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Toward A Horizontal Fiduciary Duty In Corporate Law, Asaf Eckstein, Gideon Parchomovsky
Toward A Horizontal Fiduciary Duty In Corporate Law, Asaf Eckstein, Gideon Parchomovsky
Cornell Law Review
Fiduciary duty is arguably the single most important aspect of our corporate law system. It consists of two distinct subduties-a duty of care and a duty of loyalty-and it applies to all directors and corporate officers. Yet, under extant law, the duty only applies vertically, in the relationship between directors and corporate officers and the firm. At present, there exists no horizontal fiduciary duty: directors and corporate officers owe no fiduciary duty to each other. Consequently, if one of them falls her peers, they cannot seek direct legal recourse against her even when they stand to suffer significant reputational and …
Impersonal Personhood: Crafting A Coherent Theory Of The Corporate Entity, Bryan P. Magee
Impersonal Personhood: Crafting A Coherent Theory Of The Corporate Entity, Bryan P. Magee
Cornell Law Review
Corporate legal personhood is a baffling and elusive concept. Are corporations persons and, if so, what does this mean? Ascribing the moniker of "person" to a corporation can conjure up the idea that a corporate entity is entitled to all the natural and legal rights that natural "personhood" entails. This, however, ignores that there are different kinds of "legal person" and that the scope of their respective rights differs based on the purpose of the personhood they are given. This Note posits that the law grants corporations entity-hood primarily to centralize contractual rights and obligations. This purpose, this Note contends, …
Activist Directors And Agency Costs: What Happens When An Activist Director Goes On The Board, John C. Coffee Jr., Robert J. Jackson Jr., Joshua R. Mitts, Robert E. Bishop
Activist Directors And Agency Costs: What Happens When An Activist Director Goes On The Board, John C. Coffee Jr., Robert J. Jackson Jr., Joshua R. Mitts, Robert E. Bishop
Cornell Law Review
We develop and apply a new and more rigorous methodology by which to measure and understand both informed trading and the agency costs of hedge fund activism. We use quantitative data to show a systematic relationship between the appointment of a hedge fund-nominated director to a corporate board and an increase in informed trading in that corporation's stock (with the relationship being most pronounced when the fund's slate of directors includes a hedge fund employee). This finding is important from two different perspectives. First, from a governance perspective, activist hedge funds represent a new and potent force in corporate governance. …