Law Commons^™

Déjà Vu All Over Again? Reflections On Auerbach's 'Modern Corporate Tax', Reuven S. Avi-Yonah

Law & Economics Working Papers

This paper comments on Alan Auerbach's "A Modern Corporate Tax" (Hamilton Project/CAP, December 2010) and argues that it is not a significant improvement over previous proposals to replace the corporate tax with a cash flow tax.

On The Role And Regulation Of Proxy Advisors, Paul Rose

Michigan Law Review First Impressions

In anticipation of proxy season-the springtime ritual where companies prepare and deliver proxy statements in preparation for annual shareholder meetings-U.S. public companies typically reexamine their corporate governance structures and policies. Many corporate governance structures that were acceptable ten years ago are now considered outmoded or even evidence of managerial entrenchment. For example, consider the classified board of directors. In recent years, many companies have shifted from a classified board of directors to an annually elected board. A company might adopt an annually-elected board structure for a number of reasons. A classified board can serve as an entrenchment device, for instance, …

Assessing The Applicability Of The Business Judgment Rule And The “Defensive” Business Judgment Rule In The Chinese Judiciary: A Perspective On Takeover Dispute Adjudication, Xiao-Chuan Charlie Weng

Xiao-chuan Charlie Weng

With the surge of takeovers in China, many issues regarding takeover adjudication and legislation have increasingly received academic attention. The issues of the independence and professionalization of the judiciary and the scarcity of legislation on duty of care are the major predicaments facing corporate China. Massive legislative and judicial reform of takeover adjudication is not viable in the near future. However, U.S. common law standards of review, including the business judgment rule and serial rules against hostile takeover, with diacritical the business judgment rule stamp, may hold potential for reform within the current economic environment. The article investigates the problems …

Path Dependence And Durability Of Hong Kong's Existing Corporate Reorganization System, Charles Zhen Qu Dr

Charles Zhen Qu Dr

A corporate reorganization system that ensures optimal deployment of distressed companies’ assets helps promote economic development. In many developed economies, faltering firms are reorganized through a formal corporate reorganization procedure. The Hong Kong government has recently recommended the enactment of such a procedure on the assumption that the existing corporate and insolvency framework is ill-equipped to restructure failing companies. This article rebuts this assumption through an assessment of the efficiency of the judicially-developed reorganization system that has emerged as a result of the failure to introduce a formal reorganization procedure a decade ago. It argues that since an efficient alternative …

Technology Convergence And Federalism: Who Should Decide The Future Of Telecommunications Regulation?, Daniel A. Lyons

University of Michigan Journal of Law Reform

This Article critically examines the division of regulatory jurisdiction over telecommunications issues between the federal government and the states. Currently, the line between federal and state jurisdiction varies depending on the service at issue. This compartmentalization might have made sense fifteen years ago, but the advent of technology convergence has largely rendered this model obsolete. Yesterday's telephone and cable companies now compete head-to-head to offer consumers the vaunted "triple play" of voice, video, and internet services. But these telecommunications companies are finding it increasingly difficult to fit new operations into arcane, rigid regulatory compartments. Moreover, services that consumers view as …

Directors In The Dock: An Analysis In The Light Of Maksud Sayid Case, Jitendra Soni

Jitendra Soni

No abstract provided.

Using - And Not Losing - Tax Losses, Part 1: Protecting Tax Losses From A Section 382 Ownership Change (Slides), Mark C. Van Deusen

William & Mary Annual Tax Conference

No abstract provided.

Using - And Not Losing - Tax Losses, Part 2 (Slides), Steven M. Friedman

William & Mary Annual Tax Conference

No abstract provided.

Agenda: 2010 World Energy Justice Conference: Emerging Solutions For The Energy Poor: Technological, Entrepreneurial And Institutional Challenges, University Of Colorado Boulder. Center For Energy & Environmental Security, Colorado Journal Of International Environmental Law And Policy

2010 World Energy Justice Conference (November 5)

This conference is a sequel to the 2009 World Energy Justice Conference (WEJC 2009) which began examining ways of mainstreaming safe, clean, and efficient energy for the world's Energy Poor (EP). The EP number two and a half billion people living on less than $1-2 a day who have no access to modern energy services. WEJC 2010 more fully develops these themes. WEJC 2010 will explore how the next round of global warming meetings in Cancun could design new flexibility mechanisms that give credits, for example, for the reduction of black carbon by the adoption of cookstoves, and embrace small …

Corporations, Harry C. Sigman

Cal Law Trends and Developments

The major 1969 corporate law developments of particular interest to the California practitioner were: (1) California appellate decisions which, at least by implication, greatly broaden the scope of a controlling shareholder's duty to minority shareholders; (2) amendments to the California Corporations Code; and (3) amendments to the Delaware General Corporation Law.

On The Formation Of The American Corporate State: The Fuller Supreme Court, 1888-1910, George Skouras

George Skouras

This paper deals with the formation and legitimation of the American Corporate State by the Fuller Supreme Court. It argues that the Fuller Court was wrong to use the Due Process Clause of the 14th Amendment and natural law to support laissez-faire capitalism and the emergent corporate structure at the expense of labor and labor unions. It also argues that the corporatization of America has created a social and cultural environment that places business as the center of the American universe. This has led to a very asymmetrical relationship between corporations and citizens. It further argues that recent revisionist scholarship …

Torture, Inc.: Corporate Liability Under The Torture Victim Protection Act, Emily M. Martin

Northern Illinois University Law Review

The Torture Victim Protection Act (TVPA) was passed by Congress to provide a modern cause of action for victims of torture around the world. The TVPA allows victims anywhere to bring suit in the Untied States for torture committed abroad by foreign nationals. Currently, there is a split in the circuits over whether the TVPA can be used to hold corporations liable for use of torture. This Comment takes the position that the TVPA can and should be applied to corporations in order to be consistent with the Act's legislative history and to fill dangerous gaps in governance over multinational …

Are Investors’ Gains And Losses From Securities Fraud Equal Over Time? Theory And Evidence, Alicia J. Davis

Law & Economics Working Papers

Most leading securities regulation scholars argue that compensating securities fraud victims is inefficient. They maintain that because diversified investors that trade frequently are as likely to gain from trading in fraud-tainted stocks as they are to suffer harm from doing so, these investors should have no expected net losses from fraud over the long term. This assertion, which analogizes trading in fraud-tainted stocks to participating in a coin toss game in which players win $1 on heads and lose $1 on tails, is problematic for a number of reasons. First, even if we accept this analogy, probability theory holds that …

Executive Compensation: The Law And Incentives, Stas Getmanenko

Stas Getmanenko

Excessive executive compensation frequently breeds resentment, undermines consumer faith in the financial system, and overly stigmatizes otherwise common business failures. Frequently, the opponents of lavish pay packages compare executive compensation to the compensation of rank-and-file workers. Such criticism reflects perfectly appropriate societal concerns over pay equity and distribution of wealth within a society. An entirely separate source of friction is the shareholders’ right to benefit from the corporation’s wealth. Shareholders’ dividend is directly reduced by the company’s expenses, one of which executive compensation. For most of today’s public companies the executive compensation expense is often negligible when considered in light …

Is The Public Utility Holding Company Act A Model For Breaking Up The Banks That Are Too-Big-To-Fail?, Roberta S. Karmel

Roberta S. Karmel

ABSTRACT FOR “IS THE PUBLIC UTILITY HOLDING COMPANY ACT A MODEL FOR BREAKING UP THE BANKS THAT ARE TO-BIG-TO-FAIL?”

BY ROBERTA S. KARMEL

During the financial crisis of 2007-08 and the debates on regulatory reform that followed, there was general agreement that the “too-big-to-fail” principle creates unacceptable moral hazard. Policy makers divided, however, on the solutions to this problem. Some argued that the banking behemoths in the United States should be broken up. Others argued that dismantling the big banks would be bad policy because these banks would not be able to compete with universal banks in the global capital …

Assuring Responsible Risk Management In Banking: The Corporate Governance Dimension, Michael E. Murphy

Michael E Murphy

ABSTRACT The corporate governance dimension of risk management in banking concerns the structures needed to assure the power and independence of control centers. Three are clearly relevant: the risk management departments themselves, the audit function and particularly internal audit, and the contingent of independent directors on the board. A fourth, the shareholder base, is problematic. A survey of corporate governance disclosures reveals a need for more progress in assuring the independence of the risk management and internal audit functions by linking them more closely to the board. The board’s own capacity to function as an independent control center relates most …

Corporate Philanthropy And The Business Benefit: The Need For Clarity, Shelby D. Green

Golden Gate University Law Review

It is supposed that corporations give to charitable causes out of self-interest - indeed, it is argued that this is all that the law permits - as a measured business response to political pressures and public hostility.s But can corporations give out of altruism - simply on the basis that giving is the social responsibility of all citizens, including corporate citizens? Case law and some commentary appear to answer no. Nevertheless, the actual giving practices of corporations seem, difficult to explain otherwise. Recently, the American Law Institute ("ALI"), as part of its Corporate Governance Project, proposed a rule to define …

A Japanese Calpers Or A New Model For Institutional Investor Activism? Japan's Pension Fund Association And The Emergence Of Shareholder Activism In Japan, Bruce Aronson

Bruce Aronson

If activist institutional investors are arguably the primary external monitors of management under leading corporate governance systems in the United States and the United Kingdom, who might assume that role in other countries? And, more importantly, what activist shareholder strategies may be possible under different corporate governance systems and operating environments that are generally less supportive of shareholder activism than the United States and the United Kingdom? This Article seeks to address that question through a comparison of the well-known strategy of CalPERS with that of a rare, real-world example of institutional investor activism outside of the “Anglo-Saxon” model—Japan’s Pension …

Citizens United And The Threat To The Regulatory State, Tamara R. Piety

Michigan Law Review First Impressions

Although Citizens United has been roundly criticized for its potential effect on elections and its display of judicial immodesty (or "activism"), the effect of the case which may be both most profound and perhaps most pernicious is its effect on the commercial speech doctrine. This is an aspect of the case which has been largely overlooked. Most people seem to be unaware of any connection between election law and the commercial speech doctrine-except, that is, those who have been working long and hard to accomplish the change it foreshadows. They are keenly aware of its implications.

The U.B.S. Case: The U.S. Attack On Swiss Banking Sovereignty, Beckett G. Cantley

Beckett G Cantley

On August 1, 2006, the United States Senate’s Permanent Subcommittee on Investigations (“PSI”), a branch of the Committee on Homeland Security and Governmental Affairs, released a report in conjunction with a Senate hearing that revealed alarming statistics regarding wealthy Americans’ love affair with offshore banking. The PSI report was a culmination of the subcommittee’s investigation into tax haven abuses, providing the most detailed look to date of high-level tax schemes. The report revealed such an alarming number of rich Americans are using offshore accounts to evade taxes that law enforcement is unable to control the growing misconduct. Senator Carl Levin …

Was Selden Right? The Expansion Of Closed Seas And Its Consequences, Scott Shackelford

Scott Shackelford

This Article focuses on the relationship between the legal regimes governing offshore resources in the continental shelves and the deep seabed, particularly in reference to the extent to which continental shelf claims are encroaching on the deep seabed. The question of how well these respective legal regimes regulate resource exploitation will also be considered, along with an analysis of the underlying reasons driving change in these governance structures. I argue that the primary issue is one of whether vague rules, particularly UNCLOS Article 76, are working in terms of incentivizing sustainable, peaceful development of offshore resources.

Is Chapter 15 Universalist Or Territorialist? Empirical Evidence From United States Bankruptcy Court Cases, Jeremy Leong

Jeremy Leong

No abstract provided.

The Financial Reform Act: Will It Succeed In Reversing The Causes Of The Subprime Crisis And Prevent Future Crises?, Charles W. Murdock

Charles W. Murdock

Summary: The Financial Reform Act: Will It Succeed in Reversing the Causes of the Subprime Crisis and Prevent Future Crises? By: Professor Charles W. Murdock

The current financial crisis, which could have plunged the world into a financial abyss similar to the Great Depression, is far from resolved. The financial institutions, which this article asserts caused the crisis, have returned to profitability and have paid billions of dollars in bonuses, while ordinary Americans have borne the brunt of the meltdown, with formal unemployment hanging around the 10% mark. This has caused some to comment that profits have been privatized and …

Cost-Benefit Analysis Of The Business Judgment Rule: A Critique In Light Of The Financial Meltdown, Todd Aman

Todd M Aman

In 2008, the United States – indeed the whole world – suffered a devastating financial meltdown. We know now that a significant cause of the meltdown was that, in the face of numerous red flags, the managers of several venerable financial firms decided to take tremendous risks in the subprime mortgage market, and the directors of these firms did little or nothing to stop them. However, despite their actions, these managers and directors face little or no risk of personal liability because they are shielded by the business judgment rule and other liability reducing mechanisms, such as director exculpation statutes. …

The Rise And Fall Of Managerial Adaptive Responses To Incentive Pay, Sharon Hannes

Sharon Hannes

A commonly-voiced argument ties the current financial crisis to prevailing executive compensation practices. Huge stock-option packages and annual bonuses, the claim goes, caused managers to concentrate on the short-run and overlook the downside of risk-taking. But why did crisis emerge only recently, even though such incentive pay schemes are hardly a new phenomenon? This paper argues that for a long period of time, from the beginning of the 1990s until the beginning of the twenty-first century, managers employed a variety of adaptive tactics in response to option-based compensation and other risk-inducing pay schemes. These practices enabled executives to enrich themselves …

Lessons In Price Stability From The U.S. Real Estate Market Collapse, Andrea J. Boyack

Andrea J Boyack

The U.S. residential housing market collapse illustrates the consequences of ignoring risk while funding mortgage borrowing. Collateral over-valuation was a foundational piece of the crisis. Over the past few decades, secondary markets, securitization, policy and psychology increased the flow of funds into real estate. At the same time, financial market segmentation divorced risk from reward. Increased mortgage capital availability, unmitigated by proper risk allocation, led to real estate price inflation. Social trends and government policies exacerbated both the mortgage capital over-supply and the risk-valuation disconnect.

The Dodd-Frank Act inadequately addresses the underlying asset valuation problem. Federal regulation may support market …

Insider Trading As Misfeasance: The Yielding Of The Fiduciary Requirement, Joanna B. Apolinsky

Joanna B Apolinsky

Mark Cuban is a billionaire entrepreneur and active investor. He has also made news of late as a defendant in an action brought against him by the Securities Exchange Commission (SEC) for insider trading. The SEC alleged that Cuban violated §10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 when he sold his Mamma.com stock after the company’s CEO informed him of material, confidential information regarding a planned securities offering by Mamma.com. Prior to informing Cuban of the offering, Mamma.com’s CEO first secured Cuban’s assurance that he would keep the information confidential. Cuban agreed. And he ended the …

The Redemption Puzzle, Reuven S. Avi-Yonah

Articles

After the adoption of partial integration in 2003, there has been only a modest rise in dividends, but a sixfold increase in redemptions. This article argues that the explanation for that lies in the different treatment of dividends and capital gains to foreign shareholders and that Congress should respond by making sections 302 and 304 inapplicable to foreign shareholders.

Controlling Creditor Opportunism, Jonathan C. Lipson

Jonathan C. Lipson

This paper addresses problems of creditor opportunism. “Distress investors” such as hedge funds, private equity funds, and investment banks are opportunistic when they use debt to obtain control of a financially troubled firm and extract improper gains at the expense of the firm and its other stakeholders. Examples include the mis-use of private information to short-sell a borrower’s securities and creditor self-dealing.

Creditors can act opportunistically because legal doctrines that historically checked such behavior—e.g., “lender liability”—have not kept pace with fundamental changes in the market for control of distressed firms. The recent Dodd-Frank financial reform is not likely to change …

The Conundrum Of Covered Bonds, Steven L. Schwarcz

Steven L Schwarcz

Covered bonds, which have been part of European finance since the time of Frederick the Great, are now being widely touted as the answer to securitization’s imperfections. There is great confusion, though, about the nature of covered bonds and their relationship to secured bond financing and securitization. This article attempts to demystify covered bonds, examining how they fit within a larger financing framework, analyzing their legal rights and obligations, and comparing their costs and benefits. The benefits of covered bonds are similar to those of securitization; both can access low-cost capital market funding with low risk to their investors, and …