Law Commons^™

Wilkes V. Springside Nursing Home, Inc.: A Historical Perspective, Mark J. Loewenstein

Publications

No abstract provided.

The Insignificance Of Proxy Access, Marcel Kahan, Edward B. Rock

All Faculty Scholarship

No abstract provided.

The Political Economy Of Fraud On The Market, William W. Bratton, Michael L. Wachter

All Faculty Scholarship

No abstract provided.

Somebody's Watching Me: Fcpa Monitorships And How They Can Work Better, F. Joseph Warin, Michael S. Diamant, Veronica S. Root

Journal Articles

This article explores the rise of the corporate compliance monitor as a condition for settling violations of the U.S. Foreign Corrupt Practices Act (“FCPA”) — a setting in which federal prosecutors routinely impose monitors. If U.S. enforcement authorities maintain their current approach, the reality is that companies facing liability for violating the FCPA are likely to have a monitor imposed on them as part of a settlement agreement. From the U.S. government’s perspective, monitorships make sense for companies that violate anti-bribery laws, making it important for offending corporations to learn how to deal with monitors. Pulling from the authors’ extensive …

Inside-Out Corporate Governance, David A. Skeel Jr., Vijit Chahar, Alexander Clark, Mia Howard, Bijun Huang, Federico Lasconi, A.G. Leventhal, Matthew Makover, Randi Milgrim, David Payne, Romy Rahme, Nikki Sachdeva, Zachary Scott

All Faculty Scholarship

Until late in the twentieth century, internal corporate governance—that is, decision making by the principal constituencies of the firm—was clearly distinct from outside oversight by regulators, auditors and credit rating agencies, and markets. With the 1980s takeover wave and hedge funds’ and equity funds’ more recent involvement in corporate governance, the distinction between inside and outside governance has eroded. The tools of inside governance are now routinely employed by governance outsiders, intertwining the two traditional modes of governance. We argue in this Article that the shift has created a new governance paradigm, which we call inside-out corporate governance.

Using the …

Reconceiving Corporate Personhood, Elizabeth Pollman

All Faculty Scholarship

Why is a corporation a “person” for purposes of the Constitution? This old question has become new again with public outrage over Citizens United, the recent campaign finance case which expanded corporate constitutional speech rights. This Article traces the historical and jurisprudential developments of corporate personhood and concludes that the doctrine’s origins had the limited purview of protecting individuals’ property and contract interests. Over time, the Supreme Court expanded the doctrine without a coherent explanation or consistent approach. The Court has relied on the older cases that were decided in different contexts and on various flawed conceptions of the corporation. …

The Model Business Corporation Act At Sixty: Shareholders And Their Influence, Lisa Fairfax

All Faculty Scholarship

In the sixty years since the Committee on Corporate Laws (Committee) promulgated the Model Business Corporation Act (MBCA), there have been significant changes in corporate law and corporate governance. One such change has been an increase in shareholder activism aimed at enhancing shareholders’ voting power and influence over corporate affairs. Such increased shareholder activism (along with its potential for increase in shareholder power) has sparked considerable debate. Advocates of increasing shareholder power insist that augmenting shareholders’ voting rights and influence over corporate affairs is vital not only for ensuring board and managerial accountability, but also for curbing fraud and other …

Fiduciary Duty And The Public Interest, Cheryl L. Wade

Faculty Publications

(Excerpt)

Professor Tamar Frankel’s excellent book, Fiduciary Law, is a thorough and comprehensive look at the fiduciary-law forest. My contribution to the Symposium on The Role of Fiduciary Law and Trust in the Twenty-First Century is one leaf on one branch of one tree in the forest that Professor Frankel so expertly navigates. In this Essay, I explore the fiduciary relationship between corporate directors and officers and the shareholders they serve. I examine how the breach of fiduciary duties owed to shareholders has the power to dramatically impact non-shareholder groups.

Professor Frankel accurately observes that “[f]iduciary duties are anchored …

Beyond Profit: Rethinking Corporate Social Responsibility And Greenwashing After The Bp Oil Disaster, Miriam A. Cherry, Judd F. Sneirson

Faculty Publications

The explosion of the BP-leased Deepwater Horizon and subsequent oil spill stand as an indictment not just of our national energy priorities and environmental law enforcement; they equally represent a failure of Anglo-American corporate law and what passes for corporate social responsibility in business today. Using BP and the disaster as a compelling case study, this Article examines green marketing and corporate governance and identifies elements of each that encourage firms to engage only superficially in corporate social responsibility yet trumpet those efforts to eager consumers and investors. This Article then proposes reforms and protections designed to increase corporate social …

Citizens United And The Corporate Form, Reuven S. Avi-Yonah

Articles

In Citizens United vs. FEC, the Supreme Court struck down a Federal statute banning direct corporate expenditures on political campaigns. The decision has been widely criticized and praised as a matter of First Amendment law. But it is also interesting as another step in the evolution of our legal views of the corporation. This article argues that by viewing Citizens United through the prism of theories about the corporate form, it is possible to see that the majority and the dissent departed from previous Supreme Court jurisprudence on the First Amendment rights of corporations. It is also possible to then …

A Behavioral Framework For Securities Risk, Tom C.W. Lin

UF Law Faculty Publications

This article provides the first critical analysis and redesign of the existing securities risk disclosure framework given new insights from the emerging, interdisciplinary field of behavioral economics. Disclosure is the principle at the heart of federal securities regulation. Beneath that core principle of disclosure is the basic assumption that the reasonable investor is the idealized über-rational person of neoclassical economic theory. Therefore, once armed with the requisite information investors presumably can protect themselves through rational choice. Descriptively, however, real investors are not like their rational, neoclassical kin. This article examines this incongruence between the idealized rational investor and the imperfect …

Normative Justifications For Lax (Or No) Corporate Fiduciary Duties: A Tale Of Problematic Principles, Imagined Facts And Inefficient Outcomes, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

Corporate fiduciary duty standards are at an all-time low in this country. Ironically, the deterioration in standards has come to full maturity during the last two decades, a period of significant and notorious corporate managerial failures.

The deterioration in the standards by which we measure the appropriateness of the actions of corporate managers has been fueled by influential judges' and scholars' ("Advocates"'), who vigorously-and seemingly quite effectively-argue in favor of a lax fiduciary duty regime for corporate managers.

Normative justifications for lax corporate fiduciary duty standards, however, are weak. The justifications fail to provide a persuasive reason to abandon the …

The Behavioral Economics Of Mergers And Acquisitions, Donald C. Langevoort

Georgetown Law Faculty Publications and Other Works

The world of mergers and acquisitions seems like a setting in which rationality necessarily dominates. There are high stakes, focused and sustained attention, and expert advisers who are repeat players. In the economics and management literature, however, there has been a great deal of research on what might be called “behavioral M&A”—using insights from psychology to explain observed patterns of behavior in the acquisitions marketplace. To date, the law has largely been uninterested in the psychological dynamics of corporate acquisitions. This essay looks at recent research on such issues as the role of overconfidence, hubris, anchoring, etc. in explaining buy-side …

Contract, Uncertainty, And Innovation, Ronald J. Gilson, Charles F. Sabel, Robert E. Scott

Faculty Scholarship

Contract today increasingly links entrepreneurial innovations to the efforts and finance necessary to transform ideas into value. In this chapter, we describe the match between a form of contract that “braids”1 formal and informal contractual elements in novel ways and the process by which innovation is pursued.

Corporations, Corruption, And Complexity: Campaign Finance After Citizens United, Richard Briffault

Faculty Scholarship

Few campaign finance cases have drawn more public attention than the Supreme Court's decision in Citizens United v. FEC. The Court's invalidation of a sixty-year-old federal law – and comparable laws in two dozen states – banning corporations from engaging in independent spending in support of or opposition to candidates strongly affirms the right of corporations to engage in electoral advocacy. Critics – and most, albeit not all, of both the popular and academic commentary on the decision has been critical – have condemned the idea that corporations enjoy the same rights to spend on elections as natural persons. …

The Tax Consequences Of Corporate Reorganisations In China, Wei Cui, Richard Krever

All Faculty Publications

The story of China’s income taxation of corporate reorganisations falls into four distinct periods. The first years of the development of a market economy were a period of benign neglect as tax authorities came to grips with a new tax system and some domestic taxpayers exploited unintended exemptions for reorganisation transactions. A dialectic emerged during the second period of reform with a shift towards a more conventional company tax system based on widely-accepted normative tax principles, while at the same time concessional rules were enacted for transactions favoured by the economic planners. The third stage saw a winding back of …

Corporate Monitorships And New Governance Regulation: In Theory, In Practice, And In Context, Cristie Ford, David Hess

All Faculty Publications

This paper was prepared for a conference on "New Governance and the Business Organization" at the University of British Columbia in May 2009. It considers government agencies' increasingly common strategy of resolving corporate criminal law and securities regulations violations by way of settlement agreements that require corporations to improve their compliance programs and hire independent monitors to oversee the changes. Based on our interviews with corporate monitors, regulators, and others in the United States and Canada, we identify the ways in which these monitorships in practice fall substantially short of the ideal new governance model we describe. These failings are …

Introduction To 'New Governance And The Business Organization', Cristie Ford, Mary Condon

All Faculty Publications

In the fall of 2010, the University of British Columbia Faculty of Law welcomed a group of scholars from around the world to consider the state, and evolution, of responsive regulation, in both theory and practice. The occasion was the presence of Dr. John Braithwaite as UBC Law’s inaugural Fasken Martineau Senior Visiting Scholar. This paper is an introductory essay to the special edition of the UBC Law Review devoted to the workshop’s resulting work products. The volume begins with John Braithwaite’s own reflections on the responsive regulation project. On one level, the set of essays that follows his can …

We Are The (National) Champions: Understanding The Mechanisms Of State Capitalism In China, Li-Wen Lin, Curtis J. Milhaupt

All Faculty Publications

While China appears to present a new variety of capitalism, frequently labeled "state capitalism," the features of this system - particularly the organizational structure surrounding China’s most important state-owned enterprises (the national champions) - remains a black box. Corporate governance scholarship on China has focused on listed firms, but listed SOEs in China are nested in vertically integrated corporate groups, and the groups are strategically linked to other business groups, as well as to the Communist Party and to governmental organs. While the parent company of the listed firms has a governmental controlling shareholder in the form of an agency …

Four Varieties Of Social Responsibility: Making Sense Of The 'Sphere Of Influence' And 'Leverage' Debate Via The Case Of Iso 26000, Stepan Wood

All Faculty Publications

One of the key controversies in social responsibility discourse is whether an organization’s responsibility should be based on its capacity to influence other parties or only on its actual contribution to social and environmental outcomes. On one side of the debate are those who argue that the limits of an organization’s responsibility should be defined in terms of its “sphere of influence” (SOI): the greater the influence, the greater the responsibility to act. On the other side are those who reject the SOI approach as ambiguous, misleading, normatively undesirable and prone to strategic manipulation. Foremost among the critics is the …

The Meaning Of 'Sphere Of Influence' In Iso 26000, Stepan Wood

All Faculty Publications

The relationship between a company’s influence and its social responsibilities is the subject of persistent controversy, manifested for example in the debate over the use of the concept of “sphere of influence” (SOI) to define the scope of a company’s social responsibility. Early drafts of the ISO 26000 guide on social responsibility employed SOI in this way, stating among other things that influence can give rise to responsibility and that generally, the greater the ability to influence, the greater the responsibility. The UN Special Representative on business and human rights, John Ruggie, rejected this use of SOI as ambiguous, misleading, …

Corporate Governance Reform For The 21st Century: A Critical Reassessment Of The Shareholder Primacy Model, Carol Liao

All Faculty Publications

This article questions the efficiency of the shareholder primacy model of corporate governance in light of the financial calamities that have plagued the first decade of the 21st century. Reform efforts following the global financial crisis have focused on failures in securities regulation, but that is only part of the story. Effective reform measures must also address the legal and normative prescriptions found within existing governance structures, and the collateral effect those prescriptions have on political and regulatory inaction.

There was strong ideological support for the shareholder primacy model at the start of the century. Following the corporate and accounting …

Kiobel And Corporate Immunity Under The Alien Tort Statute: The Struggle For Clarity Post-Sosa, Dorothy S. Lund

Faculty Scholarship

In September 2010, a two-judge Second Circuit majority ruled that corporations are immune from liability under the Alien Tort Statute (“ATS”). This statute, which grants aliens access to federal district courts, has emerged as a controversial tool for international norm enforcement in the last thirty years. The unexpected decision to foreclose corporate liability has generated a wave of criticism from human rights activists and international law scholars who claim that the decision is grounded in a fundamental misunderstanding of international law.

This commentary examines the Kiobel decision against other recent interpretations of the ATS, especially those following the Supreme Court’s …

Chasing The Greased Pig Down Wall Street: A Gatekeeper’S Guide To The Psychology, Culture And Ethics Of Financial Risk-Taking, Donald C. Langevoort

Georgetown Law Faculty Publications and Other Works

The current financial crisis has once again focused attention on lawyers, corporate directors and auditors as gatekeepers, who are expected to introduce some degree of cognitive independence to the task of risk assessment and risk management in public companies, including financial services firms. This essay examines the psychological and cultural forces that may distort risk perception and risk motivation in hyper-competitive firms, beyond the standard economic incentives associated with agency costs and moral hazards, warning gatekeepers against too easily assuming that all is well when insiders display high levels of intensity, focus and devotion to hard-to-achieve goals. In fact, these …

The Post-Citizens United Fantasy-Land, Roy A. Schotland

Georgetown Law Faculty Publications and Other Works

First, a bouquet for the illuminating facts presented by Professors Wert, Gaddie, and Bullock. They make dramatically clear how minuscule independent spending by corporate PACs has been (that is, those PACs’ direct spending as distinct from support by those PACs or their corporate sponsors for spending by intermediaries like the Chamber of Commerce). Their showing is borne out by experience this year: corporate support for campaigns is almost all hidden, flowing through intermediaries, which is why getting effective disclosure is more important than ever, as the Court clearly recognizes (We probably owe much to Justice Kennedy for the fact that …

Deconstructing Lyondell: Reconstructing Revlon, Lawrence Lederman

Articles & Chapters

No abstract provided.

A Model Of Optimal Corporate Bailouts, Antonio E. Bernardo, Eric L. Talley, Ivo Welch

Faculty Scholarship

We analyze incentive-efficient government bailouts within a canonical model of intra-firm moral hazard. Bailouts exacerbate the moral hazard of firms and managers in two ways. First, they make them less averse to failing. Second, the taxes to fund bailouts dampen their incentives. Nevertheless, if third-party externalities from keeping the firm alive are strong, bailouts can improve welfare. Our model suggests that governments should use bailouts sparingly, where social externalities are large and subsidies small; eliminate incumbent owners and managers to improve a priori incentives; and finance bailouts through redistributive taxes on productive firms instead of forcing recipients to repay in …

Economic Crisis And Share Price Unpredictability: Reasons And Implications, Edward G. Fox, Merritt B. Fox, Ronald J. Gilson

Faculty Scholarship

The volatility of share returns for individual companies increased sharply during the recent financial crisis. The larger part of this increase was due to a dramatic rise – five fold as measured by variance – in idiosyncratic risk. We find that this pattern repeats itself during each major economic reversal going back 85 years. Because idiosyncratic risk is what is involved, this increase cannot be explained by changes in predictions concerning the future course of the economy as a whole.

Our first goal is to explain why difficult economic times, which are defined in terms of market wide phenomena, make …