Law Commons^™

The Corporate Governance Of Iconic Executives, Tom C.W. Lin

UF Law Faculty Publications

This Essay explores the special corporate governance challenges posed by iconic executives. Iconic executives are complex, bittersweet figures in corporate governance narratives. They are alluring, larger-than-life corporate figures who often govern freely. Iconic executives frequently rule like monarchs over their firms, offering lofty promises to shareholders, directors, and managers under their reign. But like many stories of powerful and influential figures, the narratives of iconic executives also contain adversity and danger. Part of the acquiescence and enchantment with such figures is rooted in the virtuous promises embodied by their presence, promises of unity, accountability, and effectiveness in corporate governance. Unfortunately, …

Are Institutional Investors Part Of The Problem Or Part Of The Solution?: Key Descriptive And Prescriptive Questions About Shareholders, Ben W. Heineman Jr., Stephen Davis

Ira M. Millstein Center for Global Markets and Corporate Ownership

Over the last twenty years, institutional investors have owned an increasing share of public equity markets — more than 70 percent of the largest 1,000 companies in the United States in 2009, for example. Over the past two years, in response to failures of some boards of directors and business leaders, shareholders, including institutional investors, have been given increased powers to participate in — or have disclosures about — discrete spheres of governance in publicly held corporations. Moreover, during this same period, and in multiple jurisdictions, there have been increasing calls from both the public and private sectors for institutional …

Why Not A Ceo Term Limit?, Charles K. Whitehead

Cornell Law Faculty Publications

In this Essay, I ask: Why not require a mandatory CEO term limit? My purpose is not to propose a term limit, but rather to ask why CEO term limits are out-of-bounds – not addressed within the corporate governance scholarship – when they have long been advocated for directors and, more recently, public company auditors.

The traditional answer has been that CEOs are agents of the corporation, subject to control by the board, which holds primary responsibility for the firm’s business and affairs. Senior officers are largely shielded from outside interference, permitting them to execute consistent, long-term business strategies under …

Who Should Talk? What Counts As Employee Voice And Who Stands To Gain, Aditi Bagchi

All Faculty Scholarship

This symposium piece responds to an article by Kenneth G. Dau-Schmidt titled "Promoting Employee Voice in the American Economy: A Call for Comprehensive Reform." Professor Schmidt argues in favor of increasing employee voice in corporate governance. In this reply, Professor Bagchi distinguishes between "hard voice," "soft voice" and information rights as three variants of employee voice. She casts doubt on the material benefits from Professor Dau-Schmidt's proposals, which focus on hard and soft voice, to either employees or corporate stakeholders more broadly. The present focus of corporate governance on the relationship between shareholders and managers, to the exclusion of employees, …

Board Diversity Revisited: New Rationale, Same Old Story, Lisa Fairfax

All Faculty Scholarship

Recently, board diversity advocates have relied on market- or economic-based rationales to convince corporate America to increase the number of women and people of color in the boardroom, in lieu of moral or social justifications. This shift away from moral or social justifications has been deliberate, and it stems from a belief that corporate America would better respond to justifications that centered on the corporate bottom line. However, recent empirical data reveals that despite the increased reliance on, and apparent acceptance of, market- or economic-based rationales for board diversity, there has been little change in actual board diversity. This Article …

Chairmanship: The Effective Chair-Ceo Relationship: Insight From The Boardroom, Elise Walton

Ira M. Millstein Center for Global Markets and Corporate Ownership

This paper examines the role of the corporate Chair in the context of one of the most important relationships the Chair has – his or her relationship with the company’sCEO. To approach the topic, the Chairmen’s Forum sponsored a research effort to interview experienced Chairs,CEOs and stakeholders. After the Forum agreed on the project, a research plan was designed and approved by the sponsors. Key interview questions and interview candidates were reviewed and approved. The main areas of the interview included: background experience with the two roles; successful situations and what worked; challenges and what didn’t work; how a relationship …

Good Faith In Revlon-Land, Christopher M. Bruner

Scholarly Works

The Delaware Supreme Court has set a very high hurdle for plaintiffs challenging directors' good faith in the sale of a company. In Lyondell Chemical Company v. Ryan, the court held that unconflicted directors could be found to have breached the good faith component of their duty of loyalty in the transactional context only if they "knowingly and completely failed to undertake," and "utterly failed to attempt" to discharge their duties.

In this essay I argue that the Lyondell standard effectively imports into the transactional context the exacting standard previously applied in the oversight context — a move clearly aimed …

Deconstructing Corporate Governance: Absolute Director Primacy, René Reich-Graefe

Faculty Scholarship

Microtheoretical models of the corporation which focus on corporate governance attempt to answer two deceptively simple, but fundamentally elusive questions: ‘Who are in control of the corporation?’ and ‘Whose interests ultimately control those in control of the corporation?’ Both questions remain partially unanswered within the models developed to date by corporate theoreticians. This Article proposes a radically new model: 'absolute director primacy.’ Existing microtheoretical models conceive that we only need to—and, indeed, can—determine the controlling interests guiding corporate decisionmaking in order to prove the existence of control over the decisionmaking latitude of corporate boards. The absolute director primacy …

Deconstructing Corporate Governance: Director Primacy Without Principle?, René Reich-Graefe

Faculty Scholarship

If profit-maximizing is not enforced by corporate law, why does it nonetheless happen as a matter of almost overwhelming routine in today’s corporate reality? If indeed, director primacy is absolute and our theoretical models are all reliant on protolegal variables to explain general investor confidence ex-ante-investment despite the lack of director accountability ex-post-investment, then how can director primacy be understood and explained as a principled and, thus, just cor-porate governance structure in the first place? Or is director primacy not only absolute, but also without principle?

This Article provides a roadmap for purposes of answering this inquiry. Part II …

On The Evolution Of The United Nations’ 'Protect-Respect-Remedy' Project: The State, The Corporation And Human Rights In A Global Governance Context, Larry Cata Backer

Journal Articles

The advent of contemporary economic globalization has substantially altered the regulatory environment in which economic enterprises operate. Once assumed to be creatures of the states that recognized and regulated their existence, economic enterprises today are increasingly capable of arranging their activities beyond the regulatory scope of any state or groups of states. That gap between operational and regulatory capacity has produced a sustained reaction at the national and international levels. States have sought to extend their power over corporations beyond their borders. International organizations have sought to develop supra national legal governance frameworks. This paper examines one of the more …

Beyond The Inevitable And Inadequate Regulation Of Bankers, Lyman P. Q. Johnson

Scholarly Articles

None available.

Governance In The Public Corporation Of The Future: The Battle For Control Of Corporate Governance, Z. Jill Barclift

Faculty Scholarship

Eight years after passage of the Sarbanes-Oxley Act, Congress has again passed sweeping legislation in response to a corporate crisis. In addition to changes in the regulatory environment for Wall Street financial firms and banks, the Dodd-Frank Act (D-F Act) also proposes reforms to corporate governance.

In this article, the author examines the latest governance mandates under the D-F Act. In particular, this article focuses on the disclosure requirements on the CEO and chairman positions, and argues that disclosures of whether the CEO is also the chairman benefit shareholders' governance rights under state law. The new provisions under D-F Act …

Discourse Norms As Default Rules: Structuring Corporate Speech To Multiple Stakeholders, David Yosifon

Faculty Publications

This Article analyzes corporate speech problems through the framework of corporate law. The focus here is on the "discourse norms" that regulate corporate speech to various corporate stakehold-ers, including shareholders, workers, and consumers. I argue that these "discourse norms" should be understood as default terms in the "nexus-of-contracts" that comprises the corporation. Having reviewed the failure of corporate law as it bears on the interests of non-shareholding stakeholders such as workers and consumers, I urge the adoption of prescriptive discourse norms as an approach to reforming corporate governance in a socially useful manner.

Beyond The Board Of Directors, Kelli A. Alces

Scholarly Publications

No abstract provided.

Dangerous Categories: Narratives Of Corporate Board Diversity, Lissa Lamkin Broome, John M. Conley, Kimberly D. Krawiec

Faculty Scholarship

In this article, we report the results of a series of interviews with corporate directors about racial, ethnic, and gender diversity on corporate boards. On the one hand, our respondents were clear and nearly uniform in their statements that board diversity was an important goal worth pursuing. Yet when asked to provide examples or anecdotes illustrating why board diversity matters, many subjects acknowledged difficulty in illustrating theory with reference to practice.

This expressed reluctance to come to specific terms with general claims about the value of director diversity inspired our title phrase: dangerous categories. That is, while "diversity" evokes universal …

Does Critical Mass Matter? Views From The Board Room, Lissa Lamkin Broome, John M. Conley, Kimberly D. Krawiec

Faculty Scholarship

In this Article, we report and analyze the results of forty-six wide-ranging interviews with corporate directors and other relevant insiders on the general topic of whether and how the racial, ethnic, and gender composition of corporate boards matters. In particular, we explore their views on the concept of “critical mass” — that is, the theory that women and racial or ethnic minorities are unlikely to have an impact in the boardroom until they grow from a few tokens into a considerable minority of the board.

In contrast to other recent qualitative research on corporate boards, we find more limited support …

The Milieu Of The Boardroom And The Precinct Of Employment, Deborah A. Demott

Faculty Scholarship

This Commentary explores differences between employer-employee relationships and service on a board of directors. Against this backdrop, this Commentary argues that the research findings surveyed by Brooke and Tyler (Jennifer K. Brooke & Tom R. Tyler, Diversity and Corporate Performance: A Review of the Psychological Literature, 89 N.C. L. REV. 715 (2011)), although specific to the employment context, may be salient in assessing the impact of diversity among members of a board of directors.

Yes, Labor Markets Are Flawed--But So Is The Economic Case For Mandating Employee Voice In Corporate Governance, Scott A. Moss

Publications

No abstract provided.

Potentially Perverse Effects Of Corporate Civil Liability, Samuel W. Buell

Faculty Scholarship

Inadequate civil regulatory liability can be an incentive for public enforcers to pursue criminal cases against firms. This incentive is undesirable in a scheme with overlapping forms of liability that is meant to treat most cases of wrongdoing civilly and to reserve the criminal remedy for the few most serious institutional delicts. This effect appears to exist in the current scheme of liability for securities law violations, and may be present in other regulatory structures as well. In this chapter for a volume on "Prosecutors in the Boardroom," the author argues that enhancements of the SEC's enforcement processes likely would …

Inside-Out Corporate Governance, David A. Skeel Jr., Vijit Chahar, Alexander Clark, Mia Howard, Bijun Huang, Federico Lasconi, A.G. Leventhal, Matthew Makover, Randi Milgrim, David Payne, Romy Rahme, Nikki Sachdeva, Zachary Scott

All Faculty Scholarship

Until late in the twentieth century, internal corporate governance—that is, decision making by the principal constituencies of the firm—was clearly distinct from outside oversight by regulators, auditors and credit rating agencies, and markets. With the 1980s takeover wave and hedge funds’ and equity funds’ more recent involvement in corporate governance, the distinction between inside and outside governance has eroded. The tools of inside governance are now routinely employed by governance outsiders, intertwining the two traditional modes of governance. We argue in this Article that the shift has created a new governance paradigm, which we call inside-out corporate governance.

Using the …

The Model Business Corporation Act At Sixty: Shareholders And Their Influence, Lisa Fairfax

All Faculty Scholarship

In the sixty years since the Committee on Corporate Laws (Committee) promulgated the Model Business Corporation Act (MBCA), there have been significant changes in corporate law and corporate governance. One such change has been an increase in shareholder activism aimed at enhancing shareholders’ voting power and influence over corporate affairs. Such increased shareholder activism (along with its potential for increase in shareholder power) has sparked considerable debate. Advocates of increasing shareholder power insist that augmenting shareholders’ voting rights and influence over corporate affairs is vital not only for ensuring board and managerial accountability, but also for curbing fraud and other …

Corporations, Corruption, And Complexity: Campaign Finance After Citizens United, Richard Briffault

Faculty Scholarship

Few campaign finance cases have drawn more public attention than the Supreme Court's decision in Citizens United v. FEC. The Court's invalidation of a sixty-year-old federal law – and comparable laws in two dozen states – banning corporations from engaging in independent spending in support of or opposition to candidates strongly affirms the right of corporations to engage in electoral advocacy. Critics – and most, albeit not all, of both the popular and academic commentary on the decision has been critical – have condemned the idea that corporations enjoy the same rights to spend on elections as natural persons. …

We Are The (National) Champions: Understanding The Mechanisms Of State Capitalism In China, Li-Wen Lin, Curtis J. Milhaupt

All Faculty Publications

While China appears to present a new variety of capitalism, frequently labeled "state capitalism," the features of this system - particularly the organizational structure surrounding China’s most important state-owned enterprises (the national champions) - remains a black box. Corporate governance scholarship on China has focused on listed firms, but listed SOEs in China are nested in vertically integrated corporate groups, and the groups are strategically linked to other business groups, as well as to the Communist Party and to governmental organs. While the parent company of the listed firms has a governmental controlling shareholder in the form of an agency …

Corporate Governance Reform For The 21st Century: A Critical Reassessment Of The Shareholder Primacy Model, Carol Liao

All Faculty Publications

This article questions the efficiency of the shareholder primacy model of corporate governance in light of the financial calamities that have plagued the first decade of the 21st century. Reform efforts following the global financial crisis have focused on failures in securities regulation, but that is only part of the story. Effective reform measures must also address the legal and normative prescriptions found within existing governance structures, and the collateral effect those prescriptions have on political and regulatory inaction.

There was strong ideological support for the shareholder primacy model at the start of the century. Following the corporate and accounting …

Kiobel And Corporate Immunity Under The Alien Tort Statute: The Struggle For Clarity Post-Sosa, Dorothy S. Lund

Faculty Scholarship

In September 2010, a two-judge Second Circuit majority ruled that corporations are immune from liability under the Alien Tort Statute (“ATS”). This statute, which grants aliens access to federal district courts, has emerged as a controversial tool for international norm enforcement in the last thirty years. The unexpected decision to foreclose corporate liability has generated a wave of criticism from human rights activists and international law scholars who claim that the decision is grounded in a fundamental misunderstanding of international law.

This commentary examines the Kiobel decision against other recent interpretations of the ATS, especially those following the Supreme Court’s …