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

Law Commons

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

Articles 1 - 30 of 87

Full-Text Articles in Law

Cybersecurity Oversight Liability, Benjamin P. Edwards Jan 2019

Cybersecurity Oversight Liability, Benjamin P. Edwards

Scholarly Works

A changing cybersecurity environment now poses a significant corporate-governance challenge. Although some cybersecurity data breaches may be inevitable, courts now increasingly consider when a corporation's officers and directors may be held liable on theories that they acted in bad faith and failed to adequately oversee the corporation's affairs. This short essay reviews recent derivative decisions and encourages corporate boards to recognize that in an environment filled with increasing threats, a reasonable response will require devoting real resources and attention to cybersecurity issues.


Explaining Choice-Of-Entity Decisions By Silicon Valley Start-Ups, Gregg Polsky Jan 2019

Explaining Choice-Of-Entity Decisions By Silicon Valley Start-Ups, Gregg Polsky

Scholarly Works

Perhaps the most fundamental role of a business tax advisor is to recommend the optimal entity choice for nascent business enterprises. Nevertheless, even in 2018, the choice-of-entity analysis remains highly muddled. Most tax practitioners across the United States consistently recommend flow-through entities, such as LLCs and S corporations, to their clients. In contrast, a discrete group of highly sophisticated tax professionals, those who advise start-ups in Silicon Valley and other hotbeds of start-up activity, prefer C corporations.

Prior commentary has described and tried to explain this paradox without finding an adequate explanation. These commentators have noted a host of superficially ...


Learning To Be More Than A Lawyer, Carol Morgan Jan 2019

Learning To Be More Than A Lawyer, Carol Morgan

Scholarly Works

No abstract provided.


Distributed Ledgers, Traceable Shares, And The Division Of Power In Corporate Law, Christopher M. Bruner Jan 2018

Distributed Ledgers, Traceable Shares, And The Division Of Power In Corporate Law, Christopher M. Bruner

Scholarly Works

Review of Traceable Shares and Corporate Law, 113 Nw. U. L. Rev. __ by George S. Geis (forthcoming 2018)


The Up-C Revolution, Gregg D. Polsky, Adam H. Rosenzweig Jan 2018

The Up-C Revolution, Gregg D. Polsky, Adam H. Rosenzweig

Scholarly Works

Over the past few years, a revolutionary new tax structure, known as the Up-C, has become increasingly popular, particularly in instances where an LLC is being taken public. In such an Up-C IPO, a newly formed C corporation is placed on top of the existing LLC, which continues to operate the business. Shares of the C corporation are sold to new investors, and the proceeds are used by the C corporation to buy an interest in the LLC. Meanwhile, the legacy owners of the LLC (typically, founders and private investment funds) retain their interests in the LLC, while receiving exchange ...


Does Shareholder Voting Matter? Evidence From The Takeover Market, Paul Mason, Usha Rodrigues, Mike Stegemoller, Steven Utke Jan 2018

Does Shareholder Voting Matter? Evidence From The Takeover Market, Paul Mason, Usha Rodrigues, Mike Stegemoller, Steven Utke

Scholarly Works

Voting rights are a basic shareholder-protection mechanism. Outside of the core voting requirements state law imposes (election of directors and votes on fundamental changes), federal law grants shareholders additional voting rights. But these rights introduce concomitant costs into corporate governance. Each grant of a voting right thus invites the question: is the benefit achieved worth the cost the vote imposes?

The question is not merely a theoretical one. Recently the SEC, concerned about Nasdaq’s potential weakening of shareholder voting protections, has lamented that little evidence exists on the value of the shareholder vote. This Article provides that evidence. It ...


Center-Left Politics And Corporate Governance: What Is The 'Progressive' Agenda?, Christopher Bruner Jan 2018

Center-Left Politics And Corporate Governance: What Is The 'Progressive' Agenda?, Christopher Bruner

Scholarly Works

For as long as corporations have existed, debates have persisted among scholars, judges, and policymakers regarding how best to describe their form and function as a positive matter, and how best to organize relations among their various stakeholders as a normative matter. This is hardly surprising given the economic and political stakes involved with control over vast and growing "corporate" resources, and it has become commonplace to speak of various approaches to corporate law in decidedly political terms. In particular, on the fundamental normative issue of the aims to which corporate decision-making ought to be directed, shareholder-centric conceptions of the ...


Corporate Governance Reform In Post-Crisis Financial Firms: Two Fundamental Tensions, Christopher Bruner Jan 2018

Corporate Governance Reform In Post-Crisis Financial Firms: Two Fundamental Tensions, Christopher Bruner

Scholarly Works

The manner in which financial firms are governed directly impacts the stability and sustainability of both the financial sector and the "real" economy, as the financial crisis and associated regulatory reform efforts have tragically demonstrated. However, two fundamental tensions continue to complicate efforts to reform corporate governance in post-crisis financial firms. The first relates to reliance on increased equity capital as a buffer against shocks and a means of limiting leverage. The tension here arises from the fact that no corporate constituency desires risk more than equity does, and that risk preference only tends to be stronger in banks, and ...


Redefining Roles And Duties Of The Transactional Lawyer: A Narrative Approach, Lori D. Johnson Jan 2017

Redefining Roles And Duties Of The Transactional Lawyer: A Narrative Approach, Lori D. Johnson

Scholarly Works

Today’s transactional lawyers perform myriad tasks for their clients, including structuring, drafting, conceptualizing, negotiating, and executing the complex, risky, and often cutting-edge transactions their clients bring to the table. On the other side of that table, often sits another team of sophisticated transactional lawyers. These opposing counsel are armed for battle over every nuance, every word, every representation, every deliverable, and every obligation their client is poised to undertake or agree to. Therefore, modern transactional lawyers must behave as advocates and explore new modes of persuasion. As a response, scholars have begun to propose that transactional lawyers employ methods ...


The Fiduciary Enterprise Of Corporate Law, Christopher Bruner Jan 2017

The Fiduciary Enterprise Of Corporate Law, Christopher Bruner

Scholarly Works

No abstract provided.


Distributed Governance, Carla L. Reyes, Nizan Geslevich Packin, Benjamin P. Edwards Jan 2017

Distributed Governance, Carla L. Reyes, Nizan Geslevich Packin, Benjamin P. Edwards

Scholarly Works

Distributed ledger technology disrupts traditional business organizations by introducing new business entities without the directors and officers of traditional corporate entities. Although these emerging entities offer intriguing possibilities, distributed entities may suffer significant collective action problems and expose investors to catastrophic regulatory and governance risks. Our Article examines key considerations for stakeholders and argues that distributed entities must be carefully structured to function effectively.

This Article breaks new ground by critically examining distributed entities. We argue that a distributed model is most appropriate when distributed ledger technology solves a unique corporate governance problem. We caution against ignoring the lessons painstakingly ...


A Rational Approach To Business Entity Choice, Eric H. Franklin Jan 2016

A Rational Approach To Business Entity Choice, Eric H. Franklin

Scholarly Works

This Article reinvigorates the entity rationalization movement and will ultimately argue that there are only three necessary entity options: corporations, partnerships, and nonprofit organizations. Part I defines the issue of entity proliferation and, along with the Appendix, presents a state-by-state analysis of the types of legal entities available, an endeavor that has not yet been conducted. The Appendix contains a chart that enumerates each legal entity available in each of the fifty states and the District of Columbia. Part II discusses the problems associated with entity proliferation from the perspective of the public, potential business owners, small business attorneys, and ...


The Responsible Corporation: Its Historical Roots And Continuing Promise, Larry D. Thompson Jan 2015

The Responsible Corporation: Its Historical Roots And Continuing Promise, Larry D. Thompson

Scholarly Works

The article focuses on the on the history of American corporations from the colonization period and its impact on private corporations such as venture capitalism. Topics discussed include legal and sustainable approach to corporate responsibility, role of laws in shaping corporate duties and behavior and devastating effect of excessive dividend payments. It also discusses the cases in which courts refuse to interfere with management's long-term decision making.


The Problem Of Abusive Related-Partner Allocations, Gregg D. Polsky, Emily Cauble Jan 2014

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 ...


In-Sourcing Corporate Responsibility For Enforcement Of The Foreign Corrupt Practices Act, Larry D. Thompson Jan 2014

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 ...


Acqui-Hiring, Gregg D. Polsky, John F. Coyle Nov 2013

Acqui-Hiring, Gregg D. Polsky, John F. Coyle

Scholarly Works

Facebook, Google, and other leading technology companies in Silicon Valley have been buying start-up companies at a brisk pace. In many of these transactions, the buyer has little interest in acquiring the startup’s projects or assets. Instead, the buyer’s primary motivation is to hire some or all of the startup’s software engineers. These so-called “acqui-hires” represent a novel — and increasingly common — tool by which the largest and most successful technology companies in the world satisfy their intense demand for engineering talent.

To date, the acqui-hire has attracted no attention in the academic or professional legal literature. With ...


A Conflict Primacy Model Of The Public Board, Usha Rodrigues Jul 2013

A Conflict Primacy Model Of The Public Board, Usha Rodrigues

Scholarly Works

e board of directors is the theoretical fulcrum of the corporate form: Statutes task the board with managing the corporation. Yet in the twentieth century, CEOs and other executives came to dominate the real-world control of the corporation. In light of this transformation, in the 1970s Melvin E. Eisenberg proposed reconceiving the board as an independent monitor. Eisenberg’s monitoring board is now the dominant regulatory model of the board. Recently two different visions of the board of directors have emerged. Stephen Bainbridge’s “director primacy” model calls directors “Platonic guardians,” and Margaret Blair and Lynn Stout’s “team production ...


Securities Law's Dirty Little Secret, Usha Rodrigues May 2013

Securities Law's Dirty Little Secret, Usha Rodrigues

Scholarly Works

Securities law’s dirty little secret is that rich investors have access to special kinds of investments—hedge funds, private equity, private companies—that everyone else does not. This disparity stems from the fact that, from its inception, federal securities law has jealously guarded the manner in which firms can sell shares to the general public. Perhaps paternalistically, the law assumes that the average investor needs the protection of the full panoply of securities regulation and thus should be limited to buying public securities. In contrast, accredited—i.e., wealthy— investors, who it is presumed can fend for themselves, have ...


Is The Corporate Director's Duty Of Care A "Fiduciary' Duty? Does It Matter?, Christopher M. Bruner Jan 2013

Is The Corporate Director's Duty Of Care A "Fiduciary' Duty? Does It Matter?, Christopher M. Bruner

Scholarly Works

While reference to "fiduciary duties" (plural) is routinely employed in the United States as a convenient short-hand for a corporate director's duties of care and loyalty, other common-law countries generally treat loyalty as the sole "fiduciary duty." This contrast prompts some important questions about the doctrinal structure for duty of care analysis adopted in Delaware, the principal jurisdiction of incorporation for U.S. public companies. Specifically, has the evolution of Delaware's convoluted and problematic framework for evaluating disinterested board conduct been facilitated by styling care a "fiduciary" duty? If so, then how should Delaware lawmakers and judges respond ...


Can Executive Compensation Reform Cure Short-Termism?, Gregg Polsky, Andrew C. Lund Jan 2013

Can Executive Compensation Reform Cure Short-Termism?, Gregg Polsky, Andrew C. Lund

Scholarly Works

There is an increasingly pervasive view among corporate governance observers that senior managers are too focused on short-term results at the expense of long-term interests. Concerns about “short-termism” have been expressed within the financial industry context and outside of it, but because of the recent financial crisis, much of the discussion has been directed at financial institutions. To combat short-termism, several commentators have advocated executive compensation reform to encourage senior managers to adopt a longer-term perspective. Yet these reforms will likely prove ineffective because of other significant pressures on managers to maintain current stock prices.


Book Review: "Bishop & Zucker On Nevada Corporations And Llcs", Rachel J. Anderson Jan 2013

Book Review: "Bishop & Zucker On Nevada Corporations And Llcs", Rachel J. Anderson

Scholarly Works

In this piece written for The Writ, the official publication of the Washoe County Bar Association, Prof. Rachel Anderson reviews Bishop and Zucker on Nevada Corporations & LLCs.


Spacs And The Jobs Act, Usha Rodrigues Oct 2012

Spacs And The Jobs Act, Usha Rodrigues

Scholarly Works

The law has long confined the average investor to trading in public securitieswhile allowing wealthy—or “accredited”—individual investors access to a panoply of private securities, including investment vehicles such as hedge funds and private equity funds. Nevertheless, pressure to let the general public into private equity has been growing. Two forces have contributed to this mounting pressure. First, public investors are eager to try their hand at investing in private enterprise. Second, private firms need capital. In the face of these forces, the sharp line that has long separated public and private firms has become increasingly blurred

Consider the ...


Contract And Dispossession, Deborah W. Post Jul 2012

Contract And Dispossession, Deborah W. Post

Scholarly Works

This Essay, part of a collection of essays on the same theme, argues that contract law has become an instrument of oppression and dispossession rather than liberation. Having offered a critique, the challenge then is to consider whether it is possible to restore the liberatory potential of contract. The symposium, Post-Marxism, Post-Racialism & Other Fables of the Dispossession, was an invitation to consider the contemporary relevance of Marxist theory.

There are two reference points in this cultural critique. One is the importance of social position in a jurisprudence that embraces objectivity; the uncritical and unreflective reliance on hegemonic social practices, codes and conventions in determining whether the parties to an agreement meant or intended it to be legally enforceable. Contract law recognizes and regulates status relationships. The resort by judges to hegemonic conceptions of status results in dispossession when ...


Reconsidering The Separation Of Banking And Commerce, Mehrsa Baradaran Feb 2012

Reconsidering The Separation Of Banking And Commerce, Mehrsa Baradaran

Scholarly Works

This Article examines the long-held belief that banking and commerce need to be kept separate to ensure a stable banking system. Specifically, the Article criticizes the Bank Holding Company Act (“BHCA”), which prohibits nonbanking entities from owning banks. The recent banking collapse has caused and exacerbated several problematic trends in U.S. banking, especially the conglomeration of banking entities and the homogenization of assets. The inflexible and outdated provisions of the BHCA are a major cause of these trends. Since the enactment of the BHCA, the landscape of U.S. banking has changed dramatically, but the strict separation of banking ...


Social Proposals Under Rule 14a-8: A Fall-Back Remedy In An Era Of Congressional Inaction, Margaret V. Sachs Jan 2012

Social Proposals Under Rule 14a-8: A Fall-Back Remedy In An Era Of Congressional Inaction, Margaret V. Sachs

Scholarly Works

More than a decade ago, institutional investors, notably labor unions and pension plans, began using shareholder proposals as a vehicle for advancing progressive social causes. These proposals have recently garnered heightened levels of shareholder support. While even majority support for a proposal does not insure its adoption by the board of directors, appreciable (even if not majority) support can nonetheless sometimes precipitate adoption, or at least negotiation (which can lead to adoption). This Essay argues, first, that with Congress now largely dysfunctional, social proposals have acquired a whole new role—that of a company-by-company, fall-back mechanism for solving social problems ...


Agency And The Ontology Of The Corporation, Christopher M. Bruner Jan 2012

Agency And The Ontology Of The Corporation, Christopher M. Bruner

Scholarly Works

No abstract provided.


Exit, Voice, And Reputation: The Evolution Of Spacs, Usha Rodrigues, Mike Stegemoller Jan 2012

Exit, Voice, And Reputation: The Evolution Of Spacs, Usha Rodrigues, Mike Stegemoller

Scholarly Works

This Article tells the story of a new type of business—the special purpose acquisition corporation ("SPAC"). The promoters of a SPAC begin by forming a shell corporation with no assets. They then take the company public on little more than a promise that they will strive to complete the acquisition of a target in the near future. We present the first empirical study of the SPAC contract design, and use a hand-collected dataset to trace its evolution over the past nine years.

While SPACs are a new form, their contract design borrows heavily from private equity's playbook. Private ...


The Diminishing Returns Of Incentive Pay In Executive Compensation Contracts, Gregg D. Polsky, Andrew Lund Dec 2011

The Diminishing Returns Of Incentive Pay In Executive Compensation Contracts, Gregg D. Polsky, Andrew Lund

Scholarly Works

For the past 30 years, the conventional wisdom has been that executive compensation packages should include very large proportions of incentive pay. This incentive pay orthodoxy has become so firmly entrenched that the current debates about executive compensation simply take it as a given. We argue, however, that in light of evolving corporate governance mechanisms, the marginal net benefit of incentive-laden pay packages is both smaller than appreciated and getting smaller over time. As a result, the assumption that higher proportions of incentive pay are beneficial is no longer warranted.

A number of corporate governance mechanisms have evolved to duplicate ...


Good Faith In Revlon-Land, Christopher M. Bruner Jan 2011

Good Faith In Revlon-Land, Christopher M. Bruner

Scholarly Works

The Delaware Supreme Court has set a very high hurdle for plaintiffs challenging directors' good faith in the sale of a company. In Lyondell Chemical Company v. Ryan, the court held that unconflicted directors could be found to have breached the good faith component of their duty of loyalty in the transactional context only if they "knowingly and completely failed to undertake," and "utterly failed to attempt" to discharge their duties.

In this essay I argue that the Lyondell standard effectively imports into the transactional context the exacting standard previously applied in the oversight context — a move clearly aimed at ...


Ethical Issues In Business And The Lawyer's Role, Carol Morgan, Robert Rhee, Tamar Frankel, Mark Fagan Jan 2011

Ethical Issues In Business And The Lawyer's Role, Carol Morgan, Robert Rhee, Tamar Frankel, Mark Fagan

Scholarly Works

This is a transcript of a panel discussion on teaching Business Ethics.