Law Commons^™

The Past, Present And Future Of The Cisg (And Other Uniform Commercial Code Law Initiatives), Harry Flechtner

Articles

As the keynote speaker of the Spring 2019 CISG Conference, Harry M. Flechtner, Professor Emeritus, University of Pittsburgh School of Law, candidly shares his perspectives on the development and progress of the Convention on the International Sale of Goods (CISG) through the years. He begins with his initial introduction to the convention and then reflects upon several important issues and challenges facing the CISG, particularly involving uniform international law initiatives. Professor Flechtner looks hard at what's working and what's not and with a critical eye he draws attention to crucial matters yet to be resolved. While his perspective is light …

Texas Gulf Sulphur And The Genesis Of Corporate Liability Under Rule 10b-5, Adam C. Pritchard, Robert B. Thompson

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This Essay explores the seminal role played by SEC v. Texas Gulf Sulphur Co. in establishing Rule 10b-5’s use to create a remedy against corporations for misstatements made by their officers. The question of the corporation’s liability for private damages loomed large for the Second Circuit judges in Texas Gulf Sulphur, even though that question was not directly at issue in an SEC action for injunctive relief. The judges considered both, construing narrowly “in connection with the purchase or sale of any security,” and the requisite state of mind required for violating Rule 10b-5. We explore the choices of the …

Quacks Or Bootleggers: Who’S Really Regulating Hedge Funds?, Jeremy Kidd

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Influential scholars of corporate law have questioned previous federal interventions into corporate governance, calling it quackery. Invoking images of medical malpractice, these critiques have argued persuasively that Congress, in responding to crises, makes policy that disrupts efficient private rules and established state laws. This Article applies the Bootleggers and Baptists theory to show that Dodd–Frank’s hedge fund rules are more than just negligent or reckless, but designed to benefit special interests that compete with the hedge fund model. Those rules offer no solutions to any real or perceived risks arising from hedge fund investing, but might offer an advantage to …

Board Rooms And Jail Cells- Assessing Ngo Approaches To Private Environmental Governance, Joshua Galperin

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Staff of the Nature Conservancy often find themselves in corporate board rooms. Staff of Greenpeace often find themselves in jail cells. The Nature Conservancy (TNC) prides itself on its non-confrontational, collaborative deal making, partnering closely with corporations like chemical giant Dow and agricultural lightning rod Monsanto. Both Dow and Monsanto, in fact, are members of TNC’s Business Council along with the likes of BP, Shell, and Cargill. Greenpeace, on the other hand, prides itself on direct action, civil disobedience, and non-violent confrontation. Greenpeace has launched combative operations against Dow, Monsanto, and other TNC collaborators. While business partners praise TNC’s cooperative …

Piling On? An Empirical Study Of Parallel Derivative Suits, Stephen J. Choi, Jessica Erickson, Adam C. Pritchard

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Using a sample of all companies named as defendants in securities class actions between July 1, 2005 and December 31, 2008, we study parallel suits relying on state corporate law arising out of the same allegations as the securities class actions. We test several ways that parallel suits may add value to a securities class action. Most parallel suits target cases involving obvious indicia of wrongdoing. Moreover, we find that although a modest percentage of parallel suits are filed first, over 80 percent are filed after a securities class action (termed “follow-on” parallel suits). We find that parallel suits and, …

China's 'Corporatization Without Privatization' And The Late 19th Century Roots Of A Stubborn Path Dependency, Nicholas Howson

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This Article analyzes the contemporary program of “corporatization without privatization” in the People's Republic of China (PRC) directed at China's traditional state-owned enterprises (SOEs) through a consideration of long ago precursor enterprise establishments--starting from the last Chinese imperial dynasty's creation of “government-promoted/-supervised, merchant-financed/-operated” (guandu shangban) firms in the latter part of the nineteenth century. While analysts are tempted to see the PRC corporations with listings on international exchanges that dominate the global economy and capital markets as expressions of “convergence,” this Article argues that such firms in fact show deeply embedded aspects of path dependency unique to the Chinese context …

Contracting Out Of The Fiduciary Duty Of Loyalty: An Empirical Analysis Of Corporate Opportunity Waivers, Gabriel Rauterberg, Eric Talley

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For centuries, the duty of loyalty has been the hallowed centerpiece of fiduciary obligation, widely considered one of the few “mandatory” rules of corporate law. That view, however, is no longer true. Beginning in 2000, Delaware dramatically departed from tradition by granting incorporated entities a statutory right to waive a crucial part of the duty of loyalty: the corporate opportunities doctrine. Other states have since followed Delaware’s lead, similarly permitting firms to execute “corporate opportunity waivers.” Surprisingly, more than fifteen years into this reform experiment, no study has attempted to either systematically measure the corporate response to these reforms or …

The Fallacious Objections To The Tax Treatment Of Carried Interest, Douglas A. Kahn, Jeffrey H. Kahn

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“The tax treatment of carried interest has become a notorious bete noire for many politicians and some academicians and practitioners. Both 2016 presidential candidates denounced the current tax treatment and vowed to change it. President Obama described the current treatment as a "tax loophole" which should be closed. Others have also characterized the current tax treatment as an abusive loophole.' It is the thesis of this article that those criticisms are unfounded. To the contrary, the current tax treatment accords with sound tax policy and is proper and appropriate. Given the broad approval that attended the attacks on carried interest, …

Astroturf Activism, Melissa J. Durkee

Articles

Corporate influence in government is more than a national issue; it is an international phenomenon. For years, businesses have been infiltrating international legal processes. They secretly lobby lawmakers through front groups: “astroturf” imitations of grassroots organizations. But because this business lobbying is covert, it has been underappreciated in both the literature and the law.

This Article unearths the “astroturf activism” phenomenon. It offers an original descriptive account that classifies modes of business access to international officials and identifies harms, then develops a critical analysis of the laws that regulate this access. I show that the perplexing set of access rules …

Corporate Governance, Compliance, Social Responsibility, And Enterprise Risk Management In The Trump/Pence Era, Marcia Narine Weldon

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No abstract provided.

Sharing Economy Meets The Sherman Act: Is Uber A Firm, A Cartel, Or Something In Between?, Mark Anderson

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The sharing economy is a new industrial structure that is made possible by instantaneous internet communication and changes in the life, work, and purchasing habits of individual entrepreneurs and consumers. Antitrust law is an economic regulatory scheme dating back to 1890 in the United States that is designed to address centrally controlled concentrations of economic power and the threats that those concentrations pose to consumer interests and economic efficiency. In order to accommodate a modern enterprise structure in which thousands or millions of independent contractors join forces to provide a service by agreement among themselves, antitrust law requires re-envisioning and …

Tax Treatment Of A Marijuana Business, Douglas A. Kahn, Howard Bromberg

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Currently, twenty-eight states and the District of Columbia allow the use of marijuana for medical purposes and permit the conduct of a business marketing of marijuana for that purpose. Eight of those states and the District of Columbia permit the recreational use of marijuana. There is reason to believe that more states will decriminalize the marketing of marijuana. However, marijuana is listed in Schedule 1 of the federal Controlled Substances Act of 1970 (CSA) which makes it illegal under federal law to manufacture or distribute marijuana even when it is legal to do so under local state law. In a …

Multinational Firms And Tax Havens, Anna Gumpert, James R. Hines Jr., Monika Schnitzer

Articles

Multinational firms with operations in high-tax countries can benefit the most from reallocating taxable income to tax havens, though this is sufficiently difficult and costly that only 20.4% of German multinational firms have any tax haven affiliates. Among German manufacturing firms, a 1 percentage point higher foreign tax rate is associated with a 2.3% greater likelihood of owning a tax haven affiliate. This is consistent with tax avoidance incentives and contrasts with earlier evidence for U.S. firms. The relationship is less strong for firms in service industries, possibly reflecting the difficulty of reallocating taxable service income.

Carrot Or Stick? The Shift From Voluntary To Mandatory Disclosure Of Risk Factors, Karen K. Nelson, Adam C. Pritchard

Articles

This study investigates risk factor disclosures, examining both the voluntary, incentive-based disclosure regime provided by the safe harbor provision of the Private Securities Litigation Reform Act as well as the SEC's subsequent mandate of these disclosures. Firms subject to greater litigation risk disclose more risk factors, update the language more from year to year, and use more readable language than firms with lower litigation risk. These differences in the quality of disclosure are pronounced in the voluntary disclosure regime, but converge following the SEC mandate as low-risk firms improved the quality of their risk factor disclosures. Consistent with these findings, …

Courts, Constituencies, And The Enforcement Of Fiduciary Duties In The Nonprofit Sector, Joseph Mead, Michael C. Pollack

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Directors of nonprofit organizations owe fiduciary duties to their organizations, but the content of these duties—and how and when courts should enforce these duties—has long been debated among scholars and courts. This debate emerges in several areas, including the level of deference to be shown by courts to nonprofit directors (the business judgment rule), who should be allowed to sue to enforce duties (standing), and the type of relief available to prevailing plaintiffs (remedies). Existing literature explores these legal rules in isolation and in abstraction, generally failing to consider how the rules interact with each other and ignoring the empirical …

Economic Crisis And The Integration Of Law And Finance: The Impact Of Volatility Spikes, Edward G. Fox, Merritt B. Fox, Ronald J. Gilson

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The 2008 financial crisis raised puzzles important for understanding how the capital market prices common stocks and in turn, for the intersection between law and finance. During the crisis, there was a dramatic five-fold spike, across all industries, in “idiosyncratic risk”—the volatility of individual-firm share prices after adjustment for movements in the market as a whole.

This phenomenon is not limited to the most recent financial crisis. This Article uses an empirical review to show that a dramatic spike in idiosyncratic risk has occurred with every major downturn from the 1920s through the recent financial crisis. It canvasses three possible …

Sec Investigations And Securities Class Actions: An Empirical Comparison, Stephen J. Choi, Adam C. Pritchard

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Using actions with both an SEC investigation and a class action as our baseline, we compare the targeting of SEC-only investigations with class-action-only lawsuits. Looking at measures of information asymmetry, we find that investors in the market perceive greater information asymmetry following the public announcement of the underlying violation for class-action-only lawsuits compared with SEC-only investigations. Turning to sanctions, we find that the incidence of top officer resignation is greater for class-action-only lawsuits relative to SEC-only investigations. Our findings are consistent with the private enforcement targeting disclosure violations at least as precisely as (if not more so than) SEC enforcement.

The Business Of Treaties, Melissa J. Durkee

Articles

Business entities play important and underappreciated roles in the production of international treaties. At the same time, international treaty law is hobbled by state-centric presumptions that render its response to business ad hoc and unprincipled.

This Article makes three principal contributions. First, it draws from case studies to demonstrate the significance of business participation in treaty production. The descriptive account invites a shift from attention to traditional lobbying at the domestic level and private standard-setting at the transnational level to the ways business entities have become autonomous international actors, using a panoply of means to transform their preferred policies into …

Regulating Unicorns: Disclosure And The New Private Economy, Jennifer S. Fan

Articles

“Unicorns” are private companies with valuations of a billion dollars or more. As their name indicates, unicorns were originally so rare as to be almost mythical. But Uber and other technology companies have ushered in a new era: we now have a blessing of unicorns, each one of which has the potential to transform financial and cultural norms.

Yet from a legal perspective, these behemoths are regulated just like their much smaller, non-mythical counterparts. Unicorns’ dizzying valuations have not been matched with any expansion or recalibration of regulation. As a result, vital information about these companies remains secret, perhaps for …

Harmonizing Multinational Parent Company Liability For Foreign Subsidiary Human Rights Violations, Vivian Grosswald Curran

Articles

A notable development of recent years has been the simultaneous legal invisibility and ubiquity of the giant multinational corporation where its subsidiaries operate elsewhere under legal structures that preserve the parent company from liability for the subsidiary’s conduct. This article focuses on multinationals whose parent company is at home in a developed country and subsidiaries operate in a developing state, and specifically where the foreign subsidiary is alleged to have violated norms of universal human rights. It examines current legal theory, and offers a comparative perspective on legislative and judicial traditions and innovations in several home states of large multinational …

Cuba Conundrum: Corporate Governance And Compliance Challenges For U.S. Publicly-Traded Companies, Marcia Narine

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No abstract provided.

Entity Exit: Rights, Remedies, And Bounded Rationality, Mark Anderson

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No abstract provided.

Corporate Intent And Corporate Crime: A Matter Of Inference, Caroline Bradley

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No abstract provided.

Provisions Denying A Deduction For Illegal Expenses And Expenses Of An Illegal Business Should Be Repealed, Douglas A. Kahn, Howard Bromberg

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Currently, the tax law denies a deduction for business expenses that violate a federal or state law (but only if the state law is generally enforced). In addition, losses, including business losses, cannot be deducted if they arise out of an illegal activity. For example, medical expenses are denied a deduction if they are illegal. Kickbacks, bribes, and rebates given in connection with the Medicaid or Medicare program are nondeductible. Any expenses, legal or not, incurred in connection with the conduct of a business of selling a controlled substance that is prohibited by federal law (or by the law of …

Full Circle? The Single Tax Principle, Beps, And The New Us Model, Reuven S. Avi-Yonah

Articles

This paper will argue that while there is some innovation in BEPS, it is in fact more of a continuation that a sharp break with the past. Like Alexis de Tocqueville’s French Revolution, BEPS represents both continuity and change. In particular, the single tax principle has formed the theoretical basis of much of the international tax regime from the beginning. And it is in fact this continuity rather than any sharp change that gives the final BEPS package its promise to, as Secretary General Gurria also promised, “put an end to double non-taxation.”

The Pendulum Swings: Reconsidering Corporate Criminal Prosecution, David M. Uhlmann

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Corporate crime continues to occur at an alarming rate, yet disagreement persists among scholars and practitioners about the role of corporate criminal prosecution. Some argue that corporations should face criminal prosecution for their misconduct, while others would reserve criminal prosecution for individual corporate officials. Perhaps as a result of this conflict, there has been a dramatic increase over the last decade in the use of deferred prosecution and non-prosecution agreements for some corporate crimes, even as the government continues to bring criminal charges for other corporate crimes. To move beyond our erratic approach to corporate crime, we need a better …

The Institutional Appetite For Quack Corporate Governance, Alicia J. Davis

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This Article offers evidence that higher quality internal corporate governance is associated with higher levels of ownership by institutional investors. This finding is consistent with the idea that institutions have greater reason than individual investors to prefer well-governed firms, but surprising given the substantial empirical evidence that casts doubt on the efficacy of internal governance mechanisms. The study described in this Article also finds that higher quality external governance is associated with lower proportions of ownership by certain types of institutional investors, also a somewhat surprising result given available empirical evidence on the positive relationship between external governance and firm …

Think Like A Businessperson: Using Business School Cases To Create Strategic Corporate Lawyers​., Alicia J. Davis

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For the past twenty-five years, my academic and professional pursuits have straddled the line between business and law. I majored in business administration in college and then worked as an analyst in the Corporate Finance department at a bulge bracket Wall Street firm. After completing a JD/MBA, I returned to investment banking with a focus on middle-market mergers and acquisitions (M&A) and subsequently practiced law with a focus on private equity and M&A. Finally, in 2004, I found my current home as a corporate law professor. In my courses, which include Mergers & Acquisitions, Enterprise Organization, and Investor Protection, I …

White Paper: Options For A Treaty On Business And Human Rights, Anita Ramasastry, Douglass Cassell

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The United Nations Human Rights Council decided in June 2014 to establish an Intergovernmental Working Group to “elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises.” The first meeting of the Working Group took take place in Geneva in July 2015. The Council did not further specify what sort of instrument should be drafted. The Center for Human Rights of the American Bar Association and the Law Society of England and Wales asked the present authors to prepare a “White Paper” on possible options for a treaty …

Shareholder Primacy And Corporate Compliance, Judd F. Sneirson

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Corporations, like the rest of us, must comply with environmental and other laws or suffer the consequences. Unfortunately, these consequences can pale in comparison to the gains to be made from non-compliance. Law-and-economics scholarship recognizes this and, by treating many laws as mere costs of doing business, encourages a certain amount of deliberate non-compliance. According to this view, corporate compliance should turn on profitability or whether compliance would otherwise benefit the firm. This Article argues that the law-and-economics scholarship is wrong on the law, wrong as a matter of economics, and does not reflect how most firms in fact behave. …