Scholarship
An independent legal profession is said to be “the bulwark of a free and democratic society.” It is also said that a high measure of independence of mind and action by legal actors is necessary for the maintenance of the rule of law. However, too often, there is the allegation (within the sociological literature in particular) that the legal profession has used the concepts of independence and the rule of law as a shield or cuirass rather than as a sword. The image of lawyers representing unpopular clients fearlessly and advocating on behalf of unpopular causes, so as to uphold …
Economic Individualism And Preference Formation, Andrzej Rapaczynski
Economic Individualism And Preference Formation, Andrzej Rapaczynski
Faculty Scholarship
This note examines some issues involved in an attempt to go beyond the assumption, long-made by most economists, that people’s preferences are simply to be treated as “given” and that the principle of consumer sovereignty entails a refusal to consider some (or some people’s) revealed preferences as more authoritative than others. The most important break with that assumption has been the development of behavioral economics, which shows that people may not always know what they really want, and that economists have to develop a more critical approach, distinguishing people’s true preferences from those that are merely apparent. While this approach, …
Amazon's Antitrust Paradox, Lina M. Khan
Amazon's Antitrust Paradox, Lina M. Khan
Faculty Scholarship
Amazon is the titan of twenty-first century commerce. In addition to being a retailer, it is now a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space. Although Amazon has clocked staggering growth, it generates meager profits, choosing to price below-cost and expand widely instead. Through this strategy, the company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other …
Harmful, Harmless, And Beneficial Uncertainty In Law, Scott Baker, Alex Raskolnikov
Harmful, Harmless, And Beneficial Uncertainty In Law, Scott Baker, Alex Raskolnikov
Faculty Scholarship
This article examines the impact of four types of law-related uncertainty on the utility of risk-neutral agents. We find that greater legal or factual uncertainty makes agents worse off if enforcement is targeted (meaning that greater deviations from what the law demands lead to a greater probability of enforcement), or if sanctions are graduated (meaning that greater deviations from what the law demands result in higher sanctions). In contrast, agents are indifferent to changes in detection uncertainty induced by variation in enforcement resources or to changes in sanction uncertainty arising from legally irrelevant factors. Finally, risk-neutral agents benefit from greater …
A Model Company Act And A Model Company Court, Ronald J. Gilson
A Model Company Act And A Model Company Court, Ronald J. Gilson
Faculty Scholarship
This paper is a contribution to a symposium on the European Model Company Act ("EMCA ") in which I argue that a model company court powerfully complements the EMCA. A particular characteristic of company law complicates the intermediating role of a model act in a federal system. Because complex corporate transactions inevitably are associated with significant uncertainty, especially when they present conflicts of interest, transaction designers and legislative drafters tend to frame applicable contractual and legal rules as standards, such as fairness and equal treatment, rather than as rules. In turn, the effectiveness of a standard in the face of …
Duties To Organizational Clients, William H. Simon
Duties To Organizational Clients, William H. Simon
Faculty Scholarship
Loyalty to an organizational client means fidelity to the substantive legal structure that constitutes it. Although this principle is not controversial in the abstract, it is commonly ignored in professional discourse and doctrine. This article explains the basic notion of organizational loyalty and identifies some mistaken tendencies in discourse and doctrine, especially the "Managerialist Fallacy" that leads lawyers to conflate the client organization with its senior managers. The article then applies the basic notion to some hard cases, concluding with a critical appraisal of the rationale for confidentiality with organizational clients.
The New Public, Sarah Seo
The New Public, Sarah Seo
Faculty Scholarship
By exploring the intertwined histories of the automobile, policing, criminal procedure, and the administrative state in the twentieth-century United States, this Essay argues that the growth of the police’s discretionary authority had its roots in the governance of an automotive society. To tell this history and the proliferation of procedural rights that developed as a solution to abuses of police discretion, this Essay examines the life and oeuvre of Charles Reich, an administrative-law expert in the 1960s who wrote about his own encounters with the police, particularly in his car. The Essay concludes that, in light of this regulatory history …
Licensing Commercial Value: From Copyright To Trademarks And Back, Jane C. Ginsburg
Licensing Commercial Value: From Copyright To Trademarks And Back, Jane C. Ginsburg
Faculty Scholarship
Copyright and trademarks often overlap, particularly in visual characters. The same figure may qualify as a pictorial, graphic or sculptural work on the one hand, and as a registered (or at least used) trademark on the other. The two rights, though resting on distinct foundations, tend to be licensed together. Trademarks symbolize the goodwill of the producer, and are protected insofar as copying that symbol is likely to confuse consumers as to the source or approval of the goods or services in connection with which the mark is used. For famous marks, the dilution action grants a right against uses …
Merger Control Procedures And Institutions: A Comparison Of The Eu And Us Practice, William E. Kovacic, Petros C. Mavroidis, Damien J. Neven
Merger Control Procedures And Institutions: A Comparison Of The Eu And Us Practice, William E. Kovacic, Petros C. Mavroidis, Damien J. Neven
Faculty Scholarship
The objective of this paper is to discuss and compare the role that different constituencies play in US and EU procedures for merger control. We describe the main constituencies (both internal and external) involved in merger control in both jurisdictions and discuss how a typical merger case would be handled under these procedures. At each stage, we consider how the procedure unfolds, which parties are involved, and how they can affect the procedure. Our discussion reveals a very different ecology. EU and US procedures differ in terms of their basic design and in terms of the procedures that are naturally …
Corporate Headhunting, Daniel C. Richman
Corporate Headhunting, Daniel C. Richman
Faculty Scholarship
A wide range of commentators – including some pretty sophisticated ones – have raked through the ruins of the 2008 financial collapse, confident that there are significant criminal prosecutions to bring against individuals and that the Justice Department should be faulted for its failure to bring them. Their confidence that blockbuster criminal cases could have been made rests on shaky grounds. So, too, does their faith that the hunting of heads is a socially productive response to the collapse. If anything, a focus on headhunting will only distract from, and reduce the pressure for, efforts to explain the collapse and …
Fee-Shifting Bylaw And Charter Provisions: Can They Apply In Federal Court? – The Case For Preemption, John C. Coffee Jr.
Fee-Shifting Bylaw And Charter Provisions: Can They Apply In Federal Court? – The Case For Preemption, John C. Coffee Jr.
Faculty Scholarship
In the first months after a decision of the Delaware Supreme Court upholding a fee-shifting bylaw under which the unsuccessful plaintiff shareholder was required to reimburse all defendants for their legal and other expenses in the litigation, some 24 public companies adopted a similar provision – either by means of a board-adopted bylaw or by placing such a provision in their certificate of incorporation (in the case of companies undergoing an IPO). In effect, private ordering is introducing a one-sided version of the “loser pays” rules. Indeed, as drafted, these provisions typically require a plaintiff who is not completely successful …
Kiobel And Corporate Immunity Under The Alien Tort Statute: The Struggle For Clarity Post-Sosa, Dorothy S. Lund
Kiobel And Corporate Immunity Under The Alien Tort Statute: The Struggle For Clarity Post-Sosa, Dorothy S. Lund
Faculty Scholarship
In September 2010, a two-judge Second Circuit majority ruled that corporations are immune from liability under the Alien Tort Statute (“ATS”). This statute, which grants aliens access to federal district courts, has emerged as a controversial tool for international norm enforcement in the last thirty years. The unexpected decision to foreclose corporate liability has generated a wave of criticism from human rights activists and international law scholars who claim that the decision is grounded in a fundamental misunderstanding of international law.
This commentary examines the Kiobel decision against other recent interpretations of the ATS, especially those following the Supreme Court’s …
Public Ownership. Firm Governance, And Litigation Risk, Eric L. Talley
Public Ownership. Firm Governance, And Litigation Risk, Eric L. Talley
Faculty Scholarship
Many going-private transactions are motivated – at least ostensibly – by the desire to escape the burdens and costs of public ownership. Although these burdens have many purported manifestations, one commonly cited is the risk of litigation, which may be borne both directly by the firm and/or its fiduciaries or reflected in director and officer insurance premia funded at company expense. An important issue for the "litigation risk" justification of privatization is whether alternative (and less expensive) steps falling short of going private – such as governance reforms – may augur sufficiently against litigation exposure. In this Article, I consider …
On Uncertainty, Ambiguity, And Contractual Conditions, Eric L. Talley
On Uncertainty, Ambiguity, And Contractual Conditions, Eric L. Talley
Faculty Scholarship
This article uses the recent Delaware Chancery Court case of Hexion v. Huntsman as a template for motivating thoughts about how contract law should interpret contractual conditions in general – and "material adverse event" provisions in particular – within environments of extreme ambiguity (as opposed to risk). Although ambiguity and aversion there to bear some facial similarities to risk and risk aversion, an optimal contractual allocation of uncertainty does not always track the optimal allocation of risk. After establishing these intuitions as a conceptual proposition, I endeavor to test them empirically, using a unique data set of 528 actual material …
The Empagran Exception: Between Illinois Brick And A Hard Place, Victor P. Goldberg
The Empagran Exception: Between Illinois Brick And A Hard Place, Victor P. Goldberg
Faculty Scholarship
Before it was uncovered and prosecuted, the international vitamin cartel, known as "Vitamins, Inc." by its perpetrators, was extraordinarily successful. Estimates of cartel profits run as high as $18 billion (in 2003 dollars). In addition to substantial criminal sanctions, cartel members paid over $2 billion to American plaintiffs. When foreign plaintiffs tried to sue the foreign defendants in American courts, however, they encountered resistance. A trial court read the Foreign Trade Antitrust Improvements Act ("FTAIA") to restrict the reach of the Sherman Act and preclude foreign purchasers from suing the foreign defendants. The D.C. Circuit reversed, holding that the facts …
The Market For Bad Legal Advice: Academic Professional Responsibility Consulting As An Example, William H. Simon
The Market For Bad Legal Advice: Academic Professional Responsibility Consulting As An Example, William H. Simon
Faculty Scholarship
Clients demand bad legal advice when legal advice can favorably influence third-party conduct or attitudes even when it is wrong. Lawyers supply bad legal advice most readily when they are substantially immunized from accountability to the people it is intended to influence. Both demand and supply conditions for a flourishing market are in place in several quarters of the legal system. The resulting practices, however, are in tension with basic professional and academic values. I demonstrate these tensions through critiques of the work of academic professional responsibility consultants in such matters as Enron, Lincoln Savings & Loan, and a heretofore …
Sarbanes-Oxley's Effects On Small Firms: What Is The Evidence?, Ehud Kamar, Pinar Karaca-Mandic, Eric L. Talley
Sarbanes-Oxley's Effects On Small Firms: What Is The Evidence?, Ehud Kamar, Pinar Karaca-Mandic, Eric L. Talley
Faculty Scholarship
This article presents an overview of the regulatory regime created by the Sarbanes-Oxley Act of 2002 (SOX) and its implications for small firms. We review the available evidence in three distinct domains: compliance costs, stock price reactions, and firms' decisions to exit regulated securities markets.
Law And The Market: The Impact Of Enforcement, John C. Coffee Jr.
Law And The Market: The Impact Of Enforcement, John C. Coffee Jr.
Faculty Scholarship
Are the U.S. capital markets losing their competitiveness? A fascinating question, but what does it mean and how can it be intelligently assessed? This Article will explore the newly popular thesis that draconian enforcement and overregulation are injuring the United States and will offer a sharply contrasting interpretation: higher enforcement intensity gives the U.S. economy a lower cost of capital and higher securities valuations. This higher intensity attracts some foreign listings, but deters others.
This Article will proceed by first mapping the marked variation in the intensity of enforcement efforts by securities regulators in selected nations and then relating these …
Just Until Payday, Ronald J. Mann, Jim Hawkins
Just Until Payday, Ronald J. Mann, Jim Hawkins
Faculty Scholarship
The growth of payday lending markets during the last fifteen years has been the focus of substantial regulatory attention both in the United States and abroad, producing a dizzying array of initiatives by federal and state policymakers. Those initiatives have had conflicting purposes – some have sought to remove barriers to entry while others have sought to impose limits on the business. As is often the case in banking markets, the resulting patchwork of federal and state laws poses a problem when one state is able to dictate the practices of a national industry. For most of this industry's life, …