Law Commons^™

The Corporate Forum, Sergio Alberto Gramitto Ricci, Christina M. Sautter

Faculty Works

In this response to Professor Jill Fisch’s article "GameStop and the Reemergence of the Retail Investor," we focus on one of the risks associated with the growth of retail investing that Fisch surveys, uncontrolled information sourcing. Drawing on our work on retail investors, we revisit an instrument dear to the U.S. Securities and Exchange Commission, whose potential has not been unleashed so far, the corporate forum. Our response succinctly discusses the main mechanics of the corporate forum, the benefits the corporate forum could provide, and the feasibility hurdles that might undermine the success of corporate forums.

Drawing The Line Between Talent And Desire 09-23-2022, Michelle Choate

Life of the Law School (1993- )

No abstract provided.

Inflation, Market Failures, And Algorithms, Rory Van Loo

Faculty Scholarship

Inflation is a problem of tremendous scale. But inflation itself is unlikely to cause the greatest economic harm during inflationary periods. Instead, a more likely source of devastation will be policymakers’ response to inflation. Their main anti-inflation tools, most notably increasing interest rates, increase unemployment and the risk of recessions. This Article argues that there is a better approach. Rather than defaulting to interest rate hikes that harm markets, policy makers should prioritize laws that lower prices while improving markets. For decades, businesses have raised prices by manipulating consumers, exercising monopoly power, and lobbying for laws that block competition. Automated …

Purpose Proposals, Jill E. Fisch

All Faculty Scholarship

Repurposing the corporation is the hot issue in corporate governance. Commentators, investors and increasingly issuers, maintain that corporations should shift their focus from maximizing profits for shareholders to generating value for a more expansive group of stakeholders. Corporations are also being called upon to address societal concerns – from climate change and voting rights to racial justice and wealth inequality.

The shareholder proposal rule, Rule 14a–8, offers one potential tool for repurposing the corporation. This Article describes the introduction of innovative proposals seeking to formalize corporate commitments to stakeholder governance. These “purpose proposals” reflect a new dynamic in the debate …

Issue Brief: Impact Assessment And Responsible Business Guidance Tools In The Extractive Sector: An Environmental Human Rights Toolbox For Government, Business, Civil Society & Indigenous Groups, Sara L. Seck, Penelope Simmons, Charlotte Connolly

Responsible Business Conduct and Impact Assessment Law

This issue brief provides an overview of the impact assessment and responsible business conduct toolbox for the extractive sector. The toolbox provides guidance on how governments, businesses, civil society, and Indigenous groups may encourage and adopt a human rights approach to impact assessment (IA). It forms part of a broader research project aimed at highlighting the interrelationship between IA laws and Responsible Business Conduct (RBC) tools, funded by the Social Sciences & Humanities Research Council (SSHRC) Knowledge Synthesis Grant: Informing Best Practices in Environmental & Impact Assessments (the “KSG”).

Big Three Power, And Why It Matters, Scott Hirst, Lucian Bebchuk

Faculty Scholarship

This Article focuses on the power and corporate governance significance of the three largest index fund managers commonly referred to collectively as the “Big Three.” We present current evidence on the substantial voting power of the Big Three and explain why it is likely to persist and, indeed, further grow. We show that, due to their voting power, the Big Three have considerable influence on corporate outcomes through both what they do and what they fail to do. We also discuss the Big Three’s undesirable incentives both to underinvest in stewardship and to be excessively deferential to corporate managers.

In …

Are All Risks Created Equal? Rethinking The Distinction Between Legal And Business Risk In Corporate Law, Adi Libson, Gideon Parchomovsky

All Faculty Scholarship

Should corporate legal risk be treated similarly to corporate business risks? Currently, the law draws a clear-cut distinction between the two sources of risk, permitting the latter type of risk and banning the former. As a result, fiduciaries are shielded from personal liability in the case of business risk and are entirely exposed to civil and criminal liability that arises from legal risk-taking. As corporate law theorists have underscored, the differential treatment of business and legal risk is highly problematic from the perspective of firms and shareholders. To begin with, legal risk cannot be completely averted or eliminated. More importantly, …

Deregulation And The Lawyers' Cartel, Nuno Garoupa, Milan Markovic

Faculty Scholarship

At one time, the legal profession largely regulated itself. However, based on the economic notion that increased competition would benefit consumers, jurisdictions have deregulated their legal markets by easing rules relating to attorney advertising, fees, and, most recently, nonlawyer ownership of law firms. Yet, despite reformers’ high expectations, legal markets today resemble those of previous decades, and most legal services continue to be delivered by traditional law firms. How to account for this seeming inertia?

We argue that the competition paradigm is theoretically flawed because it fails to fully account for market failures relating to asymmetric information, imperfect information, and …

Impact Assessment And Responsible Business Conduct Tools In The Extractive Sector: An Environmental Human Rights Toolbox For Government, Business, Civil Society, And Indigenous Groups, Sara L. Seck, Charlotte Connolly, Penelope Simons, Audrey Axten

Responsible Business Conduct and Impact Assessment Law

This toolbox provides guidance on how governments, businesses, civil society, and Indigenous groups may encourage and adopt a human rights approach to impact assessment (IA). It forms part of a broader research project aimed at highlighting the interrelationship between IA laws and Responsible Business Conduct (RBC) tools, funded by the Social Sciences & Humanities Research Council (SSHRC) Knowledge Synthesis Grant: Informing Best Practices in Environmental & Impact Assessments (the “KSG”).

Golden Shares And Social Enterprise, Naveen Thomas

Faculty Scholarship

No abstract provided.

Diversity And Reimagining The Internal-External Dichotomy, Elizabeth Pollman

All Faculty Scholarship

In Duty and Diversity, two distinguished voices in business law, Professor Chris Brummer and former Chief Justice of the Delaware Supreme Court Leo E. Strine, Jr., make the case that corporate law provides “critical tools” to support corporations in taking effective action to help reduce racial and gender inequality. Specifically, they argue that “the pursuit of Diversity, Equity, and Inclusion is solidly authorized by the operation of traditional corporate law principles and can even be easily squared with the views of those who embrace what has come to be known as ‘shareholder primacy.’ ”Examining demographics in corporate boards and executive …

The Humanities Strike Back: (E)Esg And Justice Strine Challenge Gamer Shareholder Primacy, David H. Webber

Faculty Scholarship

Leo E. Strine, Jr. is closing in on Blair and Stout for the undisputed title of all-time top-scoring stakeholderist.³ I don't intend to squander this opportunity to roast and toast him by weighing the pros and cons of basketscoring primacy. Instead, my aim is to surface an overlooked argument in the debate over shareholder primacy and stakeholderism, the case for which has been recently reinvigorated by Strine's work. My argument is this: one underappreciated aspect of shareholder primacy's appeal is that it creates a competition with a single endpoint, basically a game, and that the exhilarating tournament that results, …

Forecasting The How And Why Of Corporate Crime's Demise, Miriam H. Baer

Faculty Scholarship

No abstract provided.

Made Crypto Losses? Don't Assume The Taxman Will Subsidise You, Vincent Ooi, Vincent Ooi

Research Collection Yong Pung How School Of Law

The key points we made in the article are as follows:1) One might think that because income from transactions involving cryptocurrencies is taxable, the losses from such transactions would also be deductible. Unfortunately, the situation is not quite so straightforward.2) The key question is whether it is possible to establish that there was a trade or business (in trading cryptocurrencies). If so, then the deduction rules are a lot more generous. Otherwise, there will be quite a few restrictions:a) Losses from cryptocurrency transactions are unlikely to be useable to be set off against income from other sources.b) The losses will …

A Lesson From Startups: Contracting Out Of Shareholder Appraisal, Jill E. Fisch

All Faculty Scholarship

Appraisal is a controversial topic. Policymakers have debated the goals served by the appraisal remedy, and legislatures have repeatedly revised appraisal statutes in an effort to meet those goals while minimizing the cost and potential abuse associated with appraisal litigation. Courts have struggled to determine the most appropriate valuation methodology and the extent to which that methodology should depend on case-specific factors. These difficulties are exacerbated by variation in the procedures by which mergers are negotiated and the potential for conflict-of-interest transactions.

Private ordering offers a market-based alternative to continued legislative or judicial efforts to refine the appraisal remedy. Through …

An Automation Tax- Adopt With Caution, Vincent Ooi

Research Collection Yong Pung How School Of Law

The post highlights three main issues that may result from the rapid and widespread automation of jobs: 1) declining tax revenues; 2) inequitable distribution of gains and losses from automation; and 3) social costs of job displacement, such as social support and retraining programmes for displaced workers.An automation tax may be imposed on a temporary basis to manage (slow) the rate of displacement of workers due to the adoption of automation technologies, but should not be a permanent feature. Otherwise, there will be a risk of loss of competitiveness in the long-term, possibly resulting in even greater economic harm.One main …

New Assets, (Largely) Same Old Rules: The Taxation Of Digital Tokens, Vincent Ooi

Research Collection Yong Pung How School Of Law

In this blog post, I highlight the fact that across jurisdictions, tax provisions specifically drafted to address the taxation of digital tokens are still quite rare, meaning that existing orthodox tax rules will have to be applied. However, care must be taken when applying tax provisions and one must be aware of the limits of "reasoning by analogy".Some tax provisions make reference to specific assets or asset classes and it cannot be assumed that digital tokens which look very similar to these assets will inevitably fall under those provisions. For example, no matter how much a digital payment token looks …

Esg And The Sec, Christopher Bruner

Popular Media

This piece is a review of an article by Virginia Harper Ho titled Modernizing ESG Disclosures, 2022 U. Ill. L. Rev. 277. Bruner is a contributing editor to JOTWELL’s Corporate Law section.

I Have To Tell Them What? The New Corporate Transparency Act And Forming Business Entities In Virginia, James J. Wheaton, Gustavo De La Cruz Reynozo

Faculty Publications

The details and requirements of business entity formation traditionally have been solely the province of state law. Most states, such as Virginia, maintain corporate annual report filing requirements that involve the public disclosure of corporate officers and directors. However, these requirements focus on active managers of the entities, not information about beneficial ownership. The recently enacted Corporate Transparency Act ("CTA") will fundamentally change entity disclosure on the national level.

The CTA was part of the fiscal year 2021 National Defense Authorization Act and seeks to aid national security and crime fighting through a national registry of beneficial owners of business …

The Economic (In) Significance Of Executive Pay Esg Incentives, David I. Walker

Faculty Scholarship

The hottest topic in corporate governance circles today involves company commitments to and pursuit of ESG (environmental, social, and governance) initiatives in addition to the traditional pursuit of profits. One facet of this debate has to do with how to motivate executives to pursue ESG goals. Increasingly, companies tie executive pay to ESG performance, although even strong ESG advocates debate the advisability of doing so. This Article joins the fray by closely examining ESG-based CEO pay arrangements at a subset of companies with leadership positions on the Business Roundtable, an industry trade group that embraced ESG in a 2019 statement …

The Uncertain Stewardship Potential Of Index Funds, Jill E. Fisch

All Faculty Scholarship

Regulators and commentators around the world are increasingly demanding that institutional investors engage in stewardship with respect to their portfolio companies. Further, the demand for stewardship has broadened from an expectation that investors engage to reduce agency costs and promote economic value to a call for investors to demand that companies serve a broader range of societal interests and objectives. This chapter considers calls for stewardship in the context of the U.S. capital markets specifically as applied to index funds. It argues that, irrespective of the merits of institutional stewardship generally, the structure of index funds and the business environment …

Corporations As Private Regulators, Wentong Zheng

UF Law Faculty Publications

The growing trend of corporations imposing restrictions on suppliers, contractors, and customers beyond the requirements of existing laws requires rethinking the nature and impact of corporations' private regulatory power. This trend, which this Article refers to as "Corporations as Private Regulators" (CPR), represents a paradigmatic shift in how corporations participate in the making of public policies. This Article conceptualizes the corporate CPR power as the exercise of a right of refusal to deal with counterparties. This right of refusal could be theorized as a new form of property right, whose allocation has important implications for both rights and wealth. The …

Business, Human Rights, & The Triple Planetary Crisis: Confronting Overconsumption, Sara Seck

Articles, Book Chapters, & Popular Press

According to the United Nations, the world is facing a triple planetary crisis of climate change, nature (biodiversity) loss, and pollution and waste, with the most egregious consequences felt by those least responsible. These crises are also intertwined: nature-based solutions are promoted as climate change solutions even as heat domes fuel forest fires; extraction of minerals for green energy solutions negatively impacts biodiversity and creates pollution and waste; and carbon major companies are also among the largest producers of plastic pollution. International human rights law is increasingly grappling with environmental rights and responsibilities, as evidenced by the work of special …

Empowering Diversity Ambition: Brummer And Strine’S Duty And Diversity Makes The Legal And Business Case For Doing More, Doing Good, And Doing Well, Lisa Fairfax

All Faculty Scholarship

No abstract provided.

No Need For Asia To Be Woke - Responsible Capitalism Through An Asian Lens, Dan W. Puchniak

Research Collection Yong Pung How School Of Law

LARRY Fink's 2018 proclamation that every company must show "how it makes a positive contribution to society" ostensibly woke American CEOs to the need for companies to fulfil a societal purpose beyond profit maximisation. The American Business Roundtable's 2019 commitment that a business should no longer be run purely for profit is cited as another woke moment for American CEOs to the new reality that corporate purpose matters. However, just as the sun rises first in Asia, there is no need for Asia's CEOs to be woke to the reality that corporate purpose matters.

Racial Reckoning With Economic Inequities: Board Diversity As A Symptom And A Cure, Lisa Fairfax

All Faculty Scholarship

In response to the racial reckoning sparked by the police killings of George Floyd, Breonna Taylor and other unarmed Black men and women during the summer of 2020, many corporations publicly expressed their commitment to not only grapple with racial inequities in the economic sphere, but also increase racial diversity on their board, with particular emphasis on Black directors. Most notably, on September 9, 2020, The Board Challenge (founded by business leaders with at least one Black director) launched an initiative encouraging every U.S. company to sign a pledge agreeing to appoint at least one Black director to their board …

Law School News: National Housing Advocate Named To Lead Rwu's New Real Estate Initiatives 02/08/2022, Roger Williams University School Of Law

Life of the Law School (1993- )

No abstract provided.

Sustainability Obligations And Liabilities For The Company Director, Richard Allen, Michael Tang, Jan Tan, Gautam Mukharya

Perspectives@SMU

SGX now requires its listees to issue a sustainability report. Why is this happening? And what do directors need to know?

Corporate Governance Reform And The Sustainability Imperative, Christopher Bruner

Scholarly Works

Recent years have witnessed a significant upsurge of interest in alternatives to shareholder-centric corporate governance, driven by a growing sustainability imperative—widespread recognition that business as usual, despite the short-term returns generated, could undermine social and economic stability and even threaten our long-term survival if we fail to grapple with associated costs. We remain poorly positioned to assess corporate governance reform options, however, because prevailing theoretical lenses effectively cabin the terms of the debate in ways that obscure many of the most consequential possibilities. According to prevailing frameworks, our options essentially amount to board-versus-shareholder power, and shareholder-versus stakeholder purpose. This narrow …

The Partnership Mystique: Law Firm Finance And Governance For The 21st Century American Law Firm, Maya Steinitz

Faculty Scholarship

This Article identifies and analyzes the de facto and de jure end of lawyers' exclusivity over the practice of law in the United States. This development will have profound implications for the legal profession, the careers of individual lawyers, and the justice system as a whole.

First, the Article argues that various financial products that have recently flooded the legal market are functionally equivalent to investing in and owning law firms and create all the same governance challenges as allowing nonlawyers to directly own stock in law firms.

Second, the Article analyzes Arizona's groundbreaking legalization of nonlawyer participation in law …