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Full-Text Articles in Law
Third-Party Institutional Proxy Advisors: Conflicts Of Interest And Roads To Reform, Matthew Fagan
Third-Party Institutional Proxy Advisors: Conflicts Of Interest And Roads To Reform, Matthew Fagan
University of Michigan Journal of Law Reform
With the rise of institutional activist investors in recent decades—including a purported 495 activist campaigns against U.S. corporations in 2016 alone—the role that third-party institutional proxy advisors play in corporate governance has greatly increased. The United States Office of Government Accountability estimates that clients of the top five proxy advisory firms account for about $41.5 trillion in equity throughout the world. For several years, discussions have developed regarding conflicts of interest faced by proxy advisors. For example, Institutional Shareholder Services, the top proxy advisory firm in the world, frequently provides advice to institutional investors on how to vote proxies while …
Human Rights And Cybersecurity Due Diligence: A Comparative Study, Scott J. Shackelford
Human Rights And Cybersecurity Due Diligence: A Comparative Study, Scott J. Shackelford
University of Michigan Journal of Law Reform
No company, just like no nation, is an island in cyberspace; the actions of actors from hacktivists to nation-states have the potential to impact the bottom line, along with the human rights of consumers and the public writ large. To help meet the multifaceted challenges replete in a rapidly globalizing world—and owing to the relative lack of binding international law to regulate both cybersecurity and the impact of business on human rights—companies are reconceptualizing what constitutes “due diligence.” This Article takes lessons from both the cybersecurity and human rights due diligence contexts to determine areas for cross-pollination in an effort …
A Primer On The Theory, Practice, And Pedagogy Underpinning A School Of Thought On Law And Business, James E. Holloway
A Primer On The Theory, Practice, And Pedagogy Underpinning A School Of Thought On Law And Business, James E. Holloway
University of Michigan Journal of Law Reform
Recent policyless and lawless business decisions have prompted the judiciary and legislature to erode managerial discretion and judgment. This Article is a primer on the theoretical, practical, and pedagogical requirements for a legal-managerial school of thought to measure the business losses created by these judicial and legislative responses. A legal-managerial school must provide a theoretical evaluation of law and public policy, a practical integration of legal analysis and business methodology, and a pedagogical expansion of legal thinking to include business information. This Article initiates the debate on how a legal-managerial school of thought can further the study, practice, and teaching …
Protecting Nonshareholder Interests In The Market For Corporate Control: A Role For State Takeover Statutes, Frank J. Garcia
Protecting Nonshareholder Interests In The Market For Corporate Control: A Role For State Takeover Statutes, Frank J. Garcia
University of Michigan Journal of Law Reform
Part I of this Note describes a phenomenon of modern corporate activity first identified over fifty years ago as the "separation of ownership and control." This separation gives rise to the need for a governing corporate norm; recognizing the normative aspect of this phenomenon has direct implications for the takeover debate.
Part II analyzes the problem of a target board's fiduciary duty as the modern version of the fundamental normative issue of corporate law. It argues that the norm of shareholder wealth maximization, assumed as the starting point by those most in favor of an active and minimally regulated control …
Federal Chartering Revisited, Donald E. Schwartz
Federal Chartering Revisited, Donald E. Schwartz
University of Michigan Journal of Law Reform
The protections that corporation law provided to shareholders and to our economic community against the excesses and complacency of corporate directors and managers have undergone a general weakening. Although it is uncertain whether the ALI can accomplish effective and meaningful reforms, this effort may be the most important attempt by the corporate community to reform itself.
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.
Introduction, Joel Seligman
Introduction, Joel Seligman
University of Michigan Journal of Law Reform
Introduction for the 1988 Journal of Law Reform Symposium: Issues in Corporate Governance.
Suing In The Right Of The Corporation: A Commentary And Proposal For Legislative Reform, Lawrence A. Larose
Suing In The Right Of The Corporation: A Commentary And Proposal For Legislative Reform, Lawrence A. Larose
University of Michigan Journal of Law Reform
This Article is premised on the belief that the derivative action is uniquely susceptible to strike suit litigation-that is, actions with little or no substantive merit but pursued to exploit the nuisance value inherent in litigation. Although there is historic support for the notion of "pernicious and vexing" derivative litigation, some modern evidence suggests that the vast majority of publicly held companies experience no derivative litigation. Commentators, however, have questioned both the validity of the modern evidence and the conclusions derived from it. Despite these criticisms, observers of the present vitality of the derivative action, far from characterizing it as …
Union Representatives As Corporate Directors: The Challenge To The Adversarial Model Of Labor Relations, Robert A. Mccormick
Union Representatives As Corporate Directors: The Challenge To The Adversarial Model Of Labor Relations, Robert A. Mccormick
University of Michigan Journal of Law Reform
This Article addresses these questions first by discussing the predominant philosophical approach adopted by unions in their dealings with management, and then describing several ways in which the labor laws reflect this traditional model of employment relations by showing, first, that the influence of unions has been limited to circumscribed categories of business decisions. The Article next examines decisions made by the National Labor Relations Board ("NLRB") and the courts that have carefully sought to separate employer from employee, assuming their interests to be inherently antagonistic. Then follows an evaluation of the NLRB's treatment of deviations from the traditional model …
Employee Stock Ownership Plans: An Analysis Of Current Reform Proposals, Luis L. Granados
Employee Stock Ownership Plans: An Analysis Of Current Reform Proposals, Luis L. Granados
University of Michigan Journal of Law Reform
This article surveys the battle between the critics and advocates of the ESOP, and scrutinizes various proposals currently being considered in the legislative arena. Part I examines the philosophy and history of the ESOP, particularly focusing upon the conceptual foundations provided by the writings of Louis Kelso. Part II explicates the various functions performed by the ESOP: as a tool of corporate finance, as an "in-house" market for the sale of stock held by a company's shareholders, and as a means of obtaining additional investment tax credit. Part III analyzes critically six proposed improvements of the ESOP system from both …
Keys To Unlock The Interlocks: Dealing With Interlocking Directorates, Richard P. Murphy
Keys To Unlock The Interlocks: Dealing With Interlocking Directorates, Richard P. Murphy
University of Michigan Journal of Law Reform
The use of interlocking directorates by American industrial and commercial corporations is widespread. Section 8 of the Clayton Act has been interpreted as prohibiting only interlocks between directly competing firms. There are other kinds of interlocks with substantial anticompetitive effects, however, that have essentially escaped any regulation under the antitrust laws. This article will examine whether the deleterious effects of unregulated interlocks should be a source of concern. It will conclude that these interlocks should not remain unregulated because they are presumptively anticompetitive, produce problems that section 8 was designed to address, and conflict with the basic goals of the …
Controlling The Controllers In Parent-Subsidiary Relations, James C. Bruno
Controlling The Controllers In Parent-Subsidiary Relations, James C. Bruno
University of Michigan Journal of Law Reform
This article will examine the rights and responsibilities of a party in control of a corporation. The discussion of these rights and responsibilities focuses principally on the law of Michigan. However, passages on policy, discussion of the development of relevant Michigan law, and recommendations for changes in the law are pertinent to the general problem-area of parent-subsidiary relations encountered in all jurisdictions.