Business Law, Public Responsibility, and Ethics Commons^™

The Exit Structure Of Venture Capital, D. Gordon Smith

Faculty Scholarship

Venture capital contracts contain extensive provisions regulating exit by the venture capitalists. In this Article, Professor Smith employs financial contracting theory in conjunction with original data collected from 367 venture-backed companies to analyze these exit provisions. He concludes that the combination of exit provisions in a typical venture capital relationship serves to lock venture capitalists into the investment during the initial stage. In later stages of the relationship, the venture capitalists acquire increasing control over exit by securing additional seats on the board of directors and by obtaining contractual exit rights. The result is a sophisticated transfer of control from …

Spare The Rod, Spoil The Director? Revitalizing Directors' Fiduciary Duty Through Legal Liability, Lisa M. Fairfax

Faculty Scholarship

It appears that our society has tacitly agreed to spare corporate directors any significant legal liability—which includes both financial and incarceration—for failing to perform their duties as board members. Thus, over the last twenty years, there has been a virtual elimination of legal liability—particularly in the form of financial penalties—for directors who breach their fiduciary duty of care. This is true despite the fact that we entrust directors with the awesome responsibility of monitoring all of America's corporations as well as the officers and agents within those corporations. More surprisingly, this tacit agreement against legal liability for directors has persisted …

The Exit Structure Of Strategic Alliances, D. Gordon Smith

Faculty Scholarship

Today, many biotechnology firms use strategic alliances to contract with other companies. This article contends that the governance structure of these alliances - specifically, the contractual board - provides an integrated restraint on opportunism. While an alliance agreement's exit structure could provide a check on opportunism by allowing the parties to exit at will, such exit provisions also can be used opportunistically. Most alliance agreements, therefore, provide for contractual lock in of the alliance partners, with only limited means of exit. Lock in, of course, raises its own concerns, and the contractual board - which typically is composed of representatives …

A New Interpretation Of The Contemporaneous Ownership Requirement In Shareholder Derivative Suits: In Re Bank Of New York Derivative Litigation And The Elimination Of The Continuing Wrong Doctrine, Terence L. Robinson Jr.

BYU Law Review

No abstract provided.

The Unique Benefits Of Treating Personal Goodwill As Property In Corporate Acquisitions, Darian M. Ibrahim

Faculty Publications

Corporate acquisition talks may not get far if buyer and seller disagree over transaction structure, which can have significant after-tax effects. But the parties may have overlooked an item that, due to its potential tax treatment, could be the key to facilitating the acquisition. That item is the selling shareholder's "personal goodwill."

Personal goodwill exists when the shareholder's reputation, expertise, or contacts gives the corporation its intrinsic value. It is most likely to be found in closely held businesses, especially those that are technical, specialized, orprofessional in nature or have few customers and suppliers. If personal goodwill is treated as …

The New Dividend Puzzle, William W. Bratton

All Faculty Scholarship

No abstract provided.

How Do Corporations Play Politics? The Fedex Story, Jill E. Fisch

All Faculty Scholarship

Corporate political activity has been the subject of federal regulation since 1907, and the restrictions on corporate campaign contributions and other political expenditures continue to increase. Most recently, Congress banned soft money donations in the Bipartisan Campaign Reform Act of 2002 ("BCRA"), a ban upheld by the Supreme Court in McConnell v. FEC. Significantly, although the omnibus BCRA clearly was not directed exclusively at corporations, the Supreme Court began its lengthy opinion in McConnell by referencing and endorsing the efforts of Elihu Root, more than a century ago, to prohibit corporate political contributions. Repeatedly, within the broad context of campaign …

Corporate Shaming Revisited: An Essay For Bill Klein, David A. Skeel Jr.

All Faculty Scholarship

No abstract provided.

Institutional Competition To Regulate Corporations: A Comment On Macey, Jill E. Fisch

All Faculty Scholarship

No abstract provided.

Do Institutions Matter? The Impact Of The Lead Plaintiff Provision Of The Private Securities Litigation Reform Act, Stephen Choi, Jill E. Fisch, A. C. Pritchard

All Faculty Scholarship

When Congress enacted the Private Securities Litigation Reform Act in 1995 (“PSLRA”), the Act’s “lead plaintiff” provision was the centerpiece of its efforts to increase investor control over securities fraud class actions. The lead plaintiff provision alters the balance of power between investors and class counsel by creating a presumption that the investor with the largest financial stake in the case will serve as lead plaintiff. The lead plaintiff then chooses class counsel and, at least in theory, negotiates the terms of counsel’s compensation.

Congress’s stated purpose in enacting the lead plaintiff provision was to encourage institutional investors—pension funds, mutual …

Welfare, Dialectic, And Mediation In Corporate Law, William W. Bratton

All Faculty Scholarship

No abstract provided.