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Still 'Ain't No Glory In Pain': How The Telecommunications Act Of 1996 And Other 1990s Deregulation Faciliated The Market Crash Of 2002, André Douglas Pond Cummings Sep 2006

Still 'Ain't No Glory In Pain': How The Telecommunications Act Of 1996 And Other 1990s Deregulation Faciliated The Market Crash Of 2002, André Douglas Pond Cummings

Faculty Scholarship

This article investigates the various flaws inherent in two short-sighted Congressional enactments, The Telecommunications Act of 1996 and the Commodities Futures Modernization Act of 2000 (CFMA). The article concludes that the Telecommunications Act and the CFMA, together with various 1990s deregulation legislation, led in large part to the collapse of the U.S. capital markets in 2002.

The article continues a comprehensive review undertaken in the recently published Ain't No Glory In Pain: How the 1994 Republican Revolution, the Private Securities Litigation Reform Act of 1995 and Certain 1990s Deregulation Contributed to the Collapse of the Unites States' Capital ...


The "Branding Effect" Of Contracts, D. Gordon Smith Apr 2006

The "Branding Effect" Of Contracts, D. Gordon Smith

Faculty Scholarship

In his case study of the MasterCard IPO and its predecessor piece on the Google IPO, Victor Fleischer claims to find evidence of a branding effect of legal infrastructure. The branding effect is not aimed at reducing the potential for opportunism by a counterparty to a contract, but rather at increasing the attractiveness of a product to present and future users or improving the image of a company in the eyes of regulators, judges, and juries. In this essay commenting on Fleischer's work, I endorse the notion that deal structures have branding effects and position Fleischer's work within ...


Law & Entrepreneurship: Do Courts Matter?, D. Gordon Smith, Masako Ueda Mar 2006

Law & Entrepreneurship: Do Courts Matter?, D. Gordon Smith, Masako Ueda

Faculty Scholarship

In this essay, we sketch the outlines of a research agenda exploring links between courts and entrepreneurship. Our conception of law and entrepreneurship encompasses the study of positive law (including constitutions, statutes, and regulations), common law doctrines, and private ordering that relate to the discovery and exploitation of profitable opportunities by new firms. We briefly survey the economics literatures that relate to law and entrepreneurship, including the law and finance literature launched by the work of Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert Vishny (LLSV). Relying on the suggestive work of LLSV and other economists who have labored ...


Some Reflections On The Diversity Of Corporate Boards: Women, People Of Color, And The Unique Issues Associated With Women Of Color, Lisa M. Fairfax Feb 2006

Some Reflections On The Diversity Of Corporate Boards: Women, People Of Color, And The Unique Issues Associated With Women Of Color, Lisa M. Fairfax

Faculty Scholarship

As one might expect, there are many similarities between the circumstances of women directors and directors of color, which includes African Americans, Latinos, and Asian Americans. Indeed, both groups began appearing on corporate boards in significant numbers during the same period—right after the Civil Rights Movement pursuant to which the push for racial equality throughout society precipitated efforts to achieve greater representation of people of color as well as women on corporate boards. Moreover, while women and people of color have experienced some increase in board representation over the last few decades, both groups also have encountered significant barriers ...


Faith And Faithfulness In Corporate Theory, Lyman P.Q. Johnson Jan 2006

Faith And Faithfulness In Corporate Theory, Lyman P.Q. Johnson

Faculty Scholarship

No abstract provided.


The Audit Committee's Ethical And Legal Responsibilities: The State Law Perspective, Lyman P.Q. Johnson Jan 2006

The Audit Committee's Ethical And Legal Responsibilities: The State Law Perspective, Lyman P.Q. Johnson

Faculty Scholarship

This paper provides a state law perspective on the post-scandal, post-reform audit committee. Federal law, along with NYSE and Nasdaq (together, "SRO") rules, recently have made sweeping changes in corporate governance, including numerous provisions that bear on audit committees. These changes are unprecedented and dramatic, and rightly have received wide attention and careful study. Certain basic principles underlying the governance functions and duties of audit committees, however, originate in, and are still determined by, state law. Moreover, state law applies to all corporations; federal law and SRO rules on audit committees apply only to those companies coming under federal law ...


Atomism And The Private Merger Challenge, Paul Stancil Jan 2006

Atomism And The Private Merger Challenge, Paul Stancil

Faculty Scholarship

This Article explores the implications of allowing private parties to challenge mergers and acquisitions under the antitrust laws. It highlights a number of relatively recent developments in antitrust law that suggest an increase in private merger challenges in the future, and it identifies antiquated time of suit doctrines that may lead to inefficient and/or frivolous antimerger filings. It concludes by proposing several significant changes to the existing legal regime: (1) limited fee-shifting; (2) rigid time-of-suit deadlines; (3) single damages; and (4) limits on the use of postacquisition evidence to establish liability. Taken together, these reforms will allow private parties ...


The Missing Monitor In Corporate Governance: The Directors' & Officers' Liability Insurer, Tom Baker, Sean J. Griffith Jan 2006

The Missing Monitor In Corporate Governance: The Directors' & Officers' Liability Insurer, Tom Baker, Sean J. Griffith

Faculty Scholarship

This article reports the results of empirical research on the monitoring role of directors' and officers' liability insurance (D&O insurance) companies in American corporate governance. Economic theory provides three reasons to expect D&O insurers to serve as corporate governance monitors: first, monitoring provides insurers with a way to manage moral hazard; second, monitoring provides benefits to shareholders who might not otherwise need the risk distribution that D&O insurance provides; and third, the "bonding" provided by risk distribution gives insurers a comparative advantage in monitoring. Nevertheless, we find that D&O insurers neither monitor corporate governance during the life of the insurance contract nor manage litigation defense costs once claims arise. Our findings raise significant questions about the value of D&O insurance for shareholders as well as the deterrent effect of corporate and securities ...


On The Elimination Of Fiduciary Duties: A Theory Of Good Faith For Unincorporated Firms, Andrew S. Gold Jan 2006

On The Elimination Of Fiduciary Duties: A Theory Of Good Faith For Unincorporated Firms, Andrew S. Gold

Faculty Scholarship

No abstract provided.


Paternalistic Regulation Of Public Company Management: Lessons From Bank Management, James A. Fanto Jan 2006

Paternalistic Regulation Of Public Company Management: Lessons From Bank Management, James A. Fanto

Faculty Scholarship

No abstract provided.


After Confidentiality: Rethinking The Professional Responsibilities Of The Business Lawyer, William H. Simon Jan 2006

After Confidentiality: Rethinking The Professional Responsibilities Of The Business Lawyer, William H. Simon

Faculty Scholarship

The legal profession has yet to deal with important challenges to the traditional image and practice of business lawyering raised by recent financial reporting and tax shelter scandals. Two issues are particularly important. The first is formalism - the doctrine that only the literal terms and not the underlying purpose of the law are binding. The second is managerialism - the doctrine that conflates the interests of the corporation with those of its managers. This essay argues that a plausible ethic of business lawyering requires a more thoroughgoing rejection of these doctrines than the bar has yet considered. It also suggests that ...


Capital Punishment And Capital Murder: Market Share And The Deterrent Effects Of The Death Penalty, Jeffrey Fagan, Franklin Zimring, Amanda Geller Jan 2006

Capital Punishment And Capital Murder: Market Share And The Deterrent Effects Of The Death Penalty, Jeffrey Fagan, Franklin Zimring, Amanda Geller

Faculty Scholarship

Both legal scholars and social scientists have leveraged new research evidence on the deterrent effects of the death penalty into calls for more executions that they claim will save lives and new rules to remove procedural roadblocks and hasten executions. However, the use of total intentional homicides to estimate deterrence is a recurring aggregation error in the death penalty debate in the U.S.: by studying whether executions and death sentences affect all homicides, these studies fail to identify a more plausible target of deterrence - namely, those homicides that are punishable by death. By broadening the targets of deterrence, these ...


The Entrepreneur And The Theory Of The Modern Corporation, Charles O'Kelley Jan 2006

The Entrepreneur And The Theory Of The Modern Corporation, Charles O'Kelley

Faculty Scholarship

The foremost description of the classic entrepreneur, immediately prior to the Great Depression and now, was presented by Frank Knight in his seminal work, Risk, Uncertainty, and Profit. In this Article, I will explicate Knight's theory of the entrepreneur and show how it relates to both the Berle-Means Paradigm and the nexus-of-contracts theory of the corporation. My effort here is in part intellectual history and in part the tentative beginnings of a new positive account of the corporation. In the latter regard, this Article takes only the first step in what may prove a quite exhaustive effort to re-plow ...


Direct Versus Derivative And The Law Of Limited Liability Companies, Daniel S. Kleinberger Jan 2006

Direct Versus Derivative And The Law Of Limited Liability Companies, Daniel S. Kleinberger

Faculty Scholarship

The hybrid nature of limited liability companies causes us to re-invent, or at least re-examine, many doctrinal wheels. This Article will reexamine one of the most practical of those wheels-the distinction between direct and derivative claims in the context of a closely-held limited liability company.

Case law concerning the direct/derivative distinction is still overwhelmingly from the law of corporations, although LLC cases are now being reported with some frequency. LLC cases routinely analogize to, or borrow from, the corporate law. This Article encompasses that law, analyzes LLC developments, and argues that courts should (i) avoid the "special injury" rule ...


Senior Corporate Officers And The Duty Of Candor: Do The Ceo And Dfo Have A Duty To Inform?, Z. Jill Barclift Jan 2006

Senior Corporate Officers And The Duty Of Candor: Do The Ceo And Dfo Have A Duty To Inform?, Z. Jill Barclift

Faculty Scholarship

This article focuses on the duty to inform as a framework to assess liability of senior officers of public companies who withhold information from directors. The broadening of the definition of the duty to inform that senior officers owe directors to include an underlying affirmative duty to provide information, even when director or shareholder action is not requested, offers an opportunity for greater monitoring of corporate governance by focusing on those often most culpable. Currently, the plain language of Delaware’s delegation of authority statute protects directors who reasonably rely in good faith on the reports of corporate officers. However ...


Patents And Business Models For Software Firms, John R. Allison, Abe Dunn, Ronald J. Mann Jan 2006

Patents And Business Models For Software Firms, John R. Allison, Abe Dunn, Ronald J. Mann

Faculty Scholarship

We analyze the relation between patents and the different business models available to firms in the software industry. The paper builds on Cusumano's work defining the differences among firms that sell products, those that provide services, and the hybrid firms that fall between those polar categories. Combining data from five years of Software Magazine's Software 500 with data about the patenting practices of those software firms, we analyze the relation between the share of revenues derived from product sales and the firm's patenting practices. Accounting for size, R&D intensity, and sector-specific effects, the paper finds a ...


Dialectical Regulation, Robert B. Ahdieh Jan 2006

Dialectical Regulation, Robert B. Ahdieh

Faculty Scholarship

While theories of regulation abound, woefully inadequate attention has been given to growing patterns of "intersystemic" and "dialectical" regulation in the world today. In this rapidly expanding universe of interactions, independent regulatory agencies, born of autonomous jurisdictions, nonetheless face a combination of jurisdictional overlap with, and regulatory dependence on, one another. Here, the cross-jurisdictional interaction of regulators is no longer the voluntary interaction embraced by transnationalists; it is, instead, an unavoidable reality of acknowledgement and engagement, potentially culminating in the integration of discrete sets of regulatory rules into a collective whole.

Such patterns of regulatory engagement are increasingly evident, across ...


Network Neutrality: Competition, Innovation, And Nondiscriminatory Access, Tim Wu Jan 2006

Network Neutrality: Competition, Innovation, And Nondiscriminatory Access, Tim Wu

Faculty Scholarship

The best proposals for network neutrality rules are simple. They ban abusive behavior like tollboothing and outright blocking and degradation. And they leave open legitimate network services that the Bells and Cable operators want to provide, such as offering cable television services and voice services along with a neutral internet offering. They are in line with a tradition of protecting consumer's rights on networks whose instinct is just this: let customers use the network as they please. No one wants to deny companies the right to charge for their services and charge consumers more if they use more. But ...


Controlling Shareholders And Corporate Governance: Complicating The Comparative Taxonomy, Ronald J. Gilson Jan 2006

Controlling Shareholders And Corporate Governance: Complicating The Comparative Taxonomy, Ronald J. Gilson

Faculty Scholarship

Corporate governance scholarship has shifted focus in recent years from hostile takeovers, which occur primarily in the widely held shareholder systems of the United States and the United Kingdom, to the comparative merits of the "controlling shareholder" systems that are the norm most everywhere else in the world. In this emerging debate, the simple dichotomy between controlling shareholder systems and widely held shareholder systems that has largely dominated the discourse is too coarse to allow a deeper understanding of the diversity of ownership structures in different national capital markets and their policy implications. In this Article, Professor Ronald Gilson seeks ...


After Confidentiiality: Rethinking The Professional Responsibilities Of The Business Lawyer, William H. Simon Jan 2006

After Confidentiiality: Rethinking The Professional Responsibilities Of The Business Lawyer, William H. Simon

Faculty Scholarship

Recent business scandals and the regulatory responses to them raise basic questions about the role of the business lawyer. Lawyers were major participants in Enron and in similar controversies over corporate disclosure. Lawyers have also been key players in the corporate tax shelter industry. In both instances, their conduct has prompted federal regulations that repudiate to an unprecedented degree the bar's traditional understanding of its structure and obligations.

The provision of the Sarbanes-Oxley Act of 2002 mandating "up-theladder" reporting by public corporation counsel was the first federal statute in American history to regulate lawyers directly and broadly. 1 The ...


The Ethics Teacher's Bittersweet Revenge: Virtue And Risk Management, William H. Simon Jan 2006

The Ethics Teacher's Bittersweet Revenge: Virtue And Risk Management, William H. Simon

Faculty Scholarship

Insurance companies have come to play a role in professional responsibility compliance that rivals that of courts and disciplinary agencies. The insurers, however, depart from the judicial perspective of the traditional enforcement agencies. Instead, they take the risk management perspective that Anthony Alfieri describes.1

I agree with Alfieri that risk management poses real dangers of cynicism and Babbittry. Nevertheless, I also see more upside than he does. The new perspective is valuable, not just as a strategy for attracting student attention, but as an antidote to real and basic deficiencies in mainstream ethics teaching and traditional professional practice. In ...


Bankruptcy Reform And The 'Sweat Box' Of Credit Card Debt, Ronald J. Mann Jan 2006

Bankruptcy Reform And The 'Sweat Box' Of Credit Card Debt, Ronald J. Mann

Faculty Scholarship

Those that backed the 2005 bankruptcy reform law argued that it would protect creditors from consumer abuse and lack of financial responsibility. The substantial increase in the number of bankruptcies over the last decade combined with the perception of system-wide abuse apparently convinced legislators from both political parties that the backers had a point. Thus, Congress enacted amendments to the Bankruptcy Code that - if effective - would fundamentally change the core policies underlying the consumer bankruptcy system in this country. The rhetoric surrounding the reform debates pressed the idea that if borrowers had to repay more of their debts, creditors would ...


Going-Private Decisions And The Sarbanes-Oxley Act Of 2002: A Cross-Country Analysis, Ehud Kamar, Pinar Karaca-Mandic, Eric L. Talley Jan 2006

Going-Private Decisions And The Sarbanes-Oxley Act Of 2002: A Cross-Country Analysis, Ehud Kamar, Pinar Karaca-Mandic, Eric L. Talley

Faculty Scholarship

This article investigates whether the passage and the implementation of the Sarbanes-Oxley Act of 2002 (SOX) drove firms out of the public capital market. To control for other factors affecting exit decisions, we examine the post-SOX change in the propensity of public American targets to be bought by private acquirers rather than public ones with the corresponding change for foreign targets, which were outside the purview of SOX. Our findings are consistent with the hypothesis that SOX induced small firms to exit the public capital market during the year following its enactment. In contrast, SOX appears to have had little ...