Law Commons^™

The Entrepreneur And The Theory Of The Modern Corporation, Charles R.T. O'Kelley

Scholarly Works

The foremost description of the classic entrepreneur, immediately prior to the Great Depression and now, was presented by Frank Knight in his seminal work, RISK, UNCERTAINTY, AND PROFIT. In this Article, I will explicate Knight's theory of the entrepreneur and show how it relates to both the Berle-Means Paradigm and the nexus-of-contracts theory of the corporation. My effort here is in part intellectual history and in part the tentative beginnings of a new positive account of the corporation. In the latter regard, this Article takes only the first step in what may prove a quite exhaustive effort to re-plow ...

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

Faculty Scholarship at Penn Law

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 ...

The Notion Of Solidarity And The Secret History Of American Labor Law, Thomas C. Kohler

Boston College Law School Faculty Papers

“Solidarity,” a term not overly familiar to Americans, sometimes seems to have as many meanings as it has users. The concept became incorporated into American thought during the 19th and 20th century waves of Catholic and Jewish immigration. It provides a European vision of communitarian social order that competes with the “unencumbered self”—America’s unique brand of individualism. Among philosophers, politicians, religious thinkers, and social activists, solidarity theory sought to redefine the then-prevailing views of social bonds. Nowhere is this more apparent than in the American labor movement, which espouses as its core values the principles of unity and ...

Specific Investment: Explaining Anomalies In Corporate Law, Margaret M. Blair, Lynn A. Stout

Cornell Law Faculty Publications

This Article has two goals: to praise Professor Robert Clark as a remarkable corporate scholar, and to explore how his work has helped to advance our understanding of corporations and corporate law. Clark wrote his classic treatise at a time when corporate scholarship was dominated by a principal-agent paradigm that viewed shareholders as the principals or sole residual claimants in public corporations and treated directors as shareholders' agents. This view naturally led contemporary scholars to believe that the chief economic problem of interest in corporate law was the "agency cost" problem of getting corporate directors to do what shareholders wanted ...

Counseling Organizational Clients "Within The Bounds Of The Law", Roger C. Cramton

Cornell Law Faculty Publications

No abstract provided.

Law & Entrepreneurship: Do Courts Matter?, D. Gordon Smith, Masako Ueda

Faculty Scholarship

In this essay, we sketch the outlines of a research agenda exploring links between courts and entrepreneurship. Our conception of law and entrepreneurship encompasses the study of positive law (including constitutions, statutes, and regulations), common law doctrines, and private ordering that relate to the discovery and exploitation of profitable opportunities by new firms. We briefly survey the economics literatures that relate to law and entrepreneurship, including the law and finance literature launched by the work of Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert Vishny (LLSV). Relying on the suggestive work of LLSV and other economists who have labored ...

Recharacterization And The Nonhindrance Of Creditors, David A. Skeel Jr., Georg Krause-Vilmar

Faculty Scholarship at Penn Law

Using a 1977 article by Robert Clark as the starting point, this article attempts to shed new light on the question of whether and when shareholder loans to her company should be either equitably subordinated or, as courts have done in a few recent cases, recharacterized as equity. In its emphasis on the particular issue of shareholder loans, the article has a narrower compass than Clark’s article, which uses a four-part typology to explore the relationship among fraudulent conveyance law, equitable subordination, veil piercing and dividend restrictions. But the article also expands Clark’s analysis in several respects. The ...

Some Reflections On The Diversity Of Corporate Boards: Women, People Of Color, And The Unique Issues Associated With Women Of Color, Lisa M. Fairfax

Faculty Scholarship

As one might expect, there are many similarities between the circumstances of women directors and directors of color, which includes African Americans, Latinos, and Asian Americans. Indeed, both groups began appearing on corporate boards in significant numbers during the same period—right after the Civil Rights Movement pursuant to which the push for racial equality throughout society precipitated efforts to achieve greater representation of people of color as well as women on corporate boards. Moreover, while women and people of color have experienced some increase in board representation over the last few decades, both groups also have encountered significant barriers ...

Note, For-Profit And Nonprofit Charter Schools: An Agency Costs Approach, John D. Morley

Faculty Scholarship Series

This Note applies agency costs theory to explain charter schools' use of forprofit
and nonprofit forms, and to suggest ways to make charter school regulation more sensitive to the differences between these forms. Borrowing from Henry Hansmann's "contract failure" theory of nonprofits and recent data on the makeup of the charter school market, I argue that nonprofit forms dominate because they minimize the unusually high agency costs that characterize interactions between charter operators and the parents, regulators, and donors who influence them. For-profit schools survive only when the economies of scale they capture through superior capital-raising offset their higher ...

Faith And Faithfulness In Corporate Theory, Lyman P.Q. Johnson

Scholarly Articles

No abstract provided.

The Audit Committee's Ethical And Legal Responsibilities: The State Law Perspective, Lyman P.Q. Johnson

Scholarly Articles

This paper provides a state law perspective on the post-scandal, post-reform audit committee. Federal law, along with NYSE and Nasdaq (together, "SRO") rules, recently have made sweeping changes in corporate governance, including numerous provisions that bear on audit committees. These changes are unprecedented and dramatic, and rightly have received wide attention and careful study. Certain basic principles underlying the governance functions and duties of audit committees, however, originate in, and are still determined by, state law. Moreover, state law applies to all corporations; federal law and SRO rules on audit committees apply only to those companies coming under federal law ...

Redemptions Of Partnership Interests And Divisions Of Partnerships, Andrea M. Whiteway

William & Mary Annual Tax Conference

No abstract provided.

Specific Investment: Explaining Anomalies In "Corporate Law", Margaret M. Blair, Lynn A. Stout

Vanderbilt Law School Faculty Publications

This Article has two goals: to praise Professor Robert Clark as a remarkable corporate scholar, and to explore how his work has helped to advance our understanding of corporations and corporate law. Clark wrote his classic treatise at a time when corporate scholarship was dominated by a principal-agent paradigm that viewed shareholders as the principals or sole residual claimants in public corporations and treated directors as shareholders' agents. This view naturally led contemporary scholars to believe that the chief economic problem of interest in corporate law was the "agency cost" problem of getting corporate directors to do what shareholders wanted ...

The Ducks Stop Here? The Environmental Challenge To Federalism, Jonathan H. Adler

Faculty Publications

PIn Solid Waste Association of Northern Cook County v. U.S. Army Corps of Engineers ("SWANCC"), the Supreme Court considered whether federal regulatory authority reaches isolated wetlands and ponds due to the potential presence of migratory birds. In rejecting such an expansive view of federal authority, the Court's majority underlined its devotion to the federalism principles enunciated in Lopez and other recent cases. The federalist majority further reiterated its support for a canon of statutory construction which holds that federal statutes will not be interpreted to intrude into state matters, such as local land-use control, absent a clear statement ...

Shareholders' Agreements In Close Corporations And Their Enforcement, Ricardo Molano Leon

LLM Theses and Essays

Shareholders’ Agreements are contractual devices to manage tensions among shareholders of a corporation. These agreements have a wide scope related to shareholders’ interest. Nevertheless, before subscribing a shareholder agreement is important to determine the requirements to make it enforceable. This issue has been addressed in the last twenty years by state corporate statutes following the Model Business Corporation Act and the Delaware General Corporation Law and in different court decisions. Today, shareholders’ agreements will be enforced according to the terms defined by the parties unless the agreement injures non-participating shareholders, third parties or is against public policy.

Can Corporations Be Morally Responsible? Aristotle, Stakeholders And The Non-Sale Of Hershey, Steven Gimbel

Philosophy Faculty Publications

Stakeholder theory is a significant development in the drive to provide a foundation for intuitions concerning the moral responsibility connected to corporate decision making. The move to include the interests of workers, consumers, the communities and biological environment in which the corporations instantiations are located run counter to the view in which stakeholders' interests are paramount. The non-sale of the Hershey Foods company to Wrigley was the ultimate result of a massive call by stakeholders to put other interests before stakeholder financial stakes, yet the discussion was notably not held in terms of stakeholder theory. Rather, the discussion was explicitly ...

Atomism And The Private Merger Challenge, Paul Stancil

Faculty Scholarship

This Article explores the implications of allowing private parties to challenge mergers and acquisitions under the antitrust laws. It highlights a number of relatively recent developments in antitrust law that suggest an increase in private merger challenges in the future, and it identifies antiquated time of suit doctrines that may lead to inefficient and/or frivolous antimerger filings. It concludes by proposing several significant changes to the existing legal regime: (1) limited fee-shifting; (2) rigid time-of-suit deadlines; (3) single damages; and (4) limits on the use of postacquisition evidence to establish liability. Taken together, these reforms will allow private parties ...

On The Elimination Of Fiduciary Duties: A Theory Of Good Faith For Unincorporated Firms, Andrew S. Gold

Faculty Scholarship

No abstract provided.

Fiduciary Duties And Unincorporated Business Entities: In Defense Of The "Manifestly Unreasonable" Standard, Mark J. Loewenstein

Articles

This article wades into the debate between contractarians and anti-contractarians over the extent to which statutes on unincorporated business entities should limit the ability of the participants in those entities to contract around fiduciary duties. Statutes enacted in the past several years provide considerable, but not complete, freedom to limit fiduciary duties. Contractarians argue that statutory limitations are inefficient and unnecessary, while anti-contractarians take the view that the statutes provide too much freedom of contract. This article stakes out a middle ground, arguing that the drafters of the statutes got it right and that in the absence of statutory limitations ...

Women In Corporate Law Teaching: A Tale Of Two Generations, Margaret V. Sachs

Scholarly Works

This Article is divided into three parts. Part I focuses on [Margaret Harris] Amsler and Part II addresses the second generation. Part III explores a question that was prompted by the second generation and that goes to the heart of this Symposium: Do women corporations professors damage their standing in the academic community by examining the interface between corporate law and gender?

European Implications Of Bankruptcy Venue Shopping In The U.S., David A. Skeel Jr.

Faculty Scholarship at Penn Law

No abstract provided.

Financial Moral Panic! Sarbanes-Oxley, Financier Folk Devils, And Off-Balance Sheet Arrangement, Jose M. Gabilondo

Faculty Publications

No abstract provided.

Cuno And Congress: An Analysis Of Proposed Federal Legislation Authorizing State Economic Development Incentives, Walter Hellerstein

Scholarly Works

If anything is clear about Cuno and the controversy the opinion has spawned, it is that Congress has the last word on the matter. Whether Congress will speak to the issues Cuno has raised is currently an open question, although in one narrow respect Congress already has. Broader legislation, however, has been introduced into Congress as the "Economic Development Act of 2005," and debate over the efficacy and wisdom of this proposal is as intense as the debate over the defensibility of Cuno itself. My purpose here is not to join that debate, although I am already on record as ...

The Equilibrium Content Of Corporate Federalism, William W. Bratton, Joseph A. Mccahery

Faculty Scholarship at Penn Law

No abstract provided.

Restoring Trust In Corporate Directors: The Disney Standard And The ‘New’ Good Faith, Sarah Helene Duggin, Stephen M. Goldman

Scholarly Articles and Other Contributions

The purpose of this Article is to explore the parameters and potential impact of the good faith standard articulated in Disney V and clarified in Stone. Part I begins with a brief review of the historical impact of the tension between entrepreneurial freedom and managerial accountability, and Part II explains why the Disney standard differs significantly from the traditional understanding of good faith as the absence of subjective bad faith. Part III points out that the court's use of the language of bad faith to articulate the new good faith may undercut the effectiveness of the standard. It urges ...

Taxation And Multinational Activity: New Evidence, New Interpretations, Mihir A. Desai, C. Fritz Foley, James R. Hines Jr.

Articles

In the midst of rapid integration and globalization, multinational firms still face tax systems that differ among countries, and these differences have the potential to affect major investment and financing decisions. This research covers a wide range of topics, including the impact of indirect taxes as well as of corporate income taxes, the sensitivity of financing decisions to tax rates, the effects of taxes on repatriation policies, the demand for, and impact of, tax havens, and the use of indirect ownership as a means of avoiding taxes. The behavior of US multinational firms as revealed by the evidence collected by ...

The Irrational Auditor And Irrational Liability, Adam C. Pritchard

Articles

This Article argues that less liability for auditors in certain areas might encourage more accurate and useful financial statements, or at least equally accurate statements at a lower cost. Audit quality is promoted by three incentives: reputation, regulation, and litigation. When we take reputation and regulation into account, exposing auditors to potentially massive liability may undermine the effectiveness of reputation and regulation, thereby diminishing integrity of audited financial statements. The relation of litigation to the other incentives that promote audit quality has become more important in light of the sea change that occurred in the regulation of the auditing profession ...

The "Bad Man" Goes To Washington: The Effect Of Political Influence On Corporate Duty, Jill E. Fisch

Faculty Scholarship at Penn Law

No abstract provided.

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

Faculty Scholarship at Penn Law

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 ...

Minority Rights In Corporate Law: A Reply To Chander, James T. Gathii

Faculty Publications & Other Works

No abstract provided.