Law Commons^™

Afghanistan's New Vat, Part 1: Invoice Matching Or A Unitary Digital Invoice, Richard Thompson Ainsworth, Musaad Alwohaibi, Andrew Leahey, Yujin Li, Haseena Rahman

Faculty Scholarship

In the summer of 1990 two groundbreaking articles on business process re-engineering (BPR) were published, one by Thomas H. Davenport (a professor in information technology at Babson College) in the MIT Sloan Management Review, the other by Michael Hammer (a professor of computer science at MIT) in the Harvard Business Review. BPR is a management strategy that analyzes IT-intensive workflow designs and business processes within an organization.

On December 21, 2020 (Jadi 1, 1399) Afghanistan was scheduled to implement a 10% VAT. It has been delayed one year by the pandemic. When it does implement, Afghanistan will have significant workflow …

In Defense Of Breakups: Administering A “Radical” Remedy, Rory Van Loo

Faculty Scholarship

Calls for breaking up monopolies—especially Amazon, Facebook, and Google—have largely focused on proving that past acquisitions of companies like Whole Foods, Instagram, and YouTube were anticompetitive. But scholars have paid insufficient attention to another major obstacle that also explains why the government in recent decades has not broken up a single large company. After establishing that an anticompetitive merger or other act has occurred, there is great skepticism of breakups as a remedy. Judges, scholars, and regulators see a breakup as extreme, frequently comparing the remedy to trying to “unscramble eggs.” They doubt the government’s competence in executing such a …

Notice Risk And Registered Agency, Andrew K. Jennings

Faculty Scholarship

No abstract provided.

The Revival Of Respondeat Superior And Evolution Of Gatekeeper Liability, Rory Van Loo

Faculty Scholarship

In an era of servants and masters, respondeat superior emerged to hold the powerful accountable for the acts of those they control. That doctrine’s significance has only grown in an economy driven by large corporations that rely heavily on legions of subsidiaries and independent contractors, such as banks deploying independent call centers, oil companies using drilling contractors, and tech platforms connecting consumers to app developers. It is widely believed that firms can avoid third- party liability for many laws by outsourcing or creating subsidiaries.

This Article shows that common narratives of the demise of third-party liability are incomplete. Respondeat superior …

Warranty, Product Liability And Transaction Structure: The Problem Of Amazon, Edward J. Janger, Aaron D. Twerski

Faculty Scholarship

No abstract provided.

Shareholder Value(S): Index Fund Esg Activism And The New Millennial Corporate Governance, David H. Webber, Michal Barzuza, Quinn Curtis

Faculty Scholarship

Major index fund operators have been criticized as ineffective stewards of the firms in which they are now the largest shareholders. While scholars debate whether this passivity is a serious problem, index funds’ generally docile approach to ownership is broadly acknowledged.

However, this Article argues that the notion that index funds are passive owners overlooks an important dimension in which index funds have demonstrated outspoken, confrontational, and effective stewardship. Specifically, we document that index funds have taken a leading role in challenging management and voting
against directors in order to advance board diversity and corporate sustainability. We show that index …

Compliance Elites, Miriam Baer

Faculty Scholarship

No abstract provided.

Little Power Struggles Everywhere: Attacks On The Administrative State At The Securities And Exchange Commission, Roberta S. Karmel

Faculty Scholarship

No abstract provided.

Value Tracing And Priority In Cross-Border Group Bankruptcies: Solving The Nortel Problem From The Bottom Up, Edward Janger, Stephan Madaus

Faculty Scholarship

No abstract provided.

Foundation Regulation In Our Age Of Impact, Dana Brakman Reiser

Faculty Scholarship

No abstract provided.

Uk & Ksa Vats: A Cutting-Edge Proposal – Mini-Blockchain And Vatcoin, Richard Thompson Ainsworth, Musaad Alwohaibi, Mike Cheetham

Faculty Scholarship

This paper develops, extends, and clarifies themes introduced in five prior papers dealing with blockchain, and VATCoin in the context of both (a) the new VATs in the Gulf Cooperation Council (GCC), and (b) the mature VATs in the EU. Five additional papers on VAT technology advances in Fiji, with blockchain and VATCoin applications to New Zealand’s approach to online sales platforms (the Netlix Tax) are similarly referenced and extended. The GCC VAT papers were exploratory. For the most part, they were composed before any GCC jurisdiction had implemented a VAT, and in three instances even before the GCC Framework …

The New Gatekeepers: Private Firms As Public Enforcers, Rory Van Loo

Faculty Scholarship

The world’s largest businesses must routinely police other businesses. By public mandate, Facebook monitors app developers’ privacy safeguards, Citibank audits call centers for deceptive sales practices, and Exxon reviews offshore oil platforms’ environmental standards. Scholars have devoted significant attention to how policy makers deploy other private sector enforcers, such as certification bodies, accountants, lawyers, and other periphery “gatekeepers.” However, the literature has yet to explore the emerging regulatory conscription of large firms at the center of the economy. This Article examines the rise of the enforcer-firm through case studies of the industries that are home to the most valuable companies, …

The Proceduralist Inversion–A Response To Skeel, Edward Janger, Adam J. Levitin

Faculty Scholarship

No abstract provided.

Three Conceptions Of Corporate Crime (And One Avenue For Reform), Miriam H. Baer

Faculty Scholarship

No abstract provided.

Detecting Corporate Environmental Cheating, Seema Kakade, Matt Haber

Faculty Scholarship

As evidenced by the Volkswagen diesel emissions scandal, corporations cheat on environmental regulations. Such scandals have created a surge in the academic literature in a wide range of areas, including corporate law, administrative law, and deterrence theory. This article furthers that literature by focusing on one particular area of corporate cheating—the ability to learn of the cheating in the first place. Detecting corporate cheating requires significant information about corporate behavior, activity, and output. Indeed, most agencies have broad statutory authority to collect such information from corporations, through targeted records requests, and inspection. However, authority is different from ability. The corporate …

Delaware's New Competition, William J. Moon

Faculty Scholarship

According to the standard account in American corporate law, states compete to supply corporate law to American corporations, with Delaware dominating the market. This “competition” metaphor in turn informs some of the most important policy debates in American corporate law.

This Article complicates the standard account, introducing foreign nations as emerging lawmakers that compete with American states in the increasingly globalized market for corporate law. In recent decades, entrepreneurial foreign nations in offshore islands have used permissive corporate governance rules and specialized business courts to attract publicly traded American corporations. Aided in part by a select group of private sector …

Buyer Beware: Variation And Opacity In Esg And Esg Index Funds, Dana Brakman Reiser, Anne Tucker

Faculty Scholarship

No abstract provided.

The Information Shortfalls Of Prosecuting Irresponsible Executives, Miriam H. Baer

Faculty Scholarship

No abstract provided.

The Law Of Corporate Investigations And The Global Expansion Of Corporate Criminal Enforcement, Jennifer Arlen, Samuel W. Buell

Faculty Scholarship

The United States model of corporate crime control, developed over the last two decades, couples a broad rule of corporate criminal liability with a practice of reducing sanctions, and often withholding conviction, for firms that assist enforcement authorities by detecting, reporting, and helping prove criminal violations. This model, while subject to skepticism and critiques, has attracted interest among reformers in overseas nations that have sought to increase the frequency and size of their enforcement actions. In both the U.S. and abroad, insufficient attention has been paid to how laws controlling the conduct of corporate investigations are critical to regimes of …

Designing Business Forms To Pursue Social Goals, Ofer Eldar

Faculty Scholarship

The long-standing debate about the purpose and role of business firms has recently regained momentum. Business firms face growing pressure to pursue social goals and benefit corporation statutes proliferate across many U.S. states. This trend is largely based on the idea that firms increase long-term shareholder value when they contribute (or appear to contribute) to society. Contrary to this trend, this Article argues that the pressing issue is whether policies to create social impact actually generate value for third-party beneficiaries—rather than for shareholders. Because it is difficult to measure social impact with precision, the design of legal forms for firms …

Revising Boilerplate: A Comparison Of Private And Public Company Transactions, Robert E. Scott, Stephen J. Choi, Mitu Gulati

Faculty Scholarship

The phenomenon of “sticky boilerplate” causing inefficient contract terms to persist exists across a variety of commercial contract types. One explanation for this failure to revise suboptimal terms is that the key agents on these transactions, including attorneys and investment bankers, are short sighted; their incentives are to get the deal done rather than ensure that they are using the best terms possible for their clients. Moreover, these agents face a first mover disadvantage that deters unilateral revisions to inefficient terms. If agency costs are indeed driving the stickiness phenomenon, we expect that the pace of revision will vary across …

Board Compliance, John Armour, Brandon Garrett, Jeffrey Gordon, Geeyoung Min

Faculty Scholarship

What role do corporate boards play in compliance? Compliance programs are internal enforcement programs, whereby firms train, monitor and discipline employees with respect to applicable laws and regulations. Corporate enforcement and compliance failures could not be more high-profile, and have placed boards in the position of responding to systemic problems. Both case law on boards’ fiduciary duties and guidance from prosecutors suggest that the board should have a continuing role in overseeing compliance activity. Yet very little is actually known about the role of boards in compliance. This paper offers the first empirical account of public companies’ engagement with compliance …

Federal Forum Provisions And The Internal Affairs Doctrine, Dhruv Aggarwal, Albert H. Choi, Ofer Eldar

Faculty Scholarship

A key question at the intersection of state and federal law is whether corporations can use their charters or bylaws to restrict securities litigation to federal court. In December 2018, the Delaware Chancery Court answered this question in the negative in the landmark decision Sciabacucchi v. Salzberg. The court invalidated “federal forum provisions” (“FFPs”) that allow companies to select federal district courts as the exclusive venue for claims brought under the Securities Act of 1933 (“1933 Act”). The decision held that the internal affairs doctrine, which is the bedrock of U.S. corporate law, does not permit charter and bylaw provisions …

Complex Compliance Investigations, Veronica Root Martinez

Faculty Scholarship

Whether it is a financial institution like Wells Fargo, an automotive company like General Motors, a transportation company like Uber, or a religious organization like the Catholic Church, failing to properly prevent, detect, investigate, and remediate misconduct within an organization’s ranks can have devastating results. The importance of the compliance function is accepted within corporations, but the reality is that all types of organizations—private or public—must ensure their members com­ply with legal and regulatory mandates, industry standards, and internal norms and expectations. They must police thousands of members’ compli­ance with hundreds of laws. And when compliance failures occur at these …

Bankruptcy’S Role In The Covid-19 Crisis, Edward R. Morrison, Andrea C. Saavedra

Faculty Scholarship

Policymakers have minimized the role of bankruptcy law in mitigating the financial fallout from COVID-19. Scholars too are unsure about the merits of bankruptcy, especially Chapter 11, in resolving business distress. We argue that Chapter 11 complements current stimulus policies for large corporations, such as the airlines, and that Treasury should consider making it a precondition for receiving government-backed financing. Chapter 11 offers a flexible, speedy, and crisis-tested tool for preserving businesses, financing them with government funds (if necessary), and ensuring that the costs of distress are borne primarily by investors, not taxpayers. Chapter 11 saves businesses and employment, not …

Nascent Competitors, C. Scott Hemphill, Tim Wu

Faculty Scholarship

A nascent competitor is a firm whose prospective innovation represents a serious threat to an incumbent. Protecting such competition is a critical mission for antitrust law, given the outsized role of unproven outsiders as innovators and the uniquely potent threat they often pose to powerful entrenched firms. In this Article, we identify nascent competition as a distinct analytical category and outline a program of antitrust enforcement to protect it. We make the case for enforcement even where the ultimate competitive significance of the target is uncertain, and explain why a contrary view is mistaken as a matter of policy and …

Board Compliance, John Armour, Brandon L. Garrett, Jeffrey N. Gordon, Geeyoung Min

Faculty Scholarship

What role do corporate boards play in compliance? Compliance programs are internal enforcement programs, whereby firms train, monitor and discipline employees with respect to applicable laws and regulations. Corporate enforcement and compliance failures could not be more high-profile, and have placed boards in the position of responding to systemic problems. Both case law on boards’ fiduciary duties and guidance from prosecutors suggest that the board should have a continuing role in overseeing compliance activity. Yet very little is actually known about the role of boards in compliance. This paper offers the first empirical account of public companies’ engagement with compliance …

The Race To The Middle, William Magnuson

Faculty Scholarship

How does federalism affect the quality of law? It is one of the fundamental questions of our constitutional system. Scholars of federalism generally fall into one of two camps on the question. One camp argues that regulatory competition between states leads to a “race to the bottom,” in which states adopt progressively worse laws in order to pander to powerful constituencies. The other camp, conversely, argues that regulatory competition leads to a “race to the top,” incentivizing states to adopt progressively better laws in the search for more desirable outcomes for their constituencies. Despite their apparent differences, however, both the …

Schrodinger's Corporation: The Paradox Of Religious Sincerity In Heterogeneous Corporations, Catherine A. Hardee

Faculty Scholarship

Consider a corporation where one group of shareholders holds sincere religious beliefs and another group of shareholders does not share those beliefs but, for a price, will allow the religious shareholders to request a religious exemption to a neutrally applicable law on behalf of the corporation. The corporation is potentially both religiously sincere and insincere at the same time. A claim by the corporation for a religious accommodation requires the court to solve the paradox created by this duality and to declare the corporation, as a whole, either sincere or insincere in its beliefs. Although the Supreme Court and scholars …

Taking Compliance Seriously, John Armour, Jeffrey N. Gordon, Geeyoung Min

Faculty Scholarship

How can we ensure corporations play by the “rules of the game” – that is, laws encouraging firms to avoid socially harmful conduct? Corporate compliance programs play a central role in society’s current response. Prosecutors give firms incentives – through discounts to penalties – to implement compliance programs that guide and monitor employees’ behavior. However, focusing on the incentives of firms overlooks the perspective of managers, who decide how much firms invest in compliance.

We show that stock-based pay, ubiquitous for corporate executives, creates systematic incentives to short-change compliance. Compliance is a long-term investment for firms, whereas managers’ time horizon …