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Full-Text Articles in Business
Regulatory Competition And The Market For Corporate Law, Ofer Eldar, Lorenzo Magnolfi
Regulatory Competition And The Market For Corporate Law, Ofer Eldar, Lorenzo Magnolfi
Faculty Scholarship
This article develops an empirical model of firms’ choice of corporate laws under inertia. Delaware dominates the incorporation market, though recently Nevada, a state whose laws are highly protective of managers, has acquired a sizable market share. Using a novel database of incorporation decisions from 1995- 2013, we show that most firms dislike protectionist laws, such as anti-takeover statutes and liability protections for officers, and that Nevada’s rise is due to the preferences of small firms.Our estimates indicate that despite inertia, Delaware would lose significant market share and revenues if it adopted protectionist laws. Our findings support the hypothesis that …
The Role Of Social Enterprise And Hybrid Organizations, Ofer Eldar
The Role Of Social Enterprise And Hybrid Organizations, Ofer Eldar
Faculty Scholarship
Recent years have brought remarkable growth in hybrid organizations that combine profit-seeking and social missions. Despite popular enthusiasm for such organizations, legal reforms to facilitate their formation and growth—particularly, legal forms for hybrid firms—have largely been ineffective. This shortcoming stems in large part from the lack of a theory that identifies the structural and functional elements that make some types of hybrid organizations more effective than others. In pursuit of such a theory, this Article focuses on a large class of hybrid organizations that has been effective in addressing development problems, such as increasing access to capital and improving employment …
Market Information And The Elite Law Firm, Elisabeth De Fontenay
Market Information And The Elite Law Firm, Elisabeth De Fontenay
Faculty Scholarship
As a subcategory of contract negotiations, corporate transactions present information problems that have not been fully analyzed. In particular, the literature does not address the possibility that parties may simply be unaware of value-increasing transaction terms or their outside option. Such unawareness can arise even for transactions that attract many competing parties, if the bargaining process is such that (1) the price terms are negotiated and fixed prior to the non-price terms, contrary to the standard assumption; and (2) some of the non-price terms remain private for some period of time.
A simple bargaining model shows that, when such unawareness …
Controlling Systemic Risk Through Corporate Governance, Steven L. Schwarcz
Controlling Systemic Risk Through Corporate Governance, Steven L. Schwarcz
Faculty Scholarship
Most of the regulatory measures to control excessive risk taking by systemically important firms are designed to reduce moral hazard and to align the interests of managers and investors. These measures may be flawed because they are based on questionable assumptions. Excessive corporate risk taking is, at its core, a corporate governance problem. Shareholder primacy requires managers to view the consequences of their firm’s risk taking only from the standpoint of the firm and its shareholders, ignoring harm to the public. In governing, managers of systemically important firms should also consider public harm. This proposal engages the long-standing debate whether …
The Responsibility Gap In Corporate Crime, Samuel W. Buell
The Responsibility Gap In Corporate Crime, Samuel W. Buell
Faculty Scholarship
In many cases of criminality within large corporations, senior management does not commit the operative offense — or conspire or assist in it — but nonetheless bears serious responsibility for the crime. That responsibility can derive from, among other things, management’s role in cultivating corporate culture, in failing to police effectively within the firm, and in accepting lavish compensation for taking the firm’s reins. Criminal law does not include any doctrinal means for transposing that form of responsibility into punishment. Arguments for expanding doctrine — including broadening of the presently narrow “responsible corporate officer” doctrine — so as to authorize …