Law Commons^™

Recent Cases: Appellate Procedure - Force Of Circuit Precedent - Ninth Circuit Holds That Three-Judge Panels May Declare Prior Cases Overruled When Intervening Supreme Court Precedent Undercuts The Theory Of Earlier Decisions, Robert J. Jackson Jr.

Faculty Scholarship

The nation's courts of appeals have struggled to devise a coherent approach to harmonizing existing circuit case law with intervening decisions of the Supreme Court.' When the Court directly overrules a decision of a court of appeals, it is agreed that the overruled decision loses the force of law. But when a Supreme Court opinion disfavors a circuit's jurisprudential theory, the courts of appeals must determine to what extent cases relying on the rejected theory remain good law. Recently, in Miller v. Gammie (Gammie II),2 the United States Court of Appeals for the Ninth Circuit, sitting en banc, adopted an …

Understanding Venture Capital Structure: A Tax Explanation For Convertible Preferred Stock, Ronald J. Gilson, David M. Schizer

Faculty Scholarship

The capital structures of venture capital-backed U.S. companies share a remarkable commonality: overwhelmingly, venture capitalists make their investments through convertible preferred stock. Not surprisingly, much of the academic literature on venture capital has sought to explain this peculiar pattern. Financial economists have developed models showing, for example, that convertible securities efficiently allocate control between the investor and entrepreneur,signal the entrepreneur's talent and motivation, and align the incentives of entrepreneurs and venture capitalists.

In this Article, we examine the influence of a more mundane factor on venture capital structure: tax law. Portfolio companies issue convertible preferred stock to achieve more favorable …