Open Access. Powered by Scholars. Published by Universities.®

Law Commons

Open Access. Powered by Scholars. Published by Universities.®

Articles 1 - 30 of 188

Full-Text Articles in Law

Texas Gulf Sulphur And The Genesis Of Corporate Liability Under Rule 10b-5, Adam C. Pritchard, Robert B. Thompson Oct 2018

Texas Gulf Sulphur And The Genesis Of Corporate Liability Under Rule 10b-5, Adam C. Pritchard, Robert B. Thompson

Articles

This Essay explores the seminal role played by SEC v. Texas Gulf Sulphur Co. in establishing Rule 10b-5’s use to create a remedy against corporations for misstatements made by their officers. The question of the corporation’s liability for private damages loomed large for the Second Circuit judges in Texas Gulf Sulphur, even though that question was not directly at issue in an SEC action for injunctive relief. The judges considered both, construing narrowly “in connection with the purchase or sale of any security,” and the requisite state of mind required for violating Rule 10b-5. We explore the choices ...


Piling On? An Empirical Study Of Parallel Derivative Suits, Stephen J. Choi, Jessica Erickson, Adam C. Pritchard Nov 2017

Piling On? An Empirical Study Of Parallel Derivative Suits, Stephen J. Choi, Jessica Erickson, Adam C. Pritchard

Articles

Using a sample of all companies named as defendants in securities class actions between July 1, 2005 and December 31, 2008, we study parallel suits relying on state corporate law arising out of the same allegations as the securities class actions. We test several ways that parallel suits may add value to a securities class action. Most parallel suits target cases involving obvious indicia of wrongdoing. Moreover, we find that although a modest percentage of parallel suits are filed first, over 80 percent are filed after a securities class action (termed “follow-on” parallel suits). We find that parallel suits and ...


China's 'Corporatization Without Privatization' And The Late 19th Century Roots Of A Stubborn Path Dependency, Nicholas Howson Oct 2017

China's 'Corporatization Without Privatization' And The Late 19th Century Roots Of A Stubborn Path Dependency, Nicholas Howson

Articles

This Article analyzes the contemporary program of “corporatization without privatization” in the People's Republic of China (PRC) directed at China's traditional state-owned enterprises (SOEs) through a consideration of long ago precursor enterprise establishments--starting from the last Chinese imperial dynasty's creation of “government-promoted/-supervised, merchant-financed/-operated” (guandu shangban) firms in the latter part of the nineteenth century. While analysts are tempted to see the PRC corporations with listings on international exchanges that dominate the global economy and capital markets as expressions of “convergence,” this Article argues that such firms in fact show deeply embedded aspects of path dependency ...


Contracting Out Of The Fiduciary Duty Of Loyalty: An Empirical Analysis Of Corporate Opportunity Waivers, Gabriel Rauterberg, Eric Talley Jun 2017

Contracting Out Of The Fiduciary Duty Of Loyalty: An Empirical Analysis Of Corporate Opportunity Waivers, Gabriel Rauterberg, Eric Talley

Articles

For centuries, the duty of loyalty has been the hallowed centerpiece of fiduciary obligation, widely considered one of the few “mandatory” rules of corporate law. That view, however, is no longer true. Beginning in 2000, Delaware dramatically departed from tradition by granting incorporated entities a statutory right to waive a crucial part of the duty of loyalty: the corporate opportunities doctrine. Other states have since followed Delaware’s lead, similarly permitting firms to execute “corporate opportunity waivers.” Surprisingly, more than fifteen years into this reform experiment, no study has attempted to either systematically measure the corporate response to these reforms ...


The Fallacious Objections To The Tax Treatment Of Carried Interest, Douglas A. Kahn, Jeffrey H. Kahn Jun 2017

The Fallacious Objections To The Tax Treatment Of Carried Interest, Douglas A. Kahn, Jeffrey H. Kahn

Articles

“The tax treatment of carried interest has become a notorious bete noire for many politicians and some academicians and practitioners. Both 2016 presidential candidates denounced the current tax treatment and vowed to change it. President Obama described the current treatment as a "tax loophole" which should be closed. Others have also characterized the current tax treatment as an abusive loophole.' It is the thesis of this article that those criticisms are unfounded. To the contrary, the current tax treatment accords with sound tax policy and is proper and appropriate. Given the broad approval that attended the attacks on carried interest ...


Tax Treatment Of A Marijuana Business, Douglas A. Kahn, Howard Bromberg Jan 2017

Tax Treatment Of A Marijuana Business, Douglas A. Kahn, Howard Bromberg

Articles

Currently, twenty-eight states and the District of Columbia allow the use of marijuana for medical purposes and permit the conduct of a business marketing of marijuana for that purpose. Eight of those states and the District of Columbia permit the recreational use of marijuana. There is reason to believe that more states will decriminalize the marketing of marijuana. However, marijuana is listed in Schedule 1 of the federal Controlled Substances Act of 1970 (CSA) which makes it illegal under federal law to manufacture or distribute marijuana even when it is legal to do so under local state law. In a ...


Multinational Firms And Tax Havens, James R. Hines Jr., Anna Gumpert, Monika Schnitzer Oct 2016

Multinational Firms And Tax Havens, James R. Hines Jr., Anna Gumpert, Monika Schnitzer

Articles

Multinational firms with operations in high-tax countries can benefit the most from reallocating taxable income to tax havens, though this is sufficiently difficult and costly that only 20.4% of German multinational firms have any tax haven affiliates. Among German manufacturing firms, a 1 percentage point higher foreign tax rate is associated with a 2.3% greater likelihood of owning a tax haven affiliate. This is consistent with tax avoidance incentives and contrasts with earlier evidence for U.S. firms. The relationship is less strong for firms in service industries, possibly reflecting the difficulty of reallocating taxable service income.


Carrot Or Stick? The Shift From Voluntary To Mandatory Disclosure Of Risk Factors, Karen K. Nelson, Adam C. Pritchard Jun 2016

Carrot Or Stick? The Shift From Voluntary To Mandatory Disclosure Of Risk Factors, Karen K. Nelson, Adam C. Pritchard

Articles

This study investigates risk factor disclosures, examining both the voluntary, incentive-based disclosure regime provided by the safe harbor provision of the Private Securities Litigation Reform Act as well as the SEC's subsequent mandate of these disclosures. Firms subject to greater litigation risk disclose more risk factors, update the language more from year to year, and use more readable language than firms with lower litigation risk. These differences in the quality of disclosure are pronounced in the voluntary disclosure regime, but converge following the SEC mandate as low-risk firms improved the quality of their risk factor disclosures. Consistent with these ...


Sec Investigations And Securities Class Actions: An Empirical Comparison, Stephen J. Choi, Adam C. Pritchard Mar 2016

Sec Investigations And Securities Class Actions: An Empirical Comparison, Stephen J. Choi, Adam C. Pritchard

Articles

Using actions with both an SEC investigation and a class action as our baseline, we compare the targeting of SEC-only investigations with class-action-only lawsuits. Looking at measures of information asymmetry, we find that investors in the market perceive greater information asymmetry following the public announcement of the underlying violation for class-action-only lawsuits compared with SEC-only investigations. Turning to sanctions, we find that the incidence of top officer resignation is greater for class-action-only lawsuits relative to SEC-only investigations. Our findings are consistent with the private enforcement targeting disclosure violations at least as precisely as (if not more so than) SEC enforcement.


The Pendulum Swings: Reconsidering Corporate Criminal Prosecution, David M. Uhlmann Jan 2016

The Pendulum Swings: Reconsidering Corporate Criminal Prosecution, David M. Uhlmann

Articles

Corporate crime continues to occur at an alarming rate, yet disagreement persists among scholars and practitioners about the role of corporate criminal prosecution. Some argue that corporations should face criminal prosecution for their misconduct, while others would reserve criminal prosecution for individual corporate officials. Perhaps as a result of this conflict, there has been a dramatic increase over the last decade in the use of deferred prosecution and non-prosecution agreements for some corporate crimes, even as the government continues to bring criminal charges for other corporate crimes. To move beyond our erratic approach to corporate crime, we need a better ...


Provisions Denying A Deduction For Illegal Expenses And Expenses Of An Illegal Business Should Be Repealed, Douglas A. Kahn, Howard Bromberg Jan 2016

Provisions Denying A Deduction For Illegal Expenses And Expenses Of An Illegal Business Should Be Repealed, Douglas A. Kahn, Howard Bromberg

Articles

Currently, the tax law denies a deduction for business expenses that violate a federal or state law (but only if the state law is generally enforced). In addition, losses, including business losses, cannot be deducted if they arise out of an illegal activity. For example, medical expenses are denied a deduction if they are illegal. Kickbacks, bribes, and rebates given in connection with the Medicaid or Medicare program are nondeductible. Any expenses, legal or not, incurred in connection with the conduct of a business of selling a controlled substance that is prohibited by federal law (or by the law of ...


Full Circle? The Single Tax Principle, Beps, And The New Us Model, Reuven S. Avi-Yonah Jan 2016

Full Circle? The Single Tax Principle, Beps, And The New Us Model, Reuven S. Avi-Yonah

Articles

This paper will argue that while there is some innovation in BEPS, it is in fact more of a continuation that a sharp break with the past. Like Alexis de Tocqueville’s French Revolution, BEPS represents both continuity and change. In particular, the single tax principle has formed the theoretical basis of much of the international tax regime from the beginning. And it is in fact this continuity rather than any sharp change that gives the final BEPS package its promise to, as Secretary General Gurria also promised, “put an end to double non-taxation.”


Back To 1913?: The Ryan Blueprint And Its Problems, Reuven S. Avi-Yonah Jan 2016

Back To 1913?: The Ryan Blueprint And Its Problems, Reuven S. Avi-Yonah

Articles

From the Revolutionary War to the late 19th century, the federal government was financed primarily through regressive tariffs on imported goods. The exception was the income tax enacted during the national emergency of the Civil War, which was allowed to expire in 1872. The rise of an industrial economy in the post- Civil War era led to significant increases in inequality, which the tariffs exacerbated by falling primarily on the working class. ‘‘Robber barons’’ like J.P. Morgan, Andrew Carnegie, and John D. Rockefeller did not consume most of their income, and their intangible wealth avoided state-level personal property taxes ...


The Three Causes Of Inversions: Reflections On Pfizer/Allergan And Notice 2015-79, Reuven S. Avi-Yonah Nov 2015

The Three Causes Of Inversions: Reflections On Pfizer/Allergan And Notice 2015-79, Reuven S. Avi-Yonah

Law & Economics Working Papers

On November 19, 2015, Treasury released Notice 2015-79 (the “Notice”). The Notice represents Treasury’s most recent response to the second wave of inversions, i.e., transactions in which US corporations become subsidiaries of foreign corporations without a meaningful change in their underlying business or in the location of their corporate headquarters. It follows on the heels of the announcement that Pfizer Inc. is considering a merger with Allergan PLC, an inverted Irish company, and supplements Notice 2014-52 from September 2014. Unfortunately, just like Notice 2014-52, the Notice is unlikely to stem the tide, and is even unlikely to stop ...


The Institutional Appetite For Quack Corporate Governance, Alicia J. Davis Sep 2015

The Institutional Appetite For Quack Corporate Governance, Alicia J. Davis

Articles

This Article offers evidence that higher quality internal corporate governance is associated with higher levels of ownership by institutional investors. This finding is consistent with the idea that institutions have greater reason than individual investors to prefer well-governed firms, but surprising given the substantial empirical evidence that casts doubt on the efficacy of internal governance mechanisms. The study described in this Article also finds that higher quality external governance is associated with lower proportions of ownership by certain types of institutional investors, also a somewhat surprising result given available empirical evidence on the positive relationship between external governance and firm ...


Think Like A Businessperson: Using Business School Cases To Create Strategic Corporate Lawyers​., Alicia J. Davis Apr 2015

Think Like A Businessperson: Using Business School Cases To Create Strategic Corporate Lawyers​., Alicia J. Davis

Articles

For the past twenty-five years, my academic and professional pursuits have straddled the line between business and law. I majored in business administration in college and then worked as an analyst in the Corporate Finance department at a bulge bracket Wall Street firm. After completing a JD/MBA, I returned to investment banking with a focus on middle-market mergers and acquisitions (M&A) and subsequently practiced law with a focus on private equity and M&A. Finally, in 2004, I found my current home as a corporate law professor. In my courses, which include Mergers & Acquisitions, Enterprise Organization, and Investor ...


Minority And Women Entrepreneurs: Building Capital, Networks, And Skills, Michael S. Barr Mar 2015

Minority And Women Entrepreneurs: Building Capital, Networks, And Skills, Michael S. Barr

Other Publications

The United States has an enviable entrepreneurial culture and a track record of building new companies. Yet new and small business owners often face particular challenges, including lack of access to capital, insufficient business networks for peer support, investment, and business opportunities, and the absence of the full range of essential skills necessary to lead a business to survive and grow. Women and minority entrepreneurs often face even greater obstacles. While business formation is, of course, primarily a matter for the private sector, public policy can and should encourage increased rates of entrepreneurship, and the capital, networks, and skills essential ...


Cancellation Of Debt And Related Transactions, Douglas A. Kahn, Jeffrey H. Kahn Jan 2015

Cancellation Of Debt And Related Transactions, Douglas A. Kahn, Jeffrey H. Kahn

Articles

If a taxpayer borrows money, the borrowed funds are not included in the taxpayer's gross income. That treatment is proper even though the taxpayer has increased his assets by the amount he borrowed because he also has created a corresponding liability to pay back the loan. The taxpayer's net: wealth has not increased. 'The more difficult and interesting questions arise when the taxpayer fails to repay the loan. At first blush, it would appear that upon cancellation of a loan, the taxpayer should have income for the amount that was cancelled. However, the current tax treatment is not ...


企業の社会的責任と戦略的租税行動 [Corporate Social Responsibility And Strategic Tax Behavior], Reuven S. Avi-Yonah, Keisaku Koga Translator Jan 2015

企業の社会的責任と戦略的租税行動 [Corporate Social Responsibility And Strategic Tax Behavior], Reuven S. Avi-Yonah, Keisaku Koga Translator

Articles

This paper addresses two questions. First, from the perspective of the corporation, should the corporation cooperate and pay the corporate tax, or should it engage in "strategic" tax behavior designed to minimize or eliminate its corporate tax burden? Second, from the perspective of the state, should the state use the corporate tax just to raise revenue, or should it also try to use it as a regulatory tool to steer corporate behavior in directions that it deems beneficial to society? The paper argues that whatever our view of the nature of the corporation and of the legitimacy of corporate social ...


Reverse Cross-Listings -- The Coming Race To List In Emerging Markets And An Enhanced Understanding Of Classical Bonding, Nicholas C. Howson, Vikramaditya S. Khanna Nov 2014

Reverse Cross-Listings -- The Coming Race To List In Emerging Markets And An Enhanced Understanding Of Classical Bonding, Nicholas C. Howson, Vikramaditya S. Khanna

Law & Economics Working Papers

This paper examines the implications for the traditional "legal bonding" hypothesis arising from future "reverse" cross-listings, meaning the cross-listing by issuers from jurisdictions with stronger investor protections into capital markets and on exchanges where investor protections are deemed less robust. We use as examples the first "Indian Depositary Receipt" or IDR IPO in May 2010, and IPOs we believe will complete on a future Shanghai Stock Exchange "international board". This analysis serves to dilute one of the long-standing negative implications of the traditional legal bonding account -- that reverse cross-listings by issuers from jurisdictions with stronger investor protections into weaker investor ...


Reverse Cross-Listings - The Coming Race To List In Emerging Markets And An Enhanced Understanding Of Classical Bonding, Nicholas C. Howson, Vikramaditya Khanna Oct 2014

Reverse Cross-Listings - The Coming Race To List In Emerging Markets And An Enhanced Understanding Of Classical Bonding, Nicholas C. Howson, Vikramaditya Khanna

Articles

Studies have found that when a U.S. issuer lists abroad on a foreign exchange, its shares exhibit negative abnormal returns. This negative movement may be because the market expects that the foreign listing will facilitate undetectable insider trading on the foreign exchange or other conduct impermissible in the United States.


Protecting The State From Itself? Regulatory Interventions In Corporate Governance And The Financing Of China’S 'State Capitalism', Nicholas C. Howson Oct 2014

Protecting The State From Itself? Regulatory Interventions In Corporate Governance And The Financing Of China’S 'State Capitalism', Nicholas C. Howson

Law & Economics Working Papers

From the start of China’s "corporatization without privatization" process in the late 1980s, a Chinese corporate governance regime apparently shareholder-empowering and determined by enabling legal norms has been altered by mandatory governance mechanisms imposed by a state administrative agency, most often to protect minority shareholders against exploitation by the party state controlling shareholders which are the accepted powers of "state capitalism." This chapter reviews the path of that benign intervention and the structural reasons for it, and then speculates on why this novel identity of the Chinese party state’s “fragmented authoritarianism” continues to be tolerated by the same ...


Concentrated Ownership And Corporate Control: Wallenberg Sphere And Samsung Group, Hwa-Jin Kim Jul 2014

Concentrated Ownership And Corporate Control: Wallenberg Sphere And Samsung Group, Hwa-Jin Kim

Law & Economics Working Papers

Samsung Group’s success cannot be attributed to its corporate governance structure, at least thus far. The corporate governance of Samsung has been rather controversial. As the group faces the succession issue the corporate governance has become as crucial as their new products and services. Samsung has discovered a role model on the other side of the planet, Wallenberg Sphere in Sweden. Much effort has been made to learn about Wallenberg’s arrangements and key to its success. However, a fundamental difference between the institutions in Sweden and Korea has made the corporate structures of the two groups radically different ...


Just Say No: Corporate Taxation And Corporate Social Responsibility, Reuven S. Avi-Yonah Jan 2014

Just Say No: Corporate Taxation And Corporate Social Responsibility, Reuven S. Avi-Yonah

Law & Economics Working Papers

This article will address the question whether publicly traded US corporations owe a duty to their shareholders to minimize their corporate tax burden in any way that they may be able to get away with from a purely legal perspective. First, however, to render the subsequent discussion a bit more concrete, I will describe a recently unveiled case study of corporate tax aggressiveness.


Concentrated Ownership And Corporate Control: Wallenberg Sphere And Samsung Group, Hwa-Jin Kim Jan 2014

Concentrated Ownership And Corporate Control: Wallenberg Sphere And Samsung Group, Hwa-Jin Kim

Articles

Samsung Group’s success cannot be attributed to its corporate governance structure, at least thus far. The corporate governance of Samsung has been rather controversial. As the group faces the succession issue the corporate governance has become as crucial as their new products and services. Samsung has discovered a role model on the other side of the planet, Wallenberg Sphere in Sweden. Much effort has been made to learn about Wallenberg’s arrangements and key to its success. However, a fundamental difference between the institutions in Sweden and Korea has made the corporate structures of the two groups radically different ...


How Serious Is The Problem Of Base Erosion And Profit Shifting?, James R. Hines Jr. Jan 2014

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 ...


Corporate Taxation And Corporate Social Responsibility, Reuven S. Avi-Yonah Jan 2014

Corporate Taxation And Corporate Social Responsibility, Reuven S. Avi-Yonah

Articles

This Article will address the question of whether publicly traded U.S. corporations owe a duty to their shareholders to minimize their corporate tax burden through any legal means, or if instead, strategic behaviors like aggressive tax-motivated transactions are inconsistent with corporate social responsibility (“CSR”). I believe the latter holds true, regardless of one’s view of the corporation. Under the “artificial entity” view, such behavior undermines the constitutive relationship between the corporation and the state. Under the “real view,” such behavior runs contrary to the normal obligation of citizens to comply with the law (even absent effective enforcement). And ...


Hobby Lobby And The Pathology Of Citizens United, Ellen D. Katz Jan 2014

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 ...


'Quack Corporate Governance' As Traditional Chinese Medicine – The Securities Regulation Cannibalization Of China's Corporate Law And A State Regulator's Battle Against Party State Political Economic Power, Nicholas C. Howson Jan 2014

'Quack Corporate Governance' As Traditional Chinese Medicine – The Securities Regulation Cannibalization Of China's Corporate Law And A State Regulator's Battle Against Party State Political Economic Power, Nicholas C. Howson

Articles

From the start of the People’s Republic of China’s (PRC) “corporatization ” project in the late 1980s, a Chinese corporate governance regime subject to increasingly enabling legal norms has been determined by mandatory regulations imposed by the PRC securities regulator, the China Securities Regulatory Commission (CSRC). Indeed, the Chinese corporate law system has been cannibalized by all - encompassing securities regulation directed at corporate governance, at least for companies with listed stock. This Article traces the path of that sustained intervention and makes a case — wholly contrary to the “quack corporate governance” critique much aired in the United States — that ...


Methods For Multicountry Studies Of Corporate Governance (And Evidence From The Brikt Countries), Bernard S. Black, Antonio Gledson De Carvalho, Vikramaditya Khanna, Woochan Kim, B. Burcin Yurtoglu Mar 2013

Methods For Multicountry Studies Of Corporate Governance (And Evidence From The Brikt Countries), Bernard S. Black, Antonio Gledson De Carvalho, Vikramaditya Khanna, Woochan Kim, B. Burcin Yurtoglu

Law & Economics Working Papers

We discuss the perils in multicountry studies of corporate governance (CG), focusing on emerging markets. The existing studies are massively multicountry studies, which cover many firms across many countries, but rely on the same limited governance elements in each countries, have few firm-level control variables, and use pure-cross-sectional data. This paper discusses the severe data and construct validity issues in these studies, proposes methods to respond to those issues, and applies those methods through a study of five major emerging markets (Brazil, India, Korea, Russia, and Turkey). We develop unique time-series datasets on governance in each country. We address construct ...