Law Commons^™

Intermediary Influence, Kathryn Judge

Faculty Scholarship

Ronald Coase and others writing in his wake typically assume that institutional arrangements evolve to minimize transaction costs. This Article draws attention to a powerful, market-based force that operates contrary to that core assumption: Intermediary influence." The claim builds on three observations: (1) many transaction costs now take the form of fees paid to specialized intermediaries, (2) intermediaries prefer institutional arrangements that yield higher transaction fees, and (3) intermediaries are often well positioned to promote self-serving arrangements. As a result, high-fee institutional arrangements often remain entrenched even in the presence of more-efficient alternatives.

This Article uses numerous case studies from …

Does Google Content Degrade Google Search? Experimental Evidence, Michael Luca, Tim Wu, Sebastian Couvidat, Daniel Frank

Faculty Scholarship

While Google is known primarily as a search engine, it has increasingly developed and promoted its own content as an alternative to results from other websites. By prominently displaying Google content in response to search queries, Google is able to use its dominance in search to gain customers for this content. This may reduce consumer welfare if the internal content is inferior to organic search results. In this paper, we provide a legal and empirical analysis of this practice in the domain of online reviews. We first identify the conditions under which universal search would be considered anticompetitive. We then …

Ex Ante Choice Of Jury Waiver Clauses In Mergers, Darius Palia, Robert E. Scott

Faculty Scholarship

This paper examines empirically why sophisticated parties in some merger and acquisition deals choose to waive their right to jury trials and some do not. We examine merger agreements for a large sample of 276 deals for the 11-year period 2001 to 2011. We exclude private company deals and those where the choice of forum and law is Delaware. First, we find that 48.2% of the deals have jury waiver clauses. Second, we find that deals in which New York is chosen as the governing law and forum state are more likely to include a jury waiver clause. No other …

Majority Control And Minority Protection, Zohar Goshen, Assaf Hamdani

Faculty Scholarship

This chapter examines legal issues concerning majority control and minority protection in firms with concentrated ownership governance structures, with particular emphasis on the tradeoff between the goals of protecting minority shareholders and allowing controllers to pursue their vision and how corporate law should balance these conflicting goals. Focusing primarily on Delaware corporate law, it suggests that holding a control block allows majority shareholders to pursue their idiosyncratic vision in the manner they see fit, even against minority investors’ objections. Idiosyncratic vision refers to the subjective value that entrepreneurs attach to their business idea or vision, and this chapter considers its …

Convergence And Persistence In Corporate Law And Governance, Jeffrey N. Gordon

Faculty Scholarship

This chapter discusses the question of “convergence or persistence” in corporate law and governance. It first considers efforts to measure convergence directly by focusing on the evolution of law-on-the-books governance provisions before analyzing capital market evidence on convergence, with particular emphasis on capital market indicators such as the decline in “cross-listings” onto US stock exchanges by firms from jurisdictions with weaker investor protection and the increase in initial public offerings (IPOs) on emerging market stock markets. The chapter proceeds by reviewing evidence of divergence, especially “divergence within convergence,” and the failure of the European Union to produce more convergent corporate …

Licensing Commercial Value: From Copyright To Trademarks And Back, Jane C. Ginsburg

Faculty Scholarship

Copyright and trademarks often overlap, particularly in visual characters. The same figure may qualify as a pictorial, graphic or sculptural work on the one hand, and as a registered (or at least used) trademark on the other. The two rights, though resting on distinct foundations, tend to be licensed together. Trademarks symbolize the goodwill of the producer, and are protected insofar as copying that symbol is likely to confuse consumers as to the source or approval of the goods or services in connection with which the mark is used. For famous marks, the dilution action grants a right against uses …

Tax And Corporate Governance: The Influence Of Tax On Managerial Agency Costs, David M. Schizer

Faculty Scholarship

This chapter examines the influence of tax on managerial agency costs, with particular emphasis on public companies in the United States. Focusing on “C-corporations,” this chapter first considers why tax is an imperfect vehicle for mitigating managerial agency costs. It then discusses how tax influences the compensation of managers, both in ways policy makers intended, and in ways they did not. The chapter also considers how tax affects management decisions about capital structure, hedging, and acquisitions. In addition, this chapter explores the tax system’s influence on the ability and incentives of shareholders to monitor management. This chapter then concludes with …

The Uncertain Future Of The Corporate Contribution Ban, Richard Briffault

Faculty Scholarship

Concern about the role of corporate money in democracy has been a longstanding theme in American politics. In the late nineteenth century, the states began to adopt laws restricting the use of corporate funds in elections. The first permanent federal campaign finance law – the Tillman Act of 1907 – targeted corporations by prohibiting federally-chartered corporations from making contributions in any election and prohibiting all corporations from making contributions in federal elections. Subsequently amended, continued, and strengthened by the Federal Corrupt Practices Act of 1925, the Taft-Hartley Act of 1947, the Federal Election Campaign Act of 1971, and the Bipartisan …

Supreme Court Amicus Brief Of 19 Corporate Law Professors, Friedrichs V. California Teachers Association, No. 14-915, John C. Coates, Iv, Lucian A. Bebchuk, Bernard S. Black, John C. Coffee Jr., James D. Cox, Ronald J. Gilson, Jeffrey N. Gordon, Lawrence A. Hamermesh, Henry Hansmann, Robert J. Jackson Jr., Marcel Kahan, Vikramaditya S. Khanna, Michael Klausner, Reinier Kraakman, Donald C. Langevoort, Edward B. Rock, Mark J. Roe, Helen S. Scott

Faculty Scholarship

The Supreme Court has looked to the rights of corporate shareholders in determining the rights of union members and non-members to control political spending, and vice versa. The Court sometimes assumes that if shareholders disapprove of corporate political expression, they can easily sell their shares or exercise control over corporate spending. This assumption is mistaken. Because of how capital is saved and invested, most individual shareholders cannot obtain full information about corporate political activities, even after the fact, nor can they prevent their savings from being used to speak in ways with which they disagree. Individual shareholders have no “opt …

Loser Pays: The Latest Installment In The Battle-Scarred, Cliff-Hanging Survival Of The Rule 10b-5 Class Action, John C. Coffee Jr.

Faculty Scholarship

When I was an upper-year student at Yale Law School in the late 1960s, I was sometimes as undermotivated as contemporary upper-year law students regularly appear to be. But there was then an appropriate role model for us: a graduate student, brimming with efficiency and self-discipline, who occupied a carrel in the law library, seemingly working day and night on a special research project. He had piled law review articles and cases a foot or more about his carrel, and anyone walking by could see that he seemed obsessed with something called Rule 10b-5. I had dimly heard of this …

Innovation And The Role Of Public-Private Collaboration In Contract Governance: Governing Global Finance: Towards Contractual Governance, Katharina Pistor

Faculty Scholarship

The global financial crisis demonstrated the vulnerability, if not failure, of existing governance structures for financial markets. Even if it is true that financial crises cannot be avoided, there may be room for improving existing structures. This chapter suggests that such an improvement might lie in switching from exclusive, hierarchical, and coercive forms of governance to inclusive, horizontal, cooperative ones—and uses the shorthand ‘contractual governance’ for the latter. Starting from the presumption that new forms of governance are frequently born in crisis, the chapter analyses several responses to the crisis and asks whether they display features of alternative forms of …