Law Commons^™

Mergers, Market Dominance And The Lundbeck Case, Herbert J. Hovenkamp

All Faculty Scholarship

In Lundbeck the Eighth Circuit affirmed a district court’s judgment that a merger involving the only two drugs approved for treating a serious heart condition in infants was lawful. Although the drugs treated the same condition they were not bioequivalents. The Eighth Circuit approved the district court’s conclusion that they had not been shown to be in the same relevant market.

Most mergers that are subject to challenge under the antitrust laws occur in markets that exhibit some degree of product differentiation. The Lundbeck case illustrates some of the problems that can arise when courts apply ideas derived from models …

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 …

Wage Taxes And Compensating S Corporation Officers And Members Of Llcs And Llps, John W. Lee

William & Mary Annual Tax Conference

No abstract provided.

Compensating Employees And Employee Owners, And Avoiding Problems With Payroll Tax And Executive Compensation Audits, Mary B. Hevener

William & Mary Annual Tax Conference

No abstract provided.

Real Estate Partnership And Llc Divorces, Cameron N. Cosby, Brian J. O'Connor

William & Mary Annual Tax Conference

No abstract provided.

A Comparison Of Partnership And S Corporation Exit Transactions, Mark J. Silverman, Aaron P. Nocjar

William & Mary Annual Tax Conference

No abstract provided.

Summary Of Canarelli V. Dist. Ct., 127 Nev. Adv. Op. 72, Cameron Daw

Nevada Supreme Court Summaries

A petition for a writ of certiorari or mandamus challenging the district court’s order to force Petitioner to serve as trustee for a dissolved corporation in a construction defect action.

Re-Appraising The Appraisers: Expanding Liability To Buyers And Borrowers In The Story Of The 2008 Financing Industry Crisis, Shelby D. Green

Elisabeth Haub School of Law Faculty Publications

On the surface, suing in negligence seems the most promising avenue for recovery against appraisers, because liability depends on an examination of defendant's conduct alone and does not require an examination or defendant's mental state to show intent or agreement. But historically insuperable hurdles have operated to prevent recovery under this seemingly simple cause of action. One hurdle is lack of privity. The appraiser's legal relationship is with the hiring party--the lender--to assess the risks of the loan transaction and not with the purchaser, who may rely on the appraisal in making the decision to purchase. Because of the lack …

Overlitigating Corporate Fraud: An Empirical Examination, Jessica M. Erickson

Law Faculty Publications

Corporate law leaves no stone unturned when it comes to litigating corporate fraud. The legal system has developed a remarkable array of litigation options shareholder derivative suits, securities class actions, SEC enforcement actions, even criminal prosecutions all aimed at preventing the next corporate scandal. Scholars have long assumed that these different lawsuits offer different avenues for deterring the masterminds of corporate fraud yet this assumption has gone untested in the legal literature. This Article aims to fill that gap through the first empirical examination of the broader world of corporate fraud litigation. Analyzing over 700 lawsuits, the study reveals that …

The Corporate Governance Of Iconic Executives, Tom C.W. Lin

UF Law Faculty Publications

This Essay explores the special corporate governance challenges posed by iconic executives. Iconic executives are complex, bittersweet figures in corporate governance narratives. They are alluring, larger-than-life corporate figures who often govern freely. Iconic executives frequently rule like monarchs over their firms, offering lofty promises to shareholders, directors, and managers under their reign. But like many stories of powerful and influential figures, the narratives of iconic executives also contain adversity and danger. Part of the acquiescence and enchantment with such figures is rooted in the virtuous promises embodied by their presence, promises of unity, accountability, and effectiveness in corporate governance. Unfortunately, …

A Tax Response To The Executive Pay Problem, David I. Walker

Faculty Scholarship

Many observers believe that that the public company executive labor market is deficient and results in systematically excessive compensation. This Article accepts that premise and considers potential regulatory responses. Specifically, this Article proposes and analyzes a two-pronged tax response to the problem of excessive executive pay – the imposition of a surtax on executive pay in excess of a threshold combined with investor tax relief. These two prongs respond to the chief concerns raised by excessive executive pay. The imposition of a surtax would reduce the after-tax income of executives, which would directly address the unfairness of excessive pay and …

An Industry-Specific Vat In Michigan - Objective Valuation In The Retail Gasoline Trade, Richard Thompson Ainsworth

Faculty Scholarship

New York adopted an industry-specific value added tax (VAT) to solve problems with virtual intermediaries (room remarketers) under its hotel accommodations tax. The New York VAT resembles the VAT used in the European Union (EU). It is a credit-invoice VAT that subjectively values supplies.

Michigan has also adopted an industry-specific credit-invoice VAT, however the targeted industry is the retail gasoline trade. The valuation method is objective, rather than subjective. In valuing supplies objectively rather than subjectively, the Michigan VAT resembles the exception provisions that are found in most VATs around the globe. Objective valuations are used in VATs when dealing …

An Orderly Liquidation Authority Is Not The Solution To Too-Big-To-Fail, Roberta S. Karmel

Faculty Scholarship

No abstract provided.

Are Institutional Investors Part Of The Problem Or Part Of The Solution?: Key Descriptive And Prescriptive Questions About Shareholders, Ben W. Heineman Jr., Stephen Davis

Ira M. Millstein Center for Global Markets and Corporate Ownership

Over the last twenty years, institutional investors have owned an increasing share of public equity markets — more than 70 percent of the largest 1,000 companies in the United States in 2009, for example. Over the past two years, in response to failures of some boards of directors and business leaders, shareholders, including institutional investors, have been given increased powers to participate in — or have disclosures about — discrete spheres of governance in publicly held corporations. Moreover, during this same period, and in multiple jurisdictions, there have been increasing calls from both the public and private sectors for institutional …

The Garcetti Virus, Nancy M. Modesitt

All Faculty Scholarship

In an era where corporate malfeasance has imposed staggering costs on society, ranging from the largest oil spill in recorded history to the largest government bailout of Wall Street, one would think that those who uncover corporate wrongdoing before it causes significant harm should receive awards. Employees are particularly well-placed to uncover such wrongdoing within companies. However, rather than reward these employees, employers tend to fire or marginalize them. While there are statutory protections for whistleblowers, a disturbing new trend appears to be developing: courts are excluding from the protection of whistleblowing statutes employees who report wrongdoing as part of …

Technology Solves Mtic - Vln, Rtvat, D-Vat Certification, Richard Thompson Ainsworth

Faculty Scholarship

Technology solves missing trader intra-community (MTIC) fraud. This should come as no surprise. MTIC is technology-intensive fraud – its solution should also be technology-intensive.

MTIC is getting to be an out-dated term. Now that missing trader fraud has move into services it is no longer confined to intra-community trade, and the older acronym should be adjusted to MTIC/MTEC fraud (with MTEC standing for missing trader extra-community).

MTIC/MTEC fraud is fully digitized (the supply, the movement of the supply, and the funding). The consequences should be clear. MTIC/MTEC must be prevented (before the fact), not pursued (after the fact). In the …

Transfer Pricing & Business Restructurings: Intangibles, Synergies, And Shelters, Richard Thompson Ainsworth, Andrew Shact

Faculty Scholarship

Transfer pricing in business restructuring is attracting global attention. In the past two years two key policy-making groups have released three substantive documents on this topic. The Organization of Economic Cooperation and Development (OECD) issued two position statements while the Joint Committee on Taxation (JCT) issued one. While restructurings are a very common commercial practice, until recently it has been uncommon to apply transfer pricing criteria when examining them in detail.

Essentially, the OECD has overlooked that a unique and valuable intangible is created during the restructuring process. By not acknowledging that this intangible in the mix, the OECD fails …

New York Adopts A Vat, Richard Thompson Ainsworth

Faculty Scholarship

On August 13, 2010 the New York State Department of Taxation and Finance, Office of Tax Policy Analysis, Taxpayer Guidance Division released Amendments Affecting the Application of Sales Tax to Rent Received for Hotel Occupancy by Room Remarketers. The legislative revision it considers (Chapter 57 of the Laws of 2010) was effective September 1, 2010. The changes brought in by this Chapter effectively converted New York’s Hotel Room Occupancy Tax from a single-stage retail sales tax to multi-stage European-style VAT. This paper considers the New York VAT in hotel accommodations in three sections. The first defines a European-style credit-invoice VAT …

Summary Of Smith V. Kisorin Usa, Inc., 127 Nev. Adv. Op. No. 37, Cayla Witty

Nevada Supreme Court Summaries

An appeal of a district court summary judgment challenging whether a corporation’s decision to deliver dissenters’ rights notice to all stockholders that hold stock in street name and not to all beneficial stockholders is sufficient under NRS Chapter 92A.

Money On The Table: Why The U.S. Should Tax Inbound Capital Gains, Reuven S. Avi-Yonah

Articles

On March 21, 2011, AT&T announced that it will buy T-Mobile from Deutsche Telekom for $39 billion. This transaction will be tax free to Deutsche Telekom (DT) not because it qualifies as a reorganization, but because DT is a foreign corporation and capital gains of nonresidents are generally not subject to U.S. taxation because they are deemed to be foreign source. Also, DT is protected from taxation by article 13(5) of the Germany-U.S. tax treaty, which provides that capital gains are generally taxable only by the country of residence.

The Marginalist Revolution In Corporate Finance: 1880-1965, Herbert J. Hovenkamp

All Faculty Scholarship

During the late nineteenth and early twentieth centuries fundamental changes in economic thought revolutionized the theory of corporate finance, leading to changes in its legal regulation. The changes were massive, and this branch of financial analysis and law became virtually unrecognizable to those who had practiced it earlier. The source of this revision was the marginalist, or neoclassical, revolution in economic thought. The classical theory had seen corporate finance as an historical, relatively self-executing inquiry based on the classical theory of value and administered by common law courts. By contrast, neoclassical value theory was forward looking and as a result …

Brown Shoe Versus The Horizontal Merger Guidelines, Keith N. Hylton

Faculty Scholarship

The new Horizontal Merger Guidelines, if treated by courts as a source of law, would reduce the discretion traditionally exercised by courts in defining relevant markets and market power in merger cases. This is an undesirable shift in the balance of power because courts have used the market power inquiry stage of merger analysis as a general checkpoint or weigh station for evaluating factors relevant to the welfare effects of a merger.

A Preface To Neoclassical Legal Thought, Herbert J. Hovenkamp

All Faculty Scholarship

Most legal historians speak of the period following classical legal thought as “progressive legal thought.” That term creates an unwarranted bias in characterization, however, creating the impression that conservatives clung to an obsolete “classical” ideology, when in fact they were in many ways just as revisionist as the progressives legal thinkers whom they critiqued. The Progressives and New Deal thinkers whom we identify with progressive legal thought were nearly all neoclassical, or marginalist, in their economics, but it is hardly true that all marginalists were progressives. For example, the lawyers and policy makers in the corporate finance battles of the …

Summary Of In Re Amerco Derivative Litigation, 127 Nev. Adv. Op. No. 17, Jennifer Delcarmen

Nevada Supreme Court Summaries

An appeal from an order to dismiss a shareholder derivative claim.

Summary Of American Ethanol V. Cordillera Fund, 127 Nev. Adv. Op. No. 13, Michael Roche

Nevada Supreme Court Summaries

The Court reviews an appeal from a district court decision in a corporation action.

Why Not A Ceo Term Limit?, Charles K. Whitehead

Cornell Law Faculty Publications

In this Essay, I ask: Why not require a mandatory CEO term limit? My purpose is not to propose a term limit, but rather to ask why CEO term limits are out-of-bounds – not addressed within the corporate governance scholarship – when they have long been advocated for directors and, more recently, public company auditors.

The traditional answer has been that CEOs are agents of the corporation, subject to control by the board, which holds primary responsibility for the firm’s business and affairs. Senior officers are largely shielded from outside interference, permitting them to execute consistent, long-term business strategies under …

Who Should Talk? What Counts As Employee Voice And Who Stands To Gain, Aditi Bagchi

All Faculty Scholarship

This symposium piece responds to an article by Kenneth G. Dau-Schmidt titled "Promoting Employee Voice in the American Economy: A Call for Comprehensive Reform." Professor Schmidt argues in favor of increasing employee voice in corporate governance. In this reply, Professor Bagchi distinguishes between "hard voice," "soft voice" and information rights as three variants of employee voice. She casts doubt on the material benefits from Professor Dau-Schmidt's proposals, which focus on hard and soft voice, to either employees or corporate stakeholders more broadly. The present focus of corporate governance on the relationship between shareholders and managers, to the exclusion of employees, …

When The Government Is The Controlling Shareholder, Marcel Kahan, Edward B. Rock

All Faculty Scholarship

As a result of the 2008 bailouts, the United States Government is now the controlling shareholder in AIG, Citigroup, GM, GMAC, Fannie Mae and Freddie Mac. Corporate law provides a complex and comprehensive set of standards of conduct to protect non-controlling shareholders from controlling shareholders who have goals other than maximizing firm value. In this article, we analyze the extent to which these existing corporate law structures of accountability apply when the government is the controlling shareholder, and the extent to which federal “public law” structures substitute for displaced state “private law” norms. We show that the Delaware restrictions on …

Derivatives And The Legal Origin Of The 2008 Credit Crisis, Lynn A. Stout

Cornell Law Faculty Publications

Experts still debate what caused the credit crisis of 2008. This Article argues that dubious honor belongs, first and foremost, to a little-known statute called the Commodities Futures Modernization Act of 2000 (CFMA). Put simply, the credit crisis was not primarily due to changes in the markets; it was due to changes in the law. In particular, the crisis was the direct and foreseeable (and in fact foreseen by the author and others) consequence of the CFMA’s sudden and wholesale removal of centuries-old legal constraints on speculative trading in over-the-counter (OTC) derivatives.

Derivative contracts are probabilistic bets on future events. …

Interstate Comparison - Use Of Contribution Margin In Determination Of Price Fixing, Tsui Tat Chee

Pace International Law Review Online Companion

For over a century, anti-trust law has been used to maintain an open and fair market economy by preventing monopolies. However, anti-trust law has never precisely defined the term “monopoly”, which makes evaluating the interactions between the prohibition of monopoly and encouraging competition increasingly challenging.

In 2006, the Hong Kong Government appointed Arculli & Associates Solicitor Firm to study issues relating to competition in the auto-fuel retail market in Hong Kong. A test based on contribution margins was recommended, leading to the conclusion that price fixing is not a crime in the industry.

This article examines the problems related …