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Full-Text Articles in Business

Global Standards For Securities Holding Infrastructures: A Soft Law/Fintech Model For Reform, Charles W. Mooney Jr. Jan 2019

Global Standards For Securities Holding Infrastructures: A Soft Law/Fintech Model For Reform, Charles W. Mooney Jr.

Faculty Scholarship at Penn Law

Intermediaries such as stockbrokers and banks are ubiquitous in global securities markets, playing essential roles in markets, including trading, settling trades, and post-settlement holding of securities. This essay focuses in particular on the roles of intermediaries in securities holding systems. It proposes an IOSCO-led “soft-law-to-hard-law” approach to the development of Global Standards for reforms to these holding systems. States would be expected to adopt “hard law” reforms through statutory and regulatory adjustments to securities holding systems. The reforms would embrace not only important standards of a functional and regulatory nature, but also holistic standards relating to the private law, insolvency ...


Lowering Legal Barriers To Rpki Adoption, Christopher S. Yoo, David A. Wishnick Jan 2019

Lowering Legal Barriers To Rpki Adoption, Christopher S. Yoo, David A. Wishnick

Faculty Scholarship at Penn Law

Across the Internet, mistaken and malicious routing announcements impose significant costs on users and network operators. To make routing announcements more reliable and secure, Internet coordination bodies have encouraged network operators to adopt the Resource Public Key Infrastructure (“RPKI”) framework. Despite this encouragement, RPKI’s adoption rates are low, especially in North America.

This report presents the results of a year-long investigation into the hypothesis—widespread within the network operator community—that legal issues pose barriers to RPKI adoption and are one cause of the disparities between North America and other regions of the world. On the basis of interviews ...


Fiduciary Blind Spot: The Failure Of Institutional Investors To Prevent The Illegitimate Use Of Working Americans' Savings For Corporate Political Spending, Leo E. Strine Jr. Dec 2018

Fiduciary Blind Spot: The Failure Of Institutional Investors To Prevent The Illegitimate Use Of Working Americans' Savings For Corporate Political Spending, Leo E. Strine Jr.

Faculty Scholarship at Penn Law

For decades, American workers have been subjected to increasing pressure to become forced capitalists, in the sense that to provide for retirement for themselves, and to pay for college for their children, they must turn part of their income every month over to mutual funds who participate in 401(k) and 529 programs. These “Worker Investors” save for the long term, often hold portfolios that are a proxy for the entire economy, and depend on the economy’s ability to generate good jobs and sustainable growth in order for them to be able to have economic security. In recent years ...


The Problem Of Sunsets, Jill E. Fisch, Steven Davidoff Solomon Dec 2018

The Problem Of Sunsets, Jill E. Fisch, Steven Davidoff Solomon

Faculty Scholarship at Penn Law

An increasing percentage of corporations are going public with dual class stock in which the shares owned by the founders or other corporate insiders have greater voting rights than the shares sold to public investors. Some commentators have criticized the dual class structure as unfair to public investors by reducing the accountability of insiders; others have defended the value of dual class in encouraging innovation by providing founders with insulation from market pressure that enables them to pursue their idiosyncratic vision.

The debate over whether dual class structures increase or decrease corporate value is, to date, unresolved. Empirical studies have ...


Bankruptcy For Banks: A Tribute (And Little Plea) To Jay Westbrook, David A. Skeel Jr. Oct 2018

Bankruptcy For Banks: A Tribute (And Little Plea) To Jay Westbrook, David A. Skeel Jr.

Faculty Scholarship at Penn Law

In this brief essay, to be included in a book celebrating the work of Jay Westbrook, I begin by surveying Jay’s wide-ranging contributions to bankruptcy scholarship. Jay’s functional analysis has had a profound effect on scholars’ understanding of key issues in domestic bankruptcy law, and Jay has been the leading scholarly figure on cross-border insolvency. After surveying Jay’s influence, I turn to the topic at hand: a proposed reform that would facilitate the use of bankruptcy to resolve the financial distress of large financial institutions. Jay has been a strong critic of this legislation, arguing that financial ...


Making Sustainability Disclosure Sustainable, Jill E. Fisch Sep 2018

Making Sustainability Disclosure Sustainable, Jill E. Fisch

Faculty Scholarship at Penn Law

Sustainability is receiving increasing attention from issuers, investors and regulators. The desire to understand issuer sustainability practices and their relationship to economic performance has resulted in a proliferation of sustainability disclosure regimes and standards. The range of approaches to disclosure, however, limit the comparability and reliability of the information disclosed. The Securities & Exchange Commission (SEC) has solicited comment on whether to require expanded sustainability disclosures in issuer’s periodic financial reporting, and investors have communicated broad-based support for such expanded disclosures, but, to date, the SEC has not required general sustainability disclosure.

This Article argues that claims about the relationship ...


The Tao Of The Dao: Taxing An Entity That Lives On A Blockchain, David J. Shakow Aug 2018

The Tao Of The Dao: Taxing An Entity That Lives On A Blockchain, David J. Shakow

Faculty Scholarship at Penn Law

In this report, Shakow explains how a decentralized autonomous organization functions and interacts with the U.S. tax system and presents the many tax issues that these structures raise. The possibility of using smart contracts to allow an entity to operate totally autonomously on a blockchain platform seems attractive. However, little thought has been given to how such an entity can comply with the requirements of a tax system. The DAO, the first major attempt to create such an organization, failed because of a programming error. If successful examples proliferate in the future, tax authorities will face significant problems in ...


The Salience Theory Of Consumer Financial Regulation, Natasha Sarin Aug 2018

The Salience Theory Of Consumer Financial Regulation, Natasha Sarin

Faculty Scholarship at Penn Law

Prior to the financial crisis, banks’ fee income was their fastest-growing source of revenue. This revenue was often generated through nefarious bank practices (e.g., ordering overdraft transactions for maximal fees). The crisis focused popular attention on the extent to which current regulatory tools failed consumers in these markets, and policymakers responded: A new Consumer Financial Protection Bureau was tasked with monitoring consumer finance products, and some of the earliest post-crisis financial reforms sought to lower consumer costs. This Article is the first to empirically evaluate the success of the consumer finance reform agenda by considering three recent price regulations ...


Shareholder Collaboration, Jill E. Fisch, Simone M. Sepe Jul 2018

Shareholder Collaboration, Jill E. Fisch, Simone M. Sepe

Faculty Scholarship at Penn Law

Two models dominate the debate on the theory of the firm. Under the management-power model, decision-making power exclusively belongs to corporate insiders (officers and directors). The competing shareholder-power model contemplates increasing shareholder power to limit managerial authority. Both models are focused on managerial agency costs and address the appropriate allocation of power between insiders and shareholders to minimize these costs. Both models also assume that insiders and shareholders are engaged in a competitive struggle for corporate power.

Corporate practice has moved on, however. Increasingly, the insider-shareholder dynamic is collaborative, not competitive. This Article traces the development of insider-shareholder collaboration and ...


Behavioral Finance, Decumulation And The Regulatory Strategy For Robo-Advice, Tom Baker, Benedict Dellaert Jul 2018

Behavioral Finance, Decumulation And The Regulatory Strategy For Robo-Advice, Tom Baker, Benedict Dellaert

Faculty Scholarship at Penn Law

This working paper surveys the decumulation services offered by investment robo-advisors as a case study with which to examine regulatory and market structure issues raised by automated financial advice. We provide a short introduction to decumulation, describing some of the uncertainties involved in identifying optimal decumulation strategies and sketching a few of the ‘rules of thumb’ that financial advisors have developed in this area in the face of this uncertainty. Next we describe behavioral effects that could inhibit consumers from following an optimal decumulation strategy, concluding that, left to their own devices, consumers are likely to make sub-optimal decumulation decisions ...


How Liability Insurers Protect Patients And Improve Safety, Tom Baker, Charles Silver Jul 2018

How Liability Insurers Protect Patients And Improve Safety, Tom Baker, Charles Silver

Faculty Scholarship at Penn Law

Forty years after the publication of the first systematic study of adverse medical events, there is greater access to information about adverse medical events and increasingly widespread acceptance of the view that patient safety requires more than vigilance by well-intentioned medical professionals. In this essay, we describe some of the ways that medical liability insurance organizations contributed to this transformation, and we catalog the roles that those organizations play in promoting patient safety today. Whether liability insurance in fact discourages providers from improving safety or encourages them to protect patients from avoidable harms is an empirical question that a survey ...


Coin-Operated Capitalism, Shaanan Cohney, David A. Hoffman, Jeremy Sklaroff, David A. Wishnick Jul 2018

Coin-Operated Capitalism, Shaanan Cohney, David A. Hoffman, Jeremy Sklaroff, David A. Wishnick

Faculty Scholarship at Penn Law

This Article presents the legal literature’s first detailed analysis of the inner workings of Initial Coin Offerings. We characterize the ICO as an example of financial innovation, placing it in kinship with venture capital contracting, asset securitization, and (obviously) the IPO. We also take the form seriously as an example of technological innovation, where promoters are beginning to effectuate their promises to investors through computer code, rather than traditional contract. To understand the dynamics of this shift, we first collect contracts, “white papers,” and other contract-like documents for the fifty top-grossing ICOs of 2017. We then analyze how such ...


Passive Investors, Jill E. Fisch, Asaf Hamdani, Steven Davidoff Solomon Jun 2018

Passive Investors, Jill E. Fisch, Asaf Hamdani, Steven Davidoff Solomon

Faculty Scholarship at Penn Law

The increasing percentage of the modern capital markets owned by passive investors – index funds and ETFs – has received extensive media and academic attention. This growing ownership concentration as well as the potential power of passive investors to affect both corporate governance and operational decision-making at their portfolio firms has led some commentators to call for passive investors to be subject to increased regulation and even disenfranchisement. These reactions fail to account for the institutional structure of passive investors and the market context in which they operate. Specifically, this literature assumes that passive investors compete primarily on cost and that, as ...


Marginal Rates Under The Tcja, Reed Shuldiner Jun 2018

Marginal Rates Under The Tcja, Reed Shuldiner

Faculty Scholarship at Penn Law

In this report, Shuldiner argues that although the Tax Cuts and Jobs Act appears to offer an across-the board reduction in individual marginal tax rates augmented by an additional 20 percent reduction in rates on unincorporated business income, the situation is significantly more complex.


Bankruptcy’S Uneasy Shift To A Contract Paradigm, David A. Skeel Jr., George Triantis Jun 2018

Bankruptcy’S Uneasy Shift To A Contract Paradigm, David A. Skeel Jr., George Triantis

Faculty Scholarship at Penn Law

The most dramatic development in twenty-first century bankruptcy practice has been the increasing use of contracts to shape the bankruptcy process. To explain the new contract paradigm—our principal objective in this Article-- we begin by examining the structure of current bankruptcy law. Although the Bankruptcy Code of 1978 has long been viewed as mandatory, its voting and cramdown rules, among others, invite considerable contracting. The emerging paradigm is asymmetric, however. While the Code and bankruptcy practice allow for ex post contracting, ex ante contracts are viewed with suspicion.

We next use contract theory to assess the two modes of ...


Regulation And The Marginalist Revolution, Herbert J. Hovenkamp May 2018

Regulation And The Marginalist Revolution, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

The marginalist revolution in economics became the foundation for the modern regulatory State with its “mixed” economy. Marginalism, whose development defines the boundary between classical political economy and neoclassical economics, completely overturned economists’ theory of value. It developed in the late nineteenth century in England, the Continent and the United States. For the classical political economists, value was a function of past averages. One good example is the wage-fund theory, which saw the optimal rate of wages as a function of the firm’s ability to save from previous profits. Another is the theory of corporate finance, which assessed a ...


Capturing Regulatory Agendas?: An Empirical Study Of Industry Use Of Rulemaking Petitions, Daniel E. Walters Mar 2018

Capturing Regulatory Agendas?: An Empirical Study Of Industry Use Of Rulemaking Petitions, Daniel E. Walters

Faculty Scholarship at Penn Law

A great deal of skepticism toward administrative agencies stems from the widespread perception that they excessively or even exclusively cater to business interests. From the political right comes the accusation that business interests use regulation to erect barriers to entry that protect profits and stifle competition. From the political left comes the claim that business interests use secretive interactions with agencies to erode and negate beneficial regulatory programs. Regulatory “capture” theory elevates many of these claims to the status of economic law. Despite growing skepticism about capture theory in academic circles, empirical studies of business influence and capture return ambiguous ...


Toward A Horizontal Fiduciary Duty In Corporate Law, Asaf Eckstein, Gideon Parchomovsky Feb 2018

Toward A Horizontal Fiduciary Duty In Corporate Law, Asaf Eckstein, Gideon Parchomovsky

Faculty Scholarship at Penn Law

Fiduciary duty is arguably the single most important aspect of our corporate law system. It consists of two distinct sub-duties—a duty of care and a duty of loyalty—and it applies to all directors and corporate officers. Yet, under extant law, the duty only applies vertically, in the relationship between directors and corporate officers and the firm. At present, there exists no horizontal fiduciary duty: directors and corporate officers owe no fiduciary duty to each other. Consequently, if one of them fails her peers, they cannot seek direct legal recourse against her even when they stand to suffer significant ...


Anticompetitive Mergers In Labor Markets, Ioana Marinescu, Herbert J. Hovenkamp Feb 2018

Anticompetitive Mergers In Labor Markets, Ioana Marinescu, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

Mergers of competitors are conventionally challenged under the federal antitrust laws when they threaten to lessen competition in some product or service market in which the merging firms sell. Mergers can also injure competition in markets where the firms purchase. Although that principle is widely recognized, very few litigated cases have applied merger law to buyers. This article concerns an even more rarefied subset, and one that has barely been mentioned. Nevertheless, its implications are staggering. Some mergers may be unlawful because they injure competition in the labor market by enabling the post-merger firm anticompetitively to suppress wages or salaries ...


Dual Residents: A Sur-Reply To Zelinsky, Michael S. Knoll, Ruth Mason Jan 2018

Dual Residents: A Sur-Reply To Zelinsky, Michael S. Knoll, Ruth Mason

Faculty Scholarship at Penn Law

In this article, we respond to Professor Zelinsky’s criticism of our arguments regarding the constitutionality of New York’s tax residence rule. We argue that the Supreme Court’s decision in Wynne requires reconsideration of the New York Court of Appeal’s decision in Tamagni.


Digital Media And Unionization In The “Guilded" Age: How Labor Organizations In The Entertainment Industry Are Swimming Against The Current Of Streaming New Media And Technology, Jacqueline G.H. Kim Jan 2018

Digital Media And Unionization In The “Guilded" Age: How Labor Organizations In The Entertainment Industry Are Swimming Against The Current Of Streaming New Media And Technology, Jacqueline G.H. Kim

Prize Winning Papers

No abstract provided.


Defending Actions Against Corporate Clients Of Private Security Companies, Andrew L. Pickens Jan 2018

Defending Actions Against Corporate Clients Of Private Security Companies, Andrew L. Pickens

University of Pennsylvania Journal of Business Law

No abstract provided.


Resurrecting “A Comprehensive Charter Of Economic Liberty”: The Latent Power Of The Federal Trade Commission, Sandeep Vaheesan Jan 2018

Resurrecting “A Comprehensive Charter Of Economic Liberty”: The Latent Power Of The Federal Trade Commission, Sandeep Vaheesan

University of Pennsylvania Journal of Business Law

No abstract provided.


Mutual Funds And The Regulatory Capture Of The Sec, Stewart L. Brown Jan 2018

Mutual Funds And The Regulatory Capture Of The Sec, Stewart L. Brown

University of Pennsylvania Journal of Business Law

No abstract provided.


Why Don’T General Counsels Stop Corporate Crime?, S. Burcu Avci, H. Nejat Seyhun Jan 2018

Why Don’T General Counsels Stop Corporate Crime?, S. Burcu Avci, H. Nejat Seyhun

University of Pennsylvania Journal of Business Law

No abstract provided.


Will The Supreme Court Agree With The Nlrb That Pre-Dispute Employment Arbitration Provisions Containing Class And Collective Action Waivers In Both Judicial And Arbitral Forums Violate The National Labor Relations Act – Whether There Is An Opt-Out Or Not?, Christine Neylon O'Brien Jan 2018

Will The Supreme Court Agree With The Nlrb That Pre-Dispute Employment Arbitration Provisions Containing Class And Collective Action Waivers In Both Judicial And Arbitral Forums Violate The National Labor Relations Act – Whether There Is An Opt-Out Or Not?, Christine Neylon O'Brien

University of Pennsylvania Journal of Business Law

No abstract provided.


Redefining And Regulating The New Sharing Economy, Inara Scott, Elizabeth Brown Jan 2018

Redefining And Regulating The New Sharing Economy, Inara Scott, Elizabeth Brown

University of Pennsylvania Journal of Business Law

No abstract provided.


Progressive Antitrust, Herbert J. Hovenkamp Jan 2018

Progressive Antitrust, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

Several American political candidates and administrations have both run and served under the “progressive” banner for more than a century, right through the 2016 election season. For the most part these have pursued interventionist antitrust policies, reflecting a belief that markets are fragile and in need of repair, that certain interest groups require greater protection, or in some cases that antitrust policy is an extended arm of regulation. This paper argues that most of this progressive antitrust policy was misconceived, including that reflected in the 2016 antitrust plank of the Democratic Party. The progressive state is best served by a ...


Governance By Contract: The Implications For Corporate Bylaws, Jill E. Fisch Jan 2018

Governance By Contract: The Implications For Corporate Bylaws, Jill E. Fisch

Faculty Scholarship at Penn Law

Boards and shareholders are increasing using charter and bylaw provisions to customize their corporate governance. Recent examples include forum selection bylaws, majority voting bylaws and advance notice bylaws. Relying on the contractual conception of the corporation, Delaware courts have accorded substantial deference to board-adopted bylaw provisions, even those that limit shareholder rights.

This Article challenges the rationale for deference under the contractual approach. With respect to corporate bylaws, the Article demonstrates that shareholder power to adopt and amend the bylaws is, under Delaware law, more limited than the board’s power to do so. As a result, shareholders cannot effectively ...


Reasonable Patent Exhaustion, Herbert J. Hovenkamp Jan 2018

Reasonable Patent Exhaustion, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

A lengthy tug of war between the Supreme Court and the Federal Circuit Court of Appeals may have ended when the Supreme Court held that the sale of a patented article exhausts the patentee seller’s rights to enforce restrictions on that article through patent infringement suits. Further, reversing the Federal Circuit, the parties cannot bargain around this rule through the seller’s specification of conditions stated at the time of sale, no matter how clear. No inquiry need be made into the patentee’s market power, anticompetitive effects, or other types of harms, whether enforcement of the condition is ...