Law Commons^™

Tackling Vulnerabilities Through Corporate Duties, Jingchen Zhao

Catholic University Law Review

In this article, and drawing on the work of Fineman and others, we use a vulnerability lens as a device to emphasize the protection that could be offered to vulnerable parties in corporations through directors’ duties. By situating corporations in the vulnerability paradigm, we will discuss the limitations of formal equality and clarify the role played by corporate law. The increasingly blurred distinction between private law and public law will be discussed to rationalize the protection of the vulnerable through collective responsibility. Vulnerability theory mediates conflicts between calls for “regulatory state policies” and “individual responsibility” to supervise and monitor corporate …

Public Primacy In Corporate Law, Dorothy S. Lund

Seattle University Law Review

This Article explores the malleability of agency theory by showing that it could be used to justify a “public primacy” standard for corporate law that would direct fiduciaries to promote the value of the corporation for the benefit of the public. Employing agency theory to describe the relationship between corporate management and the broader public sheds light on aspects of firm behavior, as well as the nature of state contracting with corporations. It also provides a lodestar for a possible future evolution of corporate law and governance: minimize the agency costs created by the divergence of interests between management and …

Corporate Law In The Global South: Heterodox Stakeholderism, Mariana Pargendler

Seattle University Law Review

How do the corporate laws of Global South jurisdictions differ from their Global North counterparts? Prevailing stereotypes depict the corporate laws of developing countries as either antiquated or plagued by problems of enforcement and misfit despite formal convergence. This Article offers a different view by showing how Global South jurisdictions have pioneered heterodox stakeholder approaches in corporate law, such as the erosion of limited liability for purposes of stakeholder protection in Brazil and India, the adoption of mandatory corporate social responsibility in Indonesia and India, and the large-scale program of Black corporate ownership and empowerment in South Africa, among many …

The Exit Theory Of Judicial Appraisal, William J. Carney, Keith Sharfman

Fordham Journal of Corporate & Financial Law

For many years, we and other commentators have observed the problem with allowing judges wide discretion to fashion appraisal awards to dissenting shareholders based on widely divergent, expert valuation evidence submitted by the litigating parties. The results of this discretionary approach to valuation have been to make appraisal litigation less predictable and therefore more costly and likely. While this has been beneficial to professionals who profit from corporate valuation litigation, it has been harmful to shareholders, making deals costlier and less likely to be completed.

In this Article, we propose to end the problem of discretionary judicial valuation by tracing …

Money Creation And Bank Clearing, Nadav Orian Peer

Fordham Journal of Corporate & Financial Law

Like many other countries, the U.S. money supply consists primarily of deposits created by private commercial banks. How we understand bank money creation matters enormously. We are currently witnessing a debate between two competing understandings. On the one hand, a long-standing conventional view argues that bank money creation originates in individual market transactions. Based on this understanding, the conventional view narrowly limits the scope of banking regulation to market failure correction. On the other hand, authors in a new legal literature emphasize the public aspects of bank money creation, characterizing it as a “public franchise,” a “public-private partnership,” and part …

Stakeholderism Silo Busting, Aneil Kovvali

Articles by Maurer Faculty

The fields of antitrust, bankruptcy, corporate, and securities law are undergoing tumultuous debates. On one side in each field is the dominant view that each field should focus exclusively on a specific constituency—antitrust on consumers, bankruptcy on creditors, corporate law on shareholders, and securities regulation on financial investors. On the other side is a growing insurgency that seeks to broaden the focus to a larger set of stakeholders, including workers, the environment, and political communities. But these conversations have largely proceeded in parallel, with each debate unfolding within the framework and literature of a single field. Studying these debates together …

Fairness Opinions And Spac Reform, Andrew F. Tuch

Scholarship@WashULaw

Under the emerging regulatory framework for special purpose acquisition companies (SPACs), mergers of SPACs, known as de-SPACs, must be “fair” to public (or unaffiliated) SPAC shareholders, and transaction participants face heightened liability risk for disclosure errors. This framework is a product of the SEC’s reform proposal for SPACs (SPAC Reform Proposal) and recent decisions of the Delaware Court of Chancery. In this environment, third-party fairness opinions have been regarded as a de facto requirement for de-SPACs.

Artificial Intelligence And Corporate Decisions: Fantasy, Reality Or Destiny, Jingchen Zhao

Catholic University Law Review

Fueled by the ever-growing significance of big data and advances in AI, tasks in relation to decision-making in contemporary societies have been increasingly delegated to AI at different levels. While there is massive investment all over the world related to one side of AI, namely engineering, it is also important to create rules and competence related to humanistic AI and its effects on people and societies. This article aims to examine AI’s role in the boardroom and associated legal challenges, by exploring the interplay between AI and corporate law and governance. We observe that the delegation of board tasks to …

Barbarians Inside The Gates: Raiders, Activists, And The Risk Of Mistargeting, Zohar Goshen, Reilly S. Steel

Faculty Scholarship

This Article argues that the conventional wisdom about corporate raiders and activist hedge funds — raiders break things and activists fix them — is wrong. Because activists have a higher risk of mistargeting — mistakenly shaking things up at firms that only appear to be underperforming — they are much more likely than raiders to destroy value and, ultimately, social wealth.

As corporate outsiders who challenge the incompetence or disloyalty of incumbent management, raiders and activists play similar roles in reducing “agency costs” at target firms. The difference between them comes down to a simple observation about their business models: …

Legal And Market Initiatives To Increase Diversity In Corporations—A Cross-Jurisdictional Analysis, Akshaya Kamalnath

Seattle University Law Review

This Article will critically examine various legal and market initiatives to increase diversity in corporations, with the aim of assessing their effectiveness. The initiatives explored in this Article include quota laws in Europe (including recent amendments in France and Germany which introduce quotas for executive director positions) and California; disclosure laws in the U.S., Nasdaq, and U.K.; and initiatives by institutional investors. The main argument this Article makes is that both quotas and quantitative disclosures do not provide the right incentives for corporations to make genuine efforts to improve diversity. The alternative this Article proposes is not to simply leave …

Sacred Corporate Law, Giancarlo Anello, Sergio Alberto Gramitto Ricci, Mohamed Arafa

Faculty Works

This Article investigates the sacred origins of the corporate form. It sheds light on the sacred rituals performed to establish Ancient Roman cities as legal entities. It discusses the role of the Roman Catholic Church in developing the corporate form and in giving birth to a systemized set of rules regulating corporations, which we commonly call corporate law. It analyzes the limitations to the use of the corporate form in Islamic law as well as the streams of Islamic law jurisprudence that recognize legal capacity to specific entities with religious, social, or charitable purposes. It surveys the characteristics of two …

Religious Roots Of Corporate Organization, Amanda Porterfield

Seattle University Law Review

Religion and corporate organization have developed side-by-side in Western culture, from antiquity to the present day. This Essay begins with the realignment of religion and secularity in seventeenth-century America, then looks to the religious antecedents of corporate organization in ancient Rome and medieval Europe, and then looks forward to the modern history of corporate organization. This Essay describes the long history behind the entanglement of business and religion in the United States today. It also shows how an understanding of both religion and business can be expanded by looking at the economic aspects of religion and the religious aspects of …

Leveraging Corporate Law: A Broader Account Of Delaware’S Competition, Christopher M. Bruner

Maryland Law Review

No abstract provided.

Delaware's Peril, Marcel Kahan

Maryland Law Review

No abstract provided.

The Virginia Company To Chick-Fil-A: Christian Business In America, 1600–2000, Joseph P. Slaughter

Seattle University Law Review

This Article argues that the proprietors of what the author terms “Christian Business Enterprises” (CBEs) would strenuously disagree with Justice Ginsburg and assert that their express mission is to earn a profit while propagating their religious values. As such, they operate businesses “infused with religion,” where Christian values are interwoven into the very fabric of the company and how the firm relates to its stakeholders, employees, customers, suppliers, and communities.

This Article further demonstrates the rich heritage of religious for-profit businesses throughout American history by focusing on a series of Protestant CBEs that led to today’s CBE giants: Chick-fil-A and …

The Beginning Of History For Corporate Law: Corporate Government, Social Purpose And The Case Of Sutton’S Hospital (1612), David Smith

Seattle University Law Review

This Symposium Article is an invitation to rethink the Anglo-American history of corporate law from different perspectives. This Article uses new sources to investigate Sutton’s Hospital and corporate development in England during the sixteenth and seventeenth centuries. By doing so, the analysis reveals overlooked connections between the history of corporate law, religious thought, and social purpose. In turn, the recognition of these connections challenges the received history of pre-modern corporate law. Although this history shapes contemporary Anglo-American debates over corporate personality and purpose, few have scrutinized its underlying assumptions.

Pluralism And Convergence: Judicial Standardization In Canadian Corporate Law, Camden Hutchison

All Faculty Publications

This article uses statistical analysis of judicial decisions to address whether (and to what extent) the common law of corporations varies among the provinces. The primary findings are: (1) as measured by the number of case citations, provincial courts of appeal favour precedent from their home provinces; (2) the Supreme Court of Canada exerts a powerful standardizing influence across the provinces; and (3) on balance (and despite the “home province” bias of provincial courts of appeal), Canadian corporate law is largely homogeneous, with little variation among provincial jurisdictions. This article concludes that—for a variety of reasons—it is unlikely that any …

Spirit Of The Corporation, Russell Powell

Seattle University Law Review

Christian theologians have analyzed the productive and destructive qualities of institutions, sometimes attributing to them human virtues and vices. In City of God, Saint Augustine describes a utopian vision of human community within a Christian context as an alternative to the flawed “City of Man.” Contemporary theologians and sociologists have described collective structures of human behavior in institutions as having a kind of “spirit” analogous to the individual human “spirit.” Institutions are then assumed to take on an existence separate from the individuals within them, and in fact, the “spirit” of an institution influences the behavior of individuals. In The …

The Virginia Company To Chick-Fil-A: Christian Business In America, 1600–2000, Joseph P. Slaughter

Seattle University Law Review

The Supreme Court’s 2014 decision in Burwell v. Hobby Lobby Stores, Inc. is one of its most controversial in recent history. Burwell’s narrow 5–4 ruling states that the Religious Freedom Restoration Act of 1993 applies to closely held, for-profit corporations seeking religious exemptions to the Affordable Care Act. As a result, the Burwell decision thrust Hobby Lobby, the national craft chain established by the conservative evangelical Green family of Oklahoma City, Oklahoma, onto the national stage. Firms like Hobby Lobby and Chick-fil-A, however, reject the conventional wisdom Justice Ginsburg explained in Burwell and instead embrace an approach to business with …

Adolf Berle’S Corporate Conscience, Elizabeth Sepper, James D. Nelson

Seattle University Law Review

In this contribution to the symposium on “Corporate Capitalism and the City of God,” we bring Adolf Berle’s distinctive views of morality in corporate life into contemporary conversations about corporate religion. Today’s debates over corporate religious exemptions tend to gravitate toward an entity view of conscience focused on the moral integrity of institutions or an associational view keyed to shareholders’ deep commitments. The foremost corporate law scholar of his day, Berle instead conceived of corporate conscience as a “public consensus” guiding and bounding managerial decision-making. Although he would have sympathized with efforts to integrate faith and business, he would have …

A Brief Reflection On Spirit Of The Corporation, Russell Powell

Seattle University Law Review

The author's goal in writing Spirit of the Corporation, which was initially published in 44 SEATTLE U. L. REV. 371 and is reprinted in this issue, was to reflect on the question that Adolf A. Berle, Jr. posed in his essay Corporate Capitalism and "The City of God": whether corporate managers should consider the common good while discharging their duty to act in the best interest of the corporation. The author hoped to use his interdisciplinary corporate law and religion expertise to add a theological perspective to the conversation. In this essay, the author intends to respond to those comments …

Sacred Corporate Law, Giancarlo Anello, Mohamed Arafa, Sergio Alberto Gramitto Ricci

Seattle University Law Review

This Article investigates the sacred origins of the corporate form. It sheds light on the sacred rituals performed to establish Ancient Roman cities as legal entities. It discusses the role of the Roman Catholic Church in developing the corporate form and in giving birth to a systemized set of rules regulating corporations, which we commonly call corporate law. It analyzes the limitations to the use of the corporate form in Islamic law as well as the streams of Islamic law jurisprudence that recognize legal capacity to specific entities with religious, social, or charitable purposes. It surveys the characteristics of two …

Cleaning Corporate Governance, Jens Frankenreiter, Cathy Hwang, Yaron Nili, Eric Talley

Scholarship@WashULaw

Although empirical scholarship dominates the field of law and finance, much of it shares a common vulnerability: an abiding faith in the accuracy and integrity of a small, specialized collection of corporate governance data. In this paper, we unveil a novel collection of three decades’ worth of corporate charters for thousands of public companies, which shows that this faith is misplaced.

We make three principal contributions to the literature. First, we label our corpus for a variety of firm- and state-level governance features. Doing so reveals significant infirmities within the most well-known corporate governance datasets, including an error rate exceeding …

Spirit Of The Corporation, Russell Powell

Seattle University Law Review

This Article provides a contemporary theoretical framework for Berle’s insight as a basis for considering its legal and ethical implications for corporate governance. Part II attempts to unpack contemporary understandings of spirit in order to provide a helpful working definition. Part III considers the origins and essential traits of the modern business corporation in the United States. The question posed by Berle—whether corporations can or ought to have a sort of moral orientation—is discussed in Part IV, while Part V ponders potential policy shifts that might tilt the orientation of the “spirit of the corporation” toward the common good. Part …

Religious Roots Of Corporate Organization, Amanda Porterfield

Seattle University Law Review

Religion and corporate organization have developed side-by-side in Western culture, from antiquity to the present day. This Essay begins with the realignment of religion and secularity in seventeenth-century America, then looks to the religious antecedents of corporate organization in ancient Rome and medieval Europe, and then looks forward to the modern history of corporate organization. This Essay describes the long history behind the entanglement of business and religion in the United States today. It also shows how an understanding of both religion and business can be expanded by looking at the economic aspects of religion and the religious aspects of …

Blockchain Stock Ledgers, Kevin V. Tu

Indiana Law Journal

American corporate law contains a seemingly innocuous mandate. Corporations must maintain appropriate books and records, including a stock ledger with the corporation's shareholders and stock ownership. The importance of accurate stock ownership records is obvious. Corporations must know who owns each of its outstanding shares at any point in time. Among other things, this allows corporations to determine who receives dividends and who is entitled to vote. In theory, keeping accurate records of stock ownership should be a simple matter. But despite diligent efforts, serious share discrepancies plague corporations, and reconciliation is often functionally impossible. Doing so may require the …

Fiduciary Law And The Preservation Of Trust In Business Relationships, Brian J. Broughman, Elizabeth Pollman, D. Gordon Smith

All Faculty Scholarship

This chapter explores the role of mandatory fiduciary obligations in preserving trust between business parties. Because contracts are inevitably incomplete, after investment there is always a risk of opportunism. While the parties could try to draft a more detailed agreement prohibiting various forms of opportunism, the very act of haggling over such protections may signal distrust, eliciting costly reactions (defensive measures/hedging/lack of intrinsic motivation) in the counterparty. In the absence of fiduciary protections, a vulnerable party may decide to forgo important protections against opportunism, not because such protections are suboptimal or hard to specify ex ante but because bargaining for …

“At Home” In Georgia: The Hidden Danger Of Registering To Do Business In Georgia, Brian P. Watt, W. Alex Smith

Georgia State University Law Review

Georgia law prohibits any foreign corporation—a corporation with an originating registration initiated in a state other than Georgia—from transacting business in the state until it obtains a certificate of authority from the Georgia Secretary of State. Attorneys advise foreign corporations to register as a matter of course, and business owners readily comply. Georgia is not unique in its registration requirement. Every state in the union has enacted such a statute. But very few states require a foreign corporation to forfeit the guarantees of due process as a condition for transacting business in the state. Georgia is one of them. In …

Reorganizations, Sales, And The Changing Face Of Restructuring In Canada: Quantitative Outcomes Of 2012 And 2013 Ccaa Proceedings, Alfonso Nocilla

Dalhousie Law Journal

This article examines quantitative data on the outcomes of proceedings under the Companies’ Creditors Arrangement Act (CCAA), Canada’s principal statute for resolving large, complex corporate insolvencies. In particular, this article compares the durations, direct costs, and returns to different classes of creditors generated by traditional reorganizations under the CCAA and by “liquidating CCAAs”—that is, proceedings in which the insolvent debtor sells substantially all of its assets rather than reorganizing itself. The article makes a number of contributions to the existing scholarship. Firstly, quantitative data on CCAA proceedings are rare. The data examined here, collected by the author from proceedings initiated …

Corporate Risk And Climate Impacts To Critical Energy Infrastructure In Canada, Rudiger Tscherning

Dalhousie Law Journal

Recent climate events such as Hurrican Harvey in Texas foreshadow the dangers that could result from critical energy infrastructure failure in Canada due to physical impacts caused by climate change. This article examines the types of climate impacts that could affect critical energy infrastructure in Canada. The article argues that these impacts translate into three types of corporate risk to the owners and operators of the critical asset: economic risks to the infrastructure asset; management and operational risks to the corporation; and risks arising from corporate disclosure obligations. Applying the theoretical approach of "risk management," the article concludes that, on …