Law Commons^™

Gift Horses, Choosy Beggars, And Other Reflections On The Role And Utility Of Social Enterprise Law, Cassady V. Brewer

Faculty Publications By Year

The U.S. law of social enterprise is growing rapidly. Since 2008, one-half of all U.S. states have modified their business law to establish special legal forms designed for social enterprise. Meanwhile, even with twenty-five states adopting special laws for social enterprise, the legal debate surrounding social enterprise continues. Rather than rehashing that debate, this essay sets forth the author’s personal perspective on the role and utility of social enterprise. The essay argues that, except in limited circumstances, social enterprise is superior to traditional philanthropy when it comes to solving longstanding humanitarian or environmental problems. U.S. business law thus should continue …

Non-Party Interests In Closing Opinion Letters, Heather Hughes

Articles in Law Reviews & Other Academic Journals

INTRODUCTION: What do transactional lawyers do when they issue third-party opinion letters in financial transactions? This descriptive question turns out to be quite complex'-so complex that the normative question of what lawyers should do when they issue opinions, as well as the practical question of what they could do, are difficult to answer. This Symposium Article reflects upon third-party closing opinions as a central aspect of business law practice that can be opaque to outsiders. The ideas expressed here are exploratory. In the spirit of reflecting on what transactional lawyers do, this contribution considers deal lawyer strategies as potential tools …

Citizens Derided: Corporate Politics In The Roberts Court, Jamin B. Raskin

Articles in Law Reviews & Other Academic Journals

No abstract provided.

Pre-Crime Restraints: The Explosion Of Targeted, Non-Custodial Prevention, Jennifer Daskal

Articles in Law Reviews & Other Academic Journals

This Article exposes the ways in which noncustodial pre-crime restraints have proliferated over the past decade, focusing in particular on three notable examples — terrorism-related financial sanctions, the No Fly List, and the array of residential, employment, and related restrictions imposed on sex offenders. Because such restraints do not involve physical incapacitation, they are rarely deemed to infringe core liberty interests. Because they are preventive, not punitive, criminal law procedural protections do not apply. They have exploded largely unchecked — subject to little more than bare rationality review and negligible procedural protections — and without any coherent theory as to …

The Problems And Promise Of "Enhanced Business Judgement", Mary Siegel

Articles in Law Reviews & Other Academic Journals

No abstract provided.

In-Sourcing Corporate Responsibility For Enforcement Of The Foreign Corrupt Practices Act, Larry D. Thompson

Scholarly Works

In this article I first review our nation's long-standing and active aversion to corporate corruption overseas, as principally embodied in the Foreign Corrupt Practices Act. I then explain how achievement of the FCPA's goals is undermined by the uncertainty in current federal enforcement policies and the consequent ambivalence toward self disclosure exhibited by multinational corporations. Finally, I argue that the only realistic way to make up the shortcomings in FCPA enforcement that flow from the Justice Department's limited resources is to motivate corporations themselves to police corruption in their foreign subsidiaries by giving them a concrete incentive in the form …

The New Regulation Of Small Business Capital Formation: The Impact—If Any—Of The Jobs Act, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

The Jumpstart Our Business Startups Act (JOBS Act) was—at least apparently—driven by the desire to promote job creation by facilitating small business capital formation. The legislation was premised on the correct assumptions that small businesses create jobs and that an efficient access to capital is essential for small businesses to emerge, compete, and survive in our competitive, market economy. It is certain that the JOBS Act will have an effect on businesses’ access to external capital. With regard, however, to the capital formation efforts of small businesses—businesses that may account for more than 25% of our national economy—the analysis offered …

Managing Systemic Risk In Legal Systems, J.B. Ruhl

Vanderbilt Law School Faculty Publications

The American legal system has proven remarkably robust even in the face vast and often tumultuous political, social, economic, and technological change. Yet our system of law is not unlike other complex social, biological, and physical systems in exhibiting local fragility in the midst of its global robustness. Understanding how this “robust yet fragile (RYF) dilemma operates in legal systems is important to the extent law is expected to assist in managing systemic risk, the risk of large local or even system-wide failures in other social systems. Indeed, legal system failures have been blamed as partly responsible for disasters such …

Shareholder Voting In An Age Of Intermediary Capitalism, Paul H. Edelman, Randall S. Thomas, Robert B. Thompson

Vanderbilt Law School Faculty Publications

Shareholder voting is a key part of contemporary American corporate governance. As numerous contemporary battles between corporate management and shareholders illustrate, voting has never been more important. Yet, traditional theory about shareholder voting, rooted in concepts of residual ownership and a principal/agent relationship, does not reflect recent fundamental changes as to who shareholders are and their incentives to vote (or not vote). In the first section of the article, we address this deficiency directly by developing a new theory of corporate voting that offers three strong and complementary reasons for shareholder voting. In the middle section, we apply our theory …

Private Equity Firms As Gatekeepers, Elisabeth De Fontenay

Faculty Scholarship

Notwithstanding the considerable attention private equity receives, there continues to be substantial confusion about what private equity does and whether this creates value. Calls for more aggressive regulation of the industry reflect a skeptical view of private equity as—at best—a zero-sum game, in which profits are generated only at the expense of other constituencies. The standard defense of private equity points to its corporate governance advantages as a source of value. This Article identifies an overlooked and increasingly important way in which private equity creates value: private equity firms act as gatekeepers in the debt markets. As repeat players, private …

A Difficult Conversation: Corporate Directors On Race And Gender, Kimberly D. Krawiec, John M. Conley, Lissa L. Broome

Faculty Scholarship

This symposium essay summarizes our ongoing ethnographic research on corporate board diversity, discussing the central tension in our respondents’ views – their overwhelmingly enthusiastic support of board diversity coupled with an inability to articulate coherent accounts of board diversity benefits that might rationalize that enthusiasm. As their reactions make clear, frank dialogue about race and gender – even a seemingly benign discussion of diversity’s benefits – can be a difficult conversation.

Protecting American Innovators By Combating The Decline Of Patents Granted To Small Entities, W. Keith Robinson

Faculty Journal Articles and Book Chapters

The new patent laws and recent economic trends indicate that there is a difficult time ahead for small entities. American entrepreneurs and small businesses have created several of the major technological innovations in the past forty years. However, statistics indicate that patents granted to small entities have declined. In the wake of this trend, the U.S. Patent system has undergone significant changes. Currently, the United States Patent and Trademark Office (“USPTO”) is in the process of implementing the policies and procedures outlined in its five-year strategic plan. Further, the Leahy-Smith America Invents Act (“AIA”), the largest patent reform law since …

The Problem Of Abusive Related-Partner Allocations, Gregg D. Polsky, Emily Cauble

Scholarly Works

This Article highlights a flaw in the existing rules regarding partnership tax allocations that has not yet received sufficient attention by existing literature. Namely, the partnership tax allocation rules are implicitly premised on the assumption that partners are unrelated and, thus, transact with each other at arm’s length. As a result, related partners can and do devise tax allocation schemes that exploit the gap in the current partnership tax allocation rules to achieve unwarranted tax savings.

This Article proposes to end this abuse by disallowing special allocations among related partners. Under the proposal, allocations among related partners would be required …

Climate Change And Business Law In The United States: Using Procurement, Pay, And Policy Changes To Influence Corporate Behavior, Marcia Narine

Articles

No abstract provided.

Creating A Culture Of Compliance: Why Departmentalization May Not Be The Answer, Michele M. Destefano

Articles

Over the past few decades, as corporate criminal liability rules, sentencing guidelines, and settlement incentives have changed, therehas been increased emphasis on and resources devoted to thecompliance function at large publicly held companies. In this article, Professor DeStefano traces the development of the compliance function at large corporations and questions the recent mandate by certain governmental entities that malfeasant corporations designate a chief compliance officer and separate the compliance gatekeeping function from the legal department so that this chief compliance officer does not report to the general counsel. She categorizes the types of arguments made for and against departmentalization and …

When Two Worlds Collide: The Interface Between Competition Law And Data Protection, Fred H. Cate, Christopher Kuner, Christopher Millard, Dan Jerker B. Svantesson, Orla Lynskey

Articles by Maurer Faculty

No abstract provided.

Lawyers And Fools: Lawyer-Directors In Public Corporations, Lubomir P. Litov, Simone M. Sepe, Charles K. Whitehead

Cornell Law Faculty Publications

The accepted wisdom—that a lawyer who becomes a corporate director has a fool for a client—is outdated. The benefits of lawyer-directors in today’s world significantly outweigh the costs. Beyond monitoring, they help manage litigation and regulation, as well as structure compensation to align CEO and shareholder interests. The results have been an average 9.5% increase in firm value and an almost doubling in the percentage of public companies with lawyer-directors.

This Article is the first to analyze the rise of lawyer-directors. It makes a variety of other empirical contributions, each of which is statistically significant and large in magnitude. First, …

The Governance Structure Of Shadow Banking, Steven L. Schwarcz

Faculty Scholarship

No abstract provided.

A Canadian Model Of Corporate Governance, Carol Liao

All Faculty Publications

What is Canada’s actual legal model to govern its corporations? Recent landmark judicial decisions indicate Canada is shifting away from an Anglo-American definition of shareholder primacy. Yet the Canadian securities commissions have become increasingly influential in the governance sphere, and by nature are shareholder-focused. Shareholders’ rights have increased well beyond what was ever contemplated by Canadian corporate laws, and the issue of greater shareholder vs. board control has now become the topic of live debate. The future of Canada's overall model seems to rest on what will be more compelling: the constancy of the corporate statutes and trajectory of the …

How Serious Is The Problem Of Base Erosion And Profit Shifting?, James R. Hines Jr.

Articles

In recent years, the problem of base erosion and profit shifting (BEPS) by multinational corporations has entered the public consciousness as a potentially important impediment to tax collections. The purpose of this article is to identify the nature of BEPS, consider empirical evidence of its magnitude, and evaluate proposed policy responses. There is considerable evidence that multinational firms arrange their affairs in a tax-sensitive manner, from which it is easy—indeed, perhaps a little too easy—to infer that beps is a serious problem. There are journalistic accounts of apparently spectacular international tax-avoidance schemes used by multinational corporations, though these stories commonly …

An Analysis Of Sec And Pcaob Enforcement Actions Against Engagement Quality Reviewers: A Comment And Extension In Support Of The Nevada Effect, Anthony J. Cataldo Ii, Lori Fuller, Thomas Miller

Accounting Faculty Publications

No abstract provided.

What Went Wrong: Prudent Management Of Endowment Funds And Imprudent Endowment Investing Policies, James J. Fishman

Elisabeth Haub School of Law Faculty Publications

Most colleges and universities of all sizes have an endowment, a fund that provides a stream of income and maintains the corpus of the fund in perpetuity. Organizations with large endowments, such as colleges, universities, and private foundations, all finance a significant part of their operations through the return received from the investment of this capital. This article examines the legal framework for endowment investing, endowment investing policies, their evolution to more sophisticated and riskier strategies, and the consequences evinced during the financial crisis of 2008 and beyond. It traces the approaches to endowment investing and chronicles the rise and, …

Fixing Multi-Forum Shareholder Litigation, Minor Myers

Faculty Scholarship

No abstract provided.

Time To Amend The Delaware Takeover Law, Stephen M. Shapiro, Dorothy S. Lund

Faculty Scholarship

As Professor Subramanian demonstrates with cogent statistical evidence, now is the time for the courts to put Section 203 in the dock and examine its constitutional merits. Better still, the Delaware legislature should clean house and amend this provision's criteria. In practical effect, it forbids a competitive tender offer, injuring shareholders who benefit from tender offer premiums, and the national economy, which benefits from the gravitation of industrial resources to their highest-valued uses.

Following the U.S. Supreme Court's decision in Edgar v. MITE Corp., which invalidated an Illinois takeover statute, the federal district court in Delaware routinely enjoined application of …

Finding Order In The Morass: The Three Real Justifications For Piercing The Corporate Veil, Jonathan Macey, Joshua Mitts

Faculty Scholarship

Few doctrines are more shrouded in mystery or litigated more often than piercing the corporate veil. We develop a new theoretical framework that posits that veil piercing is done to achieve three discrete public policy goals, each of which is consistent with economic efficiency: (1) achieving the purpose of an existing statute or regulation; (2) preventing shareholders from obtaining credit by misrepresentation; and (3) promoting the bankruptcy values of achieving the orderly, efficient resolution of a bankrupt's estate. We analyze the facts of veil-piercing cases to show how the outcomes are explained by our taxonomy. We demonstrate that a supposed …

Hobby Lobby And The Pathology Of Citizens United, Ellen D. Katz

Articles

Four years ago, Citizens United v. Federal Election Commission held that for-profit corporations possess a First Amendment right to make independent campaign expenditures. In so doing, the United States Supreme Court invited speculation that such corporations might possess other First Amendment rights as well. The petitioners in Conestoga Wood Specialties Corp. v. Sebelius are now arguing that for-profit corporations are among the intended beneficiaries of the Free Exercise Clause and, along with the respondents in Sebelius v. Hobby Lobby Stores, that they also qualify as “persons” under the Religious Freedom Restoration Act (RFRA). Neither suggestion follows inexorably from Citizens United, …

Corporate Governance And Executive Compensation: Evidence From Japan, Robert J. Jackson Jr., Curtis J. Milhaupt

Faculty Scholarship

Lawmakers around the world are now urging corporations to adopt governance and executive pay standards drawn largely from the American corporate law context. Yet little is known about how corporate governance actually influences executive compensation decisions outside of the United States-and whether adoption of these standards is likely to be desirable for investors abroad.

In this Article, we take advantage of a recent change in Japanese law to provide the first direct empirical evidence on executive pay in Japan. The evidence provides striking detail on the amount and structure of Japanese executive compensation. The data point to a previously unappreciated …

Fee-Shifting Bylaw And Charter Provisions: Can They Apply In Federal Court? – The Case For Preemption, John C. Coffee Jr.

Faculty Scholarship

In the first months after a decision of the Delaware Supreme Court upholding a fee-shifting bylaw under which the unsuccessful plaintiff shareholder was required to reimburse all defendants for their legal and other expenses in the litigation, some 24 public companies adopted a similar provision – either by means of a board-adopted bylaw or by placing such a provision in their certificate of incorporation (in the case of companies undergoing an IPO). In effect, private ordering is introducing a one-sided version of the “loser pays” rules. Indeed, as drafted, these provisions typically require a plaintiff who is not completely successful …

The Nordic Model Of Corporate Governance: The Role Of Ownership, Ronald J. Gilson

Faculty Scholarship

It is commonplace to credit the invention of the public corporation as an important engine of economic growth. The creation of a long-lived vehicle that gave investors both tradable shares and limited liability allowed talented managers to raise capital to fund enterprise. Writing in 1926, the Economist magazine heralded this role:

The economic historian of the future may assign to the nameless inventor of the principle of limited liability, as applied to trading corporations, a place of honor with Watt and Stephenson, and other pioneers of the Industrial Revolution. The genius of these men produced the means by which man’s …

Merger Control Procedures And Institutions: A Comparison Of The Eu And Us Practice, William E. Kovacic, Petros C. Mavroidis, Damien J. Neven

Faculty Scholarship

The objective of this paper is to discuss and compare the role that different constituencies play in US and EU procedures for merger control. We describe the main constituencies (both internal and external) involved in merger control in both jurisdictions and discuss how a typical merger case would be handled under these procedures. At each stage, we consider how the procedure unfolds, which parties are involved, and how they can affect the procedure. Our discussion reveals a very different ecology. EU and US procedures differ in terms of their basic design and in terms of the procedures that are naturally …