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Full-Text Articles in Business Law, Public Responsibility, and Ethics

Centros, California’S “Women On Boards” Statute And The Scope Of Regulatory Competition, Jill E. Fisch, Steven Davidoff Solomon May 2019

Centros, California’S “Women On Boards” Statute And The Scope Of Regulatory Competition, Jill E. Fisch, Steven Davidoff Solomon

Faculty Scholarship at Penn Law

We examine the Centros decision through the lens of SB 826 – the California statute mandating a minimum number of women on boards. SB 826, like the Centros decision, raises questions about the scope of the internal affairs doctrine and its role in encouraging regulatory competition. Despite the claim that US corporate law is characterized by regulatory competition, in the US, the internal affairs doctrine has led to less variation in corporate law than in Europe. We theorize that this is due to the shareholder primacy norm in US corporate law which results in the internal affairs doctrine focusing on matters ...


Making Sustainability Disclosure Sustainable, Jill E. Fisch Apr 2019

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 Shifting Tides Of Merger Litigation, Matthew D. Cain, Jill E. Fisch, Steven Davidoff Solomon, Randall S. Thomas Jan 2018

The Shifting Tides Of Merger Litigation, Matthew D. Cain, Jill E. Fisch, Steven Davidoff Solomon, Randall S. Thomas

Faculty Scholarship at Penn Law

In 2015, Delaware made several important changes to its laws concerning merger litigation. These changes, which were made in response to a perception that levels of merger litigation were too high and that a substantial proportion of merger cases were not providing value, raised the bar, making it more difficult for plaintiffs to win a lawsuit challenging a merger and more difficult for plaintiffs’ counsel to collect a fee award.

We study what has happened in the courts in response to these changes. We find that the initial effect of the changes has been to decrease the volume of merger ...


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 ...


Corporate Outsourcing To Take Advantage Of Cheap Labor In Developing Countries, Cecily Schenimann Jan 2018

Corporate Outsourcing To Take Advantage Of Cheap Labor In Developing Countries, Cecily Schenimann

Senior Honors Theses

Corporate outsourcing is a common practice for many large corporations, and a primary reason that corporations outsource is financial: production in other countries, especially those that are developing is significantly less expensive. There are various reasons corporations use outsourcing and this choice often results in subpar and unhealthy labor conditions for those individuals working in developing countries. Reviews of China, Bangladesh, and El Salvador reveal that operations in developing countries often result in harmful working atmospheres. A call for increased corporate responsibility and accountability for corporations who choose to take their manufacturing and production elsewhere, but specifically to developing nations ...


Appraising Merger Efficiencies, Herbert J. Hovenkamp Jan 2017

Appraising Merger Efficiencies, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

Mergers of business firms violate the antitrust laws when they threaten to lessen competition, which generally refers to a price increase resulting from a reduction in output. However, a merger that threatens competition may also enable the post-merger firm to reduce its costs or improve its product. Attitudes toward mergers are heavily driven by assumptions about efficiency gains. If mergers of competitors never produced efficiency gains but simply reduced the number of competitors, a strong presumption against them would be warranted. We tolerate most mergers because of a background, highly generalized belief that most or at least many produce cost ...


The Bylaw Puzzle In Delaware Corporate Law, David A. Skeel Jr. Jan 2017

The Bylaw Puzzle In Delaware Corporate Law, David A. Skeel Jr.

Faculty Scholarship at Penn Law

In less than a decade, Delaware’s legislature has overruled its courts and reshaped Delaware corporate law on two different occasions, with proxy access bylaws in 2009 and with shareholder litigation bylaws in 2015. Having two dramatic interventions in quick succession would be puzzling under any circumstances. The interventions are doubly puzzling because with proxy access, Delaware’s legislature authorized the use of bylaws or charter provisions that Delaware’s courts had banned; while with shareholder litigation, it banned bylaws or charter provisions that the courts had authorized. This Article attempts to unravel the puzzle.

I start with corporate law ...


Corporate Power Is Corporate Purpose I: Evidence From My Hometown, Leo E. Strine Jr. Dec 2016

Corporate Power Is Corporate Purpose I: Evidence From My Hometown, Leo E. Strine Jr.

Faculty Scholarship at Penn Law

This paper is the first in a series considering a rather tired argument in corporate governance circles, that corporate laws that give only rights to stockholders somehow implicitly empower directors to regard other constituencies as equal ends in governance. By continuing to suggest that corporate boards themselves are empowered to treat the best interests of other corporate constituencies as ends in themselves, no less important than stockholders, scholars and commentators obscure the need for legal protections for other constituencies and for other legal reforms that give these constituencies the means to more effectively protect themselves.

Using recent events in the ...


Corporate Power Is Corporate Purpose Ii: An Encouragement For Future Consideration From Professors Johnson And Millon, Leo E. Strine Jr. Oct 2016

Corporate Power Is Corporate Purpose Ii: An Encouragement For Future Consideration From Professors Johnson And Millon, Leo E. Strine Jr.

Faculty Scholarship at Penn Law

This paper is the second in a series considering the argument that corporate laws that give only rights to stockholders somehow implicitly empower directors to regard other constituencies as equal ends in governance. This piece was written as part of a symposium honoring the outstanding work of Professors Lyman Johnson and David Millon, and it seeks to encourage Professors Johnson and Millon, as proponents of the view that corporations have no duty to make stockholder welfare the end of corporate law, to focus on the reality that corporate power translates into corporate purpose.

Drawing on examples of controlled companies that ...


The Arc And Architecture Of Private Enforcement Regimes In The United States And Europe: A View Across The Atlantic, Jason Rathod, Sandeep Veheesan May 2016

The Arc And Architecture Of Private Enforcement Regimes In The United States And Europe: A View Across The Atlantic, Jason Rathod, Sandeep Veheesan

The University of New Hampshire Law Review

The United States and Europe have traditionally taken very different approaches to the regulation of harmful conduct. Previously, European nations relied almost entirely on the public enforcement of laws, whereas the United States relied on a mix of public and private actors. In the United States, private rights of action have played a central role deterring illegal conduct—and, in fact, provided greater deterrence than public enforcers in some areas of law. They have also allowed injured parties to obtain compensation. Despite their very different histories, the private enforcement systems in the United States and Europe are showing signs of ...


Whistleblowers: Loyal Corporate Employee Or Disloyal Employee?, Debra Wroge Nov 2015

Whistleblowers: Loyal Corporate Employee Or Disloyal Employee?, Debra Wroge

Communication and Theater Association of Minnesota Journal

Whistleblowers have received much media attention and scrutiny during the last decade due to high-profile corporate scandals and reports of unlawful activities in government and private sector corporations. There is a changing trend in the perception of whistleblowers from troublemakers to loyal employee. Interviews, based on a FBI whistleblower case, were conducted with eight employees in a Fortune 200 company. Results of qualitative analysis and findings reported in this paper support the perception of whistleblowers as loyal employees who have a strong sense of right and wrong, and are committed to calling attention to wrongdoing. The solution proposed is a ...


The Compensation Committee Process, Dana Hermanson, James Tompkins, Rajaram Veliyath, Zhongxia Ye Mar 2015

The Compensation Committee Process, Dana Hermanson, James Tompkins, Rajaram Veliyath, Zhongxia Ye

James Tompkins

The article investigates the process used in executive compensation committees to meet their responsibilities, particularly noting the lack of research into the committee process itself. It discusses committee's areas of responsibility, approaches to meeting their responsibilities, and committee operational issues through the use of interviews with compensation committee members. It addresses themes of the interviews including achieving fair compensation, promoting the legitimacy of the committee's decisions, and monitoring the committee for appropriate behaviors. It comments on the tension between executive committees, shareholders, organizational management, and stakeholders.


The Mess At Morgan: Risk, Incentives And Shareholder Empowerment, Jill E. Fisch Jan 2015

The Mess At Morgan: Risk, Incentives And Shareholder Empowerment, Jill E. Fisch

Faculty Scholarship at Penn Law

The financial crisis of 2008 focused increasing attention on corporate America and, in particular, the risk-taking behavior of large financial institutions. A growing appreciation of the “public” nature of the corporation resulted in a substantial number of high profile enforcement actions. In addition, demands for greater accountability led policymakers to attempt to harness the corporation’s internal decision-making structure, in the name of improved corporate governance, to further the interest of non-shareholder stakeholders. Dodd-Frank’s advisory vote on executive compensation is an example.

This essay argues that the effort to employ shareholders as agents of public values and, thereby, to ...


Rediscovering Corporate Governance In Bankruptcy, David A. Skeel Jr. Jan 2015

Rediscovering Corporate Governance In Bankruptcy, David A. Skeel Jr.

Faculty Scholarship at Penn Law

In this Essay on Lynn LoPucki and Bill Whitford’s corporate reorganization project, written for a symposium honoring Bill Whitford, I begin by very briefly describing its historical antecedents. The project draws on the insights and perspectives of two closely intertwined traditions: the legal realism of 1930s, whose exemplars included William Douglas and other participants in the SEC study; and the law in action movement at the University of Wisconsin. In Section II, I briefly survey the key contributions of the corporate governance project, which punctured the then-conventional wisdom about the treatment of shareholders in bankruptcy, managers’ principal allegiance, and ...


Sustainability, Stakeholder Perspective And Corporate Success: A Paradigm Shift, Eunsup Daniel Shim Oct 2014

Sustainability, Stakeholder Perspective And Corporate Success: A Paradigm Shift, Eunsup Daniel Shim

WCOB Faculty Publications

In this paper, I argue that the corporation can ‘do well by doing good’ in the long run if they take the stakeholder perspective. Corporations narrowly focused on short-term profits, can make business decisions that could be detrimental to long-run sustainability. For example, firms might not be making enough investments in Research and Development, producing potentially harmful products, and might not pay enough attention to their corporate image. The stakeholder perspective promotes ethical business decision-making and focuses on long-run sustainability by emphasizing a stable customer base, employee well-being, a better corporate image, and corporate social responsibility. Ethical decision-making includes a ...


Corporate Governance And Social Welfare In The Common Law World, David A. Skeel Jr. Jan 2014

Corporate Governance And Social Welfare In The Common Law World, David A. Skeel Jr.

Faculty Scholarship at Penn Law

The newest addition to the spate of recent theories of comparative corporate governance is Corporate Governance in the Common-Law World: The Political Foundations of Shareholder Power, an important new book by Christopher Bruner. Focusing on the U.S., the U.K., Canada and Australia, Bruner argues that the robustness of the country’s social welfare system is the key determinant of the extent to which its corporate governance is shareholder-centered. This explains why corporate governance is so shareholder-oriented in the United Kingdom, which has universal healthcare and generous unemployment benefits, while shareholders’ powers are more attenuated in the United States ...


Remic Tax Enforecement As Financial-Market Regulator, Bradley T. Borden, David J. Reiss Nov 2013

Remic Tax Enforecement As Financial-Market Regulator, Bradley T. Borden, David J. Reiss

Bradley T. Borden

Lawmakers, prosecutors, homeowners, policymakers, investors, news media, scholars and other commentators have examined, litigated, and reported on numerous aspects of the 2008 Financial Crisis and the role that residential mortgage-backed securities (RMBS) played in that crisis. Big banks create RMBS by pooling mortgage notes into trusts and selling interests in those trusts as RMBS. Absent from prior work related to RMBS securitization is the tax treatment of RMBS mortgage-note pools and the critical role tax enforcement should play in ensuring the integrity of mortgage-note securitization.

This Article is the first to examine federal tax aspects of RMBS mortgage-note pools formed ...


Voice Without Say: Why Capital-Managed Firms Aren’T (Genuinely) Participatory, Justin Schwartz Aug 2013

Voice Without Say: Why Capital-Managed Firms Aren’T (Genuinely) Participatory, Justin Schwartz

Justin Schwartz

Why are most capitalist enterprises of any size organized as authoritarian bureaucracies rather than incorporating genuine employee participation that would give the workers real authority? Even firms with employee participation programs leave virtually all decision-making power in the hands of management. The standard answer is that hierarchy is more economically efficient than any sort of genuine participation, so that participatory firms would be less productive and lose out to more traditional competitors. This answer is indefensible. After surveying the history, legal status, and varieties of employee participation, I examine and reject as question-begging the argument that the rarity of genuine ...


Neoliberalism And The Law: How Historical Materialism Can Illuminate Recent Governmental And Judicial Decision Making, Justin Schwartz Jan 2013

Neoliberalism And The Law: How Historical Materialism Can Illuminate Recent Governmental And Judicial Decision Making, Justin Schwartz

Justin Schwartz

Neoliberalism can be understood as the deregulation of the economy from political control by deliberate action or inaction of the state. As such it is both constituted by the law and deeply affects it. I show how the methods of historical materialism can illuminate this phenomenon in all three branches of the the U.S. government. Considering the example the global financial crisis of 2007-08 that began with the housing bubble developing from trade in unregulated and overvalued mortgage backed securities, I show how the repeal of the Glass-Steagall Act, which established a firewall between commercial and investment banking, allowed ...


The Merits Of Cooperative Corporate Governance In The Digital Age, Meredith-Anne Kurz Jan 2013

The Merits Of Cooperative Corporate Governance In The Digital Age, Meredith-Anne Kurz

Meredith-Anne Kurz

No abstract provided.


Who Calls The Shots?: How Mutual Funds Vote On Director Elections, Stephen J. Choi, Jill E. Fisch, Marcel Kahan Jan 2013

Who Calls The Shots?: How Mutual Funds Vote On Director Elections, Stephen J. Choi, Jill E. Fisch, Marcel Kahan

Faculty Scholarship at Penn Law

Shareholder voting has become an increasingly important focus of corporate governance, and mutual funds control a substantial percentage of shareholder voting power. The manner in which mutual funds exercise that power, however, is poorly understood. In particular, because neither mutual funds nor their advisors are beneficial owners of their portfolio holdings, there is concern that mutual fund voting may be uninformed or tainted by conflicts of interest. These concerns, if true, hamper the potential effectiveness of regulatory reforms such as proxy access and say on pay. This article analyzes mutual fund voting decisions in uncontested director elections. We find that ...


Education By Corporation: The Merits And Perils Of For-Profit Higher Education For A Democratic Citizenry, Amy Sepinwall Dec 2012

Education By Corporation: The Merits And Perils Of For-Profit Higher Education For A Democratic Citizenry, Amy Sepinwall

Amy J. Sepinwall

For-profit colleges have elicited wildly divergent reactions, with critics vilifying them and their executives, and supporters seeing in the institutions a necessary and laudable complement to public and non-profit institutions. As I propose to argue in this chapter, the truth likely likes somewhere between these extremes.

Commentary on for-profit education proceeds along three narratives: the first views the for-profit college as a kind of villainous, unstoppable monster; the second, contrastingly, sees the for-profit college as a kind of savior; and the third takes a more nuanced position, identifying virtues of for-profit education while expressing concern about its compatibility with education ...


Threats Escalate: Corporate Information Technology Governance Under Fire, Lawrence J. Trautman Jan 2012

Threats Escalate: Corporate Information Technology Governance Under Fire, Lawrence J. Trautman

Lawrence J. Trautman Sr.

In a previous publication The Board’s Responsibility for Information Technology Governance, (with Kara Altenbaumer-Price) we examined: The IT Governance Institute’s Executive Summary and Framework for Control Objectives for Information and Related Technology 4.1 (COBIT®); reviewed the Weill and Ross Corporate and Key Asset Governance Framework; and observed “that in a survey of audit executives and board members, 58 percent believed that their corporate employees had little to no understanding of how to assess risk.” We further described the new SEC rules on risk management; Congressional action on cyber security; legal basis for director’s duties and responsibilities ...


"Because That's Where The Money Is": A Theory Of Corporate Legal Compliance, William Bradford Dec 2011

"Because That's Where The Money Is": A Theory Of Corporate Legal Compliance, William Bradford

william bradford

Upon his capture in 1934, the legendary bank robber Willie Sutton was asked by FBI agents, Why do you rob banks, Willie? Sutton, who believed the question to be rhetorical, replied, dryly, Because that's where the money is. In other words, Sutton understood his interrogator to be inquiring as to why he robbed banks rather than, say, homes, or gas stations, or church offering plates. Had he understood the query as intended - i.e., what was it about Willie Sutton the impelled Willie Sutton to crime when many others, struggling to survive the Great Depression, were not? - Sutton could ...


Corporate Governance And Accountability, Renee M. Jones Nov 2011

Corporate Governance And Accountability, Renee M. Jones

Renee Jones

This book chapter on Corporate Governance and Accountability is a contribution to the book CORPORATE GOVERNANCE - SYNTHESIS OF THEORY, RESEARCH, AND PRACTICE (Wiley, forthcoming 2010), edited by Ronald Anderson and H. Kent Baker. This chapter describes the sources of corporate governance standards for American corporations and analyzes the accountability mechanisms designed to ensure that corporate officials act faithfully in their management of corporate affairs. The chapter focuses on the financial reporting system under the U.S. securities laws which forms the foundation of the accountability system, and discusses structures and rules designed to ensure the integrity of financial reporting. The ...


Understanding Csr: An Empirical Study Of Private Self-Regulation, Benedict Sheehy Sep 2011

Understanding Csr: An Empirical Study Of Private Self-Regulation, Benedict Sheehy

Benedict Sheehy

Abstract: The article is a study of an important burgeoning form of regulation—private self-regulation—in the area of Corporate Social Responsibility (CSR). Rather than taking a purely theoretical approach or a social scientific study relying publicly reported data, the article addresses the issue by way of interview based case studies. As a study in regulation it clarifies the difference between various types of self-regulation, trade associations’ codes as private self-regulation and government sponsored self-regulation. This distinction hampers efforts to understand the important aspects of motivation and compliance. This study provides empirical examination of compliance in private self-regulation. Given the ...


Llcs And Corporations: A Fork In The Road In Delaware?, Joshua P. Fershee Jun 2011

Llcs And Corporations: A Fork In The Road In Delaware?, Joshua P. Fershee

Joshua P Fershee

As Vice Chancellor Laster explained in CML V, LLC v. Bax, 6 A.3d 238 (Del. Ch. Nov. 3, 2010): '[T]here is nothing absurd about different legal principles applying to corporations and LLCs.'" This short paper argues that courts should respect the LLC as a business form distinct from corporations and that Delaware courts have taken the first step toward doing just that.

Where legislatures have decided that distinctly corporate concepts should apply to LLCs—such as allowing piercing the veil or derivative lawsuits—those wishes (obviously) should be honored by the courts. But where state LLC laws are ...


Lyondell: A Note Of Approbation, William W. Bratton Jan 2010

Lyondell: A Note Of Approbation, William W. Bratton

Faculty Scholarship at Penn Law

No abstract provided.


The Overstated Promise Of Corporate Governance, Jill E. Fisch Jan 2010

The Overstated Promise Of Corporate Governance, Jill E. Fisch

Faculty Scholarship at Penn Law

No abstract provided.


Tracking Berle's Footsteps: The Trail Of The Modern Corporation's Law Chapter, William W. Bratton, Michael L. Wachter Jan 2010

Tracking Berle's Footsteps: The Trail Of The Modern Corporation's Law Chapter, William W. Bratton, Michael L. Wachter

Faculty Scholarship at Penn Law

No abstract provided.