Law Commons^™

Freezing Out Ben & Jerry: Corporate Law And The Sale Of A Social Enterprise Icon, Antony Page, Robert A. Katz

Faculty Publications

Companies with social missions are frequently bought by larger, more conventional profit-seeking firms and just as frequently accused of “selling out.” Ben & Jerry’s Homemade Inc. is perhaps the leading example: its takeover by international conglomerate Unilever is an oft-repeated cautionary tale of the negative proclivities of the publicly-traded corporate form and profit-maximizing corporate law. Contrary to conventional wisdom, however, corporate law did not compel the sale, or sell-out, of Ben & Jerry’s. This familiar account omits a critical part of the narrative -- the company and its founders had established impressive anti-takeover defenses that, when pressed, the board declined …

Re-Enchanting The Corporation, Lyman P.Q. Johnson

Scholarly Articles

This Essay begins with Max Weber’s observation that the condition of the modern world is “disenchanted” and goes on to argue that contesting the notion of disenchantment offers a promising framework for rethinking baseline issues in corporate law and corporate life more generally. After elaborating what disenchantment meant to Weber, this Essay offers two counter-observations. First, the world may not be better off as a result of disenchantment. Second, as an empirical matter the world may not really be “disenchanted” given the substantial number of people who both hold religious beliefs and consistently report that those beliefs influence how they …

To Be Or Not To Be Both Ceo And Board Chair, Thuy-Nga T. Vo

Faculty Scholarship

Part I of this article discusses the management and monitoring responsibilities of the board of directors. Part II explores the duality governance structure and its prevalence in corporate America. In Part III, the article examines and weighs the theoretical arguments for and against duality. Based on these arguments, this part assesses the impact of combined or separate CEO and Chair positions on the board’s performance of its management and monitoring responsibilities. Part IV turns to the empirical data on the effect of combined, rather than separate, CEO-Chair roles on corporate performance. Part V explains the views of corporate stakeholders on …

How Many Fiduciary Duties Are There In Corporate Law?, Julian Velasco

Journal Articles

Historically, there were two main fiduciary duties in corporate law, care and loyalty, and only the duty of loyalty was likely to lead to liability. In the 1980s and 1990s, the Delaware Supreme Court breathed life into the duty of care, created a number of intermediate standards of review, elevated the duty of good faith to equal standing with care and loyalty, and announced a unified test for review of breaches of fiduciary duty. The law, which once seemed so straightforward, suddenly became elaborate and complex. In 2006, in the case of Stone v. Ritter, the Delaware Supreme Court rejected …

The Role Of Independent Directors In Startup Firms, Brian Broughman

Articles by Maurer Faculty

This Article develops a new theory to explain the widespread use of independent directors in the governance of startup firms. Privately held startups often assign a tie-breaking board seat to a third-party independent director. This practice cannot be explained by the existing corporate governance literature, which relies on diffuse ownership and passive investment-features unique to the publicly traded firm. To develop an alternative theory, I model a financing contract between an entrepreneur and a venture capital investor. I show that allocating a tie- breaking vote to an unbiased thirdparty can prevent opportunistic behavior that would occur ifthe firm were controlled …

Promoting Innovation: The Law Of Publicly Traded Corporations, Merritt B. Fox

Faculty Scholarship

Improving economic welfare requires that society’s scarce savings be allocated among proposed real investment projects in a way that appreciates the prospects of promising new innovations. Corporate and securities law help structure important elements of this process of allocation. This article sketches out an approach based upon a seemingly paradoxical analogy of a market economy’s overall finance process to the way a hierarchical organization gathers and processes relevant bits of information dispersed among many individuals in order to make decisions. It thereby takes advantage of important thinking in communications and organizational theory about how to make organizations sensitive to the …

Virtual Shareholder Meetings Reconsidered, Lisa Fairfax

All Faculty Scholarship

In 2000 Delaware enacted a statute enabling corporations to host meetings solely by electronic means of communication rather than in a physical location. Since that time, several states have followed Delaware's lead, and the American Bar Association has proposed changing the Model Business Corporation Act to provide for some form of virtual shareholder meetings. Many states believed that such meetings would prove to be an important device for shareholders who desire to increase their voice within the corporation. Instead, very few companies have taken advantage of the ability to host such meetings. This Article provides some data on state statutes …

The Cult Of Efficiency In Corporate Law, Stephen E. Ellis, Grant M. Hayden

Faculty Journal Articles and Book Chapters

This paper challenges a fundamental assumption of corporate law scholarship. Corporate law is heavily influenced by economics, and by normative economics in particular. Economic efficiency, for example, is seen as the primary goal of good corporate governance. But this dependence on standard notions of economic efficiency is unfortunate, as those notions are highly problematic. In economic theory, efficiency is spelled out in terms of individual preference satisfaction, which is an inadequate foundation for any sort of normative analysis. We argue that on any account of the good, people will sometimes prefer things that aren’t good for them on that account. …

A Short History Of Tontines, Kent Mckeever

Faculty Scholarship

A tontine is an investment scheme through which shareholders derive some form of profit or benefit while they are living, but the value of each share devolves to the other participants and not the shareholder's heirs on the death of each shareholder. The tontine is usually brought to an end through a dissolution and distribution of assets to the living shareholders when the number of shareholders reaches an agreed small number.

If people know about tontines at all, they tend to visualize the most extreme form – a joint investment whose heritable ownership ends up with the last living shareholder. …