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Full-Text Articles in Law
Turning A Short-Term Fling Into A Long-Term Commitment: Board Duties In A New Era, Nadelle Grossman
Turning A Short-Term Fling Into A Long-Term Commitment: Board Duties In A New Era, Nadelle Grossman
University of Michigan Journal of Law Reform
Corporate boards face significant pressure to make decisions that maximize profits in the short run. That pressure comes in part from executives who are financially rewarded for short-term profits despite the long-term risks associated with those profit-making activities. The current financial crisis, where executives at AIG and numerous other institutions ignored the long-term risks associated with their mortgage backed securities investments, arose largely because those executives were compensated for the short-term profits generated by those investments despite their longer-term risks. Pressure on boards for short-term profits also comes from activist investors who seek to make quick money off of trading …
Beyond Managerialism: Investor Capitalism?, Alfred F. Conard
Beyond Managerialism: Investor Capitalism?, Alfred F. Conard
University of Michigan Journal of Law Reform
Capitalism, in most large public corporations, has been subtly transformed from a system of dominance by the suppliers of capital to a system of dominance by the managers, dubbed "managerialism." In many respects, managerialism is beneficial to investors and other enterprise constituencies, since managers' rewards typically grow with the profitability of the enterprise. But managerialism permits drastic wastes of resources when managers hang on to their jobs after they have become inefficient or spend lavishly to defend themselves against takeover bids. Derivative suits, shareholder proposals, independent directors, and other prescriptions have failed to stifle managerial abuses. This is the message …
Two Models Of Corporate Governance: Beyond Berle And Means, Lynne L. Dallas
Two Models Of Corporate Governance: Beyond Berle And Means, Lynne L. Dallas
University of Michigan Journal of Law Reform
This Article introduces a new model of corporate governance, which challenges, as did Berle and Means, the conclusions drawn from the traditional ownership model. Rather than focusing upon the inefficiencies of the large complex firm resulting from the separation of share ownership and control, however, this new model, which I call the power model, focuses upon the political nature of decision making in the large corporation, which exists regardless of the identity of the entrepreneur.
Providing An Effective Remedy In Shareholder Suits Against Officers, Directors, And Controlling Persons, Michael H. Woolever
Providing An Effective Remedy In Shareholder Suits Against Officers, Directors, And Controlling Persons, Michael H. Woolever
University of Michigan Journal of Law Reform
Corporate officers, directors, and controlling persons occupy a fiduciary relationship toward the corporation and its shareholders in the exercise of control over corporate affairs. This fiduciary obligation requires that officers, directors, and controlling persons act in good faith and perform their offices in the best interests of the corporation and its shareholders and not to their own advantage. When this duty is breached, a shareholder may bring an action against these fiduciaries, either in his own name or derivatively for the benefit of the corporation. Under present law, however, it may be impossible for an American court to secure jurisdiction …