Law Commons^™

Unentrapped, William W. Bratton

All Faculty Scholarship

No abstract provided.

Shareholder Primacy's Corporatist Origins: Adolf Berle And The Modern Corporation, William W. Bratton, Michael L. Wachter

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No abstract provided.

Fiduciary Duties And The Analyst Scandals, Jill E. Fisch

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No abstract provided.

Does Analyst Independence Sell Investors Short?, Jill E. Fisch

All Faculty Scholarship

Regulators responded to the analyst scandals of the late 1990s by imposing extensive new rules on the research industry. These rules include a requirement forcing financial firms to separate investment banking operations from research. Regulators argued, with questionable empirical support, that the reforms were necessary to eliminate analyst conflicts of interest and ensure the integrity of sell-side research.

By eliminating investment banking revenues as a source for funding research, the reforms have had substantial effects. Research coverage of small issuers has been dramatically reduced—the vast majority of small capitalization firms now have no coverage at all. The market for research …

Criminalization Of Corporate Law: The Impact On Shareholders And Other Constituents, Jill E. Fisch

All Faculty Scholarship

No abstract provided.

Measuring Efficiency In Corporate Law: The Role Of Shareholder Primacy, Jill E. Fisch

All Faculty Scholarship

The shareholder primacy norm defines the objective of the corporation as maximization of shareholder wealth. Law and economics scholars have incorporated the shareholder primacy norm into their empirical analyses of regulatory efficiency. An increasingly influential body of scholarship uses empirical methodology to evaluate legal rules that allocate power within the corporation. By embracing the shareholder primacy norm, empirical scholars offer normative assessments about regulatory choices based on the effect of legal rules on measures of shareholder value such as stock price, net profits, and Tobin’s Q.

This Article challenges the foundations of using the shareholder primacy norm to judge corporate …

Regulatory Responses To Investor Irrationality: The Case Of The Research Analyst, Jill E. Fisch

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An extensive body of behavioral economics literature suggests that investors do not behave with perfect rationality. Instead, investors are subject to a variety of biases that may cause them to react inappropriately to information. The policy challenge posed by this observation is to identify the appropriate response to investor irrationality. In particular, should regulators attempt to protect investors from bad investment decisions that may be the result of irrational behavior?

This Article considers the appropriate regulatory response to investor irrationality within the concrete context of the research analyst. Many commentators have argued that analyst conflicts of interest led to biased …

Supersize Pay, Incentive Compatibility, And The Volatile Shareholder Interest, William W. Bratton

All Faculty Scholarship

No abstract provided.

The New Dividend Puzzle, William W. Bratton

All Faculty Scholarship

No abstract provided.

Do Institutions Matter? The Impact Of The Lead Plaintiff Provision Of The Private Securities Litigation Reform Act, Stephen Choi, Jill E. Fisch, A. C. Pritchard

All Faculty Scholarship

When Congress enacted the Private Securities Litigation Reform Act in 1995 (“PSLRA”), the Act’s “lead plaintiff” provision was the centerpiece of its efforts to increase investor control over securities fraud class actions. The lead plaintiff provision alters the balance of power between investors and class counsel by creating a presumption that the investor with the largest financial stake in the case will serve as lead plaintiff. The lead plaintiff then chooses class counsel and, at least in theory, negotiates the terms of counsel’s compensation.

Congress’s stated purpose in enacting the lead plaintiff provision was to encourage institutional investors—pension funds, mutual …

The Qualified Legal Compliance Committee: Using The Attorney Conduct Rules To Restructure The Board Of Directors, Jill E. Fisch, Caroline M. Gentile

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The Securities and Exchange Commission introduced a new corporate governance structure, the qualified legal compliance committee, as part of the professional standards of conduct for attorneys mandated by the Sarbanes-Oxley Act of 2002. QLCCs are consistent with the Commission’s general approach to improving corporate governance through specialized committees of independent directors. This Article suggests, however, that assessing the benefits and costs of creating QLCCs may be more complex than is initially apparent. Importantly, QLCCs are unlikely to be effective in the absence of incentives for active director monitoring. This Article concludes by considering three ways of increasing these incentives.

How To Fix Wall Street: A Voucher Financing Proposal For Securities Intermediaries, Stephen Choi, Jill E. Fisch

All Faculty Scholarship

No abstract provided.

Enron, Sarbanes-Oxley And Accounting: Rules Versus Principles Versus Rents, William W. Bratton

All Faculty Scholarship

No abstract provided.

Shareholder Value And Auditor Independence, William W. Bratton

All Faculty Scholarship

This Article questions the practice of framing problems concerning auditors’ professional responsibility inside a principal-agent paradigm. If professional independence is to be achieved, auditors cannot be enmeshed in agency relationships with the shareholders of their audit clients. As agents, the auditors by definition become subject to the principal’s control and cannot act independently. For the same reason, auditors’ duties should be neither articulated in the framework of corporate law fiduciary duty, nor conceived relationally at all. These assertions follow from an inquiry into the operative notion of the shareholder-beneficiary. The Article unpacks the notion of the shareholder and tells a …

The Securities Analyst As Agent: Rethinking The Regulation Of Analysts, Jill E. Fisch, Hillary A. Sale

All Faculty Scholarship

Recent press has highlighted shocking examples of bias, self-dealing, and inaccuracy in the behavior of the securities analyst. Critics have attributed the bubble and subsequent crash in the technology sector to analyst hype and posited that undue analyst optimism contributed to scandals such as Enron. After many years of minimal regulator oversight analysts are now the subject of extensive regulatory reform proposals, including a mandate in the Sarbanes-Oxley Act of 2002 requiring that the Securities and Exchange Commission adopt a variety of restrictions on analyst behavior.

Despite the media attention, there have been few attempts to conceptualize carefully the analyst's …

Berle And Means Reconsidered At The Century's Turn, William W. Bratton

All Faculty Scholarship

No abstract provided.

Teaching Corporate Governance Through Shareholder Litigation, Jill E. Fisch

All Faculty Scholarship

No abstract provided.

The Scope Of Private Securities Litigation: In Search Of Liability Standards For Secondary Defendants, Jill E. Fisch

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Recent federal court decisions have struggled to apply the Supreme Court's decision in Central Bank v. First Interstate to determine when outside professionals should be held liable as primary violators under section IO(b) of the Securities Exchange Act. In keeping with the Court's current interpretive methodology, Central Bank and its progeny employ a textualist approach. In this Article, Professor Fisch argues that literal textualism is an inappropriate approach for interpreting the federal securities laws generally and misguided in light of legislative developments post-dating the Central Bank decision. Instead, Professor Fisch advocates an approach that weighs Congress 's recent endorsement of …

Comparative Corporate Governance And The Theory Of The Firm: The Case Against Global Cross Reference, William W. Bratton, Joseph A. Mccahery

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Professors Bratton and McCahery take up the main questions addressed by the literature on comparative corporate governance: whether national governance systems can be expected to converge in the near future, and whether the focal point of that convergence will be a new, hybrid governance system comprised of the best practices drawn from different systems. This Article advances the view that neither global convergence that eliminates systemic differences nor the emergence of a hybrid best practice safely can be projected because each national governance system is a system to a significant extent. Each system, rather than consisting of a loose collection …

Dividends, Noncontractibility, And Corporate Law, William W. Bratton

All Faculty Scholarship

No abstract provided.

From Legitimacy To Logic: Reconstructing Proxy Regulation, Jill E. Fisch

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On October 16, 1992, after a comprehensive review of its system of proxy regulation and after two separate amendment proposals that drew more than 1700 letters of comment from the public, the Securities and Exchange Commission (the "Commission" or the "SEC") voted to reform the federal proxy rules. The reforms were "intended to facilitate shareholder communications and to enhance informed proxy voting, and to reduce the cost of compliance with the proxy rules for all persons engaged in a proxy solicitation.' The SEC explained the amendments by stating that the rules were "impeding shareholder communication and participation in the corporate …

As Time Goes By: New Questions About The Statute Of Limitations For Rule 10b-5, Jill E. Fisch

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In this Article. Professor Fisch examines the history and legacy of Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilberston, the controversial 1991 Supreme Court decision that established a federal statute of limitations for private causes of action brought under Rule 10b-5. In Part I Professor Fisch reviews the history of the 10b-5 statute of limitations prior to LampE Part II then analyzes both the issues resolved and questions raised by Lampf. Part III traces the congressional reaction to Lampf that culminated in the addition of section 27A to the Securities Act of 1934. In Part IV, Professor Fisch concludes by …

Self-Regulation, Normative Choice, And The Structure Of Corporate Fiduciary Law, William W. Bratton

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No abstract provided.

Confronting The Ethical Case Against The Ethical Case For Constituency Rights, William W. Bratton

All Faculty Scholarship

No abstract provided.

Start Making Sense: An Analysis And Proposal For Insider Trading Regulation, Jill E. Fisch

All Faculty Scholarship

No abstract provided.

The Economics And Jurisprudence Of Convertible Bonds, William W. Bratton

All Faculty Scholarship

Professor Bratton examines judicial regulation of issuer-bondholder conflicts of interest within three different, but closely related doctrinal frameworks: neoclassical contract interpretation; contract avoidance; and corporate law fiduciary restraint. After discussing the elements of convertible bond valuation and their interaction with issuer actions giving rise to conflicts of interest, he evaluates the case for judicial intervention to protect bondholder interests. He concludes that ·bondholder protective intervention is fair and tolerably efficient, provided it is kept within the bounds of contract interpretation. But he finds that more aggressive judicial intervention under the frameworks of contract avoidance and fiduciary restraint carries an unnecessary …