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Corporate Governance And Accountability, Renee M. Jones Nov 2011

Corporate Governance And Accountability, Renee M. Jones

Renee Jones

This book chapter on Corporate Governance and Accountability is a contribution to the book CORPORATE GOVERNANCE - SYNTHESIS OF THEORY, RESEARCH, AND PRACTICE (Wiley, forthcoming 2010), edited by Ronald Anderson and H. Kent Baker. This chapter describes the sources of corporate governance standards for American corporations and analyzes the accountability mechanisms designed to ensure that corporate officials act faithfully in their management of corporate affairs. The chapter focuses on the financial reporting system under the U.S. securities laws which forms the foundation of the accountability system, and discusses structures and rules designed to ensure the integrity of financial reporting. The …


Legitimacy And Corporate Law: The Case For Regulatory Redundancy, Renee M. Jones Nov 2011

Legitimacy And Corporate Law: The Case For Regulatory Redundancy, Renee M. Jones

Renee Jones

This article provides a democratic assessment of the corporate law making structure in the United States. It draws upon the basic democratic principle that those affected by legal rules should have a voice in determining the substance of those rules. Although other commentators have noted certain undemocratic aspects of corporate law, this Article is the first to present a comprehensive assessment of the corporate regulatory structure from the perspective of democracy. It departs from prior accounts by looking past the states' role to consider the ways that federal regulation shores up the legitimacy of the overarching structure. This focus on …


The Role Of Good Faith In Delaware: How Open-Ended Standards Help Delaware Preserve Its Edge, Renee M. Jones Nov 2011

The Role Of Good Faith In Delaware: How Open-Ended Standards Help Delaware Preserve Its Edge, Renee M. Jones

Renee Jones

This Article traces the development of the good faith doctrine in Delaware and links shifts in the doctrine to events occurring in the national economy and in Washington. It shows that in 2003 Delaware judges seemed open to the possibility of imposing liability on directors in a case (Disney) where facts suggested that the directors were overly passive in approving the terms of an employment contract for a senior corporate executive. After the 2001-2002 corporate governance scandals faded, however, the courts abandoned this course. A trio of decisions in Disney, Stone v. Ritter, and Lyondell reiterated what had long been …


Corporate Law And The Rhetoric Of Choice, Kent Greenfield Nov 2011

Corporate Law And The Rhetoric Of Choice, Kent Greenfield

Kent Greenfield

Rhetorically, the notion of choice has always been a powerful one in politics and law. This essay is intended to offer a note of caution about its use. Despite its progressive hue of individual freedom, the rhetoric of choice increasingly tends to be a notion used to defend and uphold existing matrices of economic and social power. This is because the rhetoric of choice is an excellent way to support exiting power relationships. The assertion that people acting within such power relationships are simply choosing their current situation undermines efforts to change those relationships. The powerful stay powerful; the weak …


Reclaiming Corporate Law In A New Gilded Age, Kent Greenfield Nov 2011

Reclaiming Corporate Law In A New Gilded Age, Kent Greenfield

Kent Greenfield

Corporate law matters. Traditionally seen as the narrow study of the relationship between managers and shareholders, corporate law has frequently been relegated to the margins of legal discussion and political debate. The marginalization of corporate law has been especially prevalent among those who count themselves as progressives. While this has not always been true, in the last generation or so progressives have focused on constitutional law and other areas of so-called public law, and have left corporate law to adherents of neoclassical law and economics. To the extent that the behavior of businesses has been a matter of concern, that …


Overlitigating Corporate Fraud: An Empirical Examination, Jessica M. Erickson Nov 2011

Overlitigating Corporate Fraud: An Empirical Examination, Jessica M. Erickson

Law Faculty Publications

Corporate law leaves no stone unturned when it comes to litigating corporate fraud. The legal system has developed a remarkable array of litigation options shareholder derivative suits, securities class actions, SEC enforcement actions, even criminal prosecutions all aimed at preventing the next corporate scandal. Scholars have long assumed that these different lawsuits offer different avenues for deterring the masterminds of corporate fraud yet this assumption has gone untested in the legal literature. This Article aims to fill that gap through the first empirical examination of the broader world of corporate fraud litigation. Analyzing over 700 lawsuits, the study reveals that …


The Corporate Governance Of Iconic Executives, Tom C.W. Lin Nov 2011

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, …


The Moral Hazard Problem In Global Economic Regulation, Frank J. Garcia Oct 2011

The Moral Hazard Problem In Global Economic Regulation, Frank J. Garcia

Frank J. Garcia

Global regulation of international business transactions presents a particular form of the moral hazard problem. Global firms use economic and political power to manipulate state and state-controlled multilateral regulation to preserve their opportunity to externalize the social costs of global economic activity with impunity. Unless other actors can effectively counter this at the national and global regulatory levels, globalization re-creates the conditions for under-regulated or “robber baron” capitalism at the global level. This model of economic activity has been rejected at the national level by the same modern democratic capitalist states which currently dominate globalization, creating a crisis of legitimacy …


The Misuse Of Tax Incentives To Align Management-Shareholder Interests, James R. Repetti Oct 2011

The Misuse Of Tax Incentives To Align Management-Shareholder Interests, James R. Repetti

James R. Repetti

The U.S. tax system contains many provisions which are intended to align management of large publicly traded companies more closely to stockholders. This article shows that many of the tax provisions that have been adopted are of questionable effectiveness because they fail to address the complexities of stockholder-management relations in attempting to motivate management to act in the best interests of stockholders. The article proposes that rather than Congress attempting to identify the best way that it can use the tax system to motivate management, Congress should eliminate tax provisions which subsidize management's inefficiencies in order to encourage stockholders, themselves, …


The Garcetti Virus, Nancy M. Modesitt Oct 2011

The Garcetti Virus, Nancy M. Modesitt

All Faculty Scholarship

In an era where corporate malfeasance has imposed staggering costs on society, ranging from the largest oil spill in recorded history to the largest government bailout of Wall Street, one would think that those who uncover corporate wrongdoing before it causes significant harm should receive awards. Employees are particularly well-placed to uncover such wrongdoing within companies. However, rather than reward these employees, employers tend to fire or marginalize them. While there are statutory protections for whistleblowers, a disturbing new trend appears to be developing: courts are excluding from the protection of whistleblowing statutes employees who report wrongdoing as part of …


Understanding Csr: An Empirical Study Of Private Self-Regulation, Benedict Sheehy Sep 2011

Understanding Csr: An Empirical Study Of Private Self-Regulation, Benedict Sheehy

Benedict Sheehy

Abstract: The article is a study of an important burgeoning form of regulation—private self-regulation—in the area of Corporate Social Responsibility (CSR). Rather than taking a purely theoretical approach or a social scientific study relying publicly reported data, the article addresses the issue by way of interview based case studies. As a study in regulation it clarifies the difference between various types of self-regulation, trade associations’ codes as private self-regulation and government sponsored self-regulation. This distinction hampers efforts to understand the important aspects of motivation and compliance. This study provides empirical examination of compliance in private self-regulation. Given the impact and …


Fiduciary Relationships Are Not Contracts, Scott Fitzgibbon Sep 2011

Fiduciary Relationships Are Not Contracts, Scott Fitzgibbon

Scott T. FitzGibbon

No abstract provided.


The Practical Soul Of Business Ethics: The Corporate Manager's Dilemma And The Social Teaching Of The Catholic Church, Leo L. Clarke, Bruce P. Frohnen, Edward C. Lyons Sep 2011

The Practical Soul Of Business Ethics: The Corporate Manager's Dilemma And The Social Teaching Of The Catholic Church, Leo L. Clarke, Bruce P. Frohnen, Edward C. Lyons

Edward C. Lyons

This Article focuses on and attempts to dispel an overly narrow view of the moral responsibilities of corporations and their managers. Many businessmen and lawyers, relying on prevailing approaches to business ethics, labor under the misperception that the moral ladder in the business world has only one rung: "Be honest." Americans, however, should, can and do expect more from the managers of our large corporations, and virtually every Fortune 100 company publicly espouses a "social responsibility" far exceeding mere honesty. Further, as is demonstrated, American jurisprudence is consistent with those expectations. This Article's thesis is that Catholic Social Teaching provides …


"Patient Capital": Can Delaware Corporate Law Help Revive It?, Jack B. Jacobs Sep 2011

"Patient Capital": Can Delaware Corporate Law Help Revive It?, Jack B. Jacobs

Washington and Lee Law Review

No abstract provided.


Legal Mechanization Of Corporate Social Responsibility Through Alien Tort Statute Litigation: A Response To Professor Branson With Some Supplemental Thoughts, Donald J. Kochan Jul 2011

Legal Mechanization Of Corporate Social Responsibility Through Alien Tort Statute Litigation: A Response To Professor Branson With Some Supplemental Thoughts, Donald J. Kochan

Donald J. Kochan

This Response argues that as ATS jurisprudence “matures” or becomes more sophisticated, the legitimate limits of the law regress. The further expansion within the corporate defendant pool – attempting to pin liability on parent, great grandparent corporations and up to the top – raises the stakes and complexity of ATS litigation. The corporate social responsibility discussion raises three principal issues about how a moral corporation lives its life: how a corporation chooses its self-interest versus the interests of others, when and how it should help others if control decisions may harm the shareholder owners, and how far the corporation must …


Money On The Table: Why The U.S. Should Tax Inbound Capital Gains, Reuven S. Avi-Yonah Jul 2011

Money On The Table: Why The U.S. Should Tax Inbound Capital Gains, Reuven S. Avi-Yonah

Articles

On March 21, 2011, AT&T announced that it will buy T-Mobile from Deutsche Telekom for $39 billion. This transaction will be tax free to Deutsche Telekom (DT) not because it qualifies as a reorganization, but because DT is a foreign corporation and capital gains of nonresidents are generally not subject to U.S. taxation because they are deemed to be foreign source. Also, DT is protected from taxation by article 13(5) of the Germany-U.S. tax treaty, which provides that capital gains are generally taxable only by the country of residence.


The Marginalist Revolution In Corporate Finance: 1880-1965, Herbert J. Hovenkamp Jul 2011

The Marginalist Revolution In Corporate Finance: 1880-1965, Herbert J. Hovenkamp

All Faculty Scholarship

During the late nineteenth and early twentieth centuries fundamental changes in economic thought revolutionized the theory of corporate finance, leading to changes in its legal regulation. The changes were massive, and this branch of financial analysis and law became virtually unrecognizable to those who had practiced it earlier. The source of this revision was the marginalist, or neoclassical, revolution in economic thought. The classical theory had seen corporate finance as an historical, relatively self-executing inquiry based on the classical theory of value and administered by common law courts. By contrast, neoclassical value theory was forward looking and as a result …


A Preface To Neoclassical Legal Thought, Herbert J. Hovenkamp Jun 2011

A Preface To Neoclassical Legal Thought, Herbert J. Hovenkamp

All Faculty Scholarship

Most legal historians speak of the period following classical legal thought as “progressive legal thought.” That term creates an unwarranted bias in characterization, however, creating the impression that conservatives clung to an obsolete “classical” ideology, when in fact they were in many ways just as revisionist as the progressives legal thinkers whom they critiqued. The Progressives and New Deal thinkers whom we identify with progressive legal thought were nearly all neoclassical, or marginalist, in their economics, but it is hardly true that all marginalists were progressives. For example, the lawyers and policy makers in the corporate finance battles of the …


We Don’T Need You Anymore: Corporate Social Responsibilities, Executive Class Interests, And Solving Mizruchi And Hirschman’S Paradox, Richard Marens Jun 2011

We Don’T Need You Anymore: Corporate Social Responsibilities, Executive Class Interests, And Solving Mizruchi And Hirschman’S Paradox, Richard Marens

Seattle University Law Review

Previously, Northern Italian, Dutch, and then English entrepreneurs had dominated global trade in turn, and when after a century or so their respective hegemonies began to show cracks, each group refocused its efforts in the service of tapping already-accumulated wealth through financial speculation and, in the process, also financed the rise of their successors.20 If Dahrendorf was correct, and American capital was managed during the era of American industrial dominance by “a class of career bureaucrats, whose primary loyalty lay with their employer rather than with a class of property owners,”21 there are good reasons to believe that that has …


The Citizen Shareholder: Modernizing The Agency Paradigm To Reflect How And Why A Majority Of Americans Invest In The Market, Anne Tucker Jun 2011

The Citizen Shareholder: Modernizing The Agency Paradigm To Reflect How And Why A Majority Of Americans Invest In The Market, Anne Tucker

Seattle University Law Review

This Article examines corporate law from the perspective of personal investment and discusses the economic realities of modern investments in order to understand the role of shareholders within the agency paradigm. Corporate law, its scholars, and suggested reforms traditionally focus on the internal organization of the corporation. For example, agency principles inform corporate law by acknowledging a potential conflict of interest between the managers and shareholders of a corporation. Reforms such as increased shareholder voting rights and proxy access, which seek to give shareholders a more direct means to make their interests known to managers, illustrate corporate law’s focus on …


A Shallow Harbor And A Cold Horizon: The Deceptive Promise Of Modern Agency Law For The Theory Of The Firm, David A. Westbrook Jun 2011

A Shallow Harbor And A Cold Horizon: The Deceptive Promise Of Modern Agency Law For The Theory Of The Firm, David A. Westbrook

Seattle University Law Review

Modern agency law—the consensual agreement of one person to work for and under the control of another—has been widely used to provide a general framework for understanding a great deal of business law. Agency law concepts can be used to frame pedagogical, scholarly, institutional, and even political discourses. In so doing, modern agency law addresses concerns about the institution of the corporation, generally by reference to contract: institutions are created out of essentially consensual, and hence justifiable, relationships among autonomous individuals. So modern agency law is more than a “theory” of the firm in the narrow sense of theory; modern …


Strengthening Investment In Public Corporations Through The Uncorporation, Kelli A. Alces Jun 2011

Strengthening Investment In Public Corporations Through The Uncorporation, Kelli A. Alces

Seattle University Law Review

We cannot completely overcome the difficulties caused by the separation of ownership and control. In The Modern Corporation and Private Property, Adolf A. Berle and Gardiner Means focused our attention on what was then a relatively new phenomenon: widely dispersed public shareholding.1 They marveled at how, for the first time in the history of the American economy, the owners of assets had so little to do with the management of those assets, and managers had so much power over so much health that did not belong to them.2 Berle and Means described what we now call the Berle−Means corporation, the …


Salomon Redux: The Moralities Of Business, Allan C. Hutchinson, Ian Langlois Jun 2011

Salomon Redux: The Moralities Of Business, Allan C. Hutchinson, Ian Langlois

Seattle University Law Review

In this Essay, we revisit the Salomon case and its related litigation not only from a legal standpoint but also from a broader moral perspective. 4 In the second Part, we offer a detailed context for and account of the Salomon litigation. The third Part focuses on the historical roots of the corporation and the judicial arguments in Salomon. In the fourth Part, we explore the moral and legal consequences of the Salomon decision. Throughout the Essay, our ambition will be not only to give the Salomon case a more contextual and richer spin but also to tackle the relationship …


Nevada And The Market For Corporate Law, Bruce H. Kobayashi, Larry E. Ribstein Jun 2011

Nevada And The Market For Corporate Law, Bruce H. Kobayashi, Larry E. Ribstein

Seattle University Law Review

Berle and Means’s view that managers rather than shareholders control our largest corporations finds important expression in William Cary’s famous article arguing that managers have led shareholders on a “race to the bottom” whose finish line is Delaware. These views, in turn, support supplanting state corporation law with federal regulation of corporate governance. Concerns about a race to the bottom lately focus on Nevada, which seeks to be Delaware’s first real competitor for out-of-state firms in the national incorporation market. Evidence suggests that Nevada’s strategy is to raise tax revenues by offering a significantly laxer corporate law than Delaware. We …


Hired To Invent Vs. Work Made For Hire: Resolving The Inconsistency Among Rights Of Corporate Personhood, Authorship, And Inventorship, Sean M. O'Connor Jun 2011

Hired To Invent Vs. Work Made For Hire: Resolving The Inconsistency Among Rights Of Corporate Personhood, Authorship, And Inventorship, Sean M. O'Connor

Seattle University Law Review

Corporations have long held core aspects of legal personhood, such as rights to own and divest property and to sue and be sued. U.S. copyright law allows corporations to be authors while U.S. patent law does not allow them to be inventors. To be sure, both copyright law and patent law allow corporations to own copyrights and patents as assignees. But only copyright law, through its work-made-for-hire doctrine, provides for the nonnatural person of the corporation to “be” the author in an almost metaphysical sense. Under patent law, the natural-person inventors must always be listed in the patent documents, even …


The Future Of Socialism, Robert Paul Wolff Jun 2011

The Future Of Socialism, Robert Paul Wolff

Seattle University Law Review

An unpromising title, this, in the seventh year of the third millennium of the Common Era; rather like “Recent Developments in Ptolemaic Astronomy” or “Betamax—a Technology Whose Time Has Come.” My grandfather’s dream, the faith of my younger days, has turned to ashes. And yet, I remain persuaded that Karl Marx has something important to teach us about the world in which we live today. In what follows, I propose to take as my text a famous statement from Marx’s A Contribution to the Critique of Political Economy1—a sort of preliminary sketch of Das Kapital2—and see what it can tell …


Rethinking The Nature Of The Firm: The Corporation As A Governance Object, Peer Zumbansen Jun 2011

Rethinking The Nature Of The Firm: The Corporation As A Governance Object, Peer Zumbansen

Seattle University Law Review

This Article attempts to bridge two discourses—corporate governance and contract governance. Regarding the latter, a group of scholars has recently set out to develop a more comprehensive research agenda to explore the governance dimensions of contractual relations, highlighting the potential of contract theory to develop a more encompassing theory of social and economic transactions. While a renewed interest in the contribution of economic theory for a concept of contract governance drives one dimension of this research, another part of this undertaking has been to move contract theory closer to theories of social organization. Here, these scholars emphasize the “social” or …


The Post-Revolutionary Period In Corporate Law: Returning To The Theory Of The Firm, Matthew T. Bodie Jun 2011

The Post-Revolutionary Period In Corporate Law: Returning To The Theory Of The Firm, Matthew T. Bodie

Seattle University Law Review

The consensus on corporate law theory has narrowed the field’s doctrinal and methodological foci. Although the vibrancy of shareholder primacy has at times been called into question as a matter of law, both boardrooms and courts have taken the normative call for shareholder wealth maximization increasingly to heart. There is little doubt that the revolution has not only substantially affected legal theory but also legislation, court decisions, and corporate behavior. It achieved a level of success unusual for an academic discipline; it not only transformed the field but also the world. We now find ourselves in the post-revolutionary period. For …


Mind Control: Firms And The Production Of Ideas, Anthony J. Casey Jun 2011

Mind Control: Firms And The Production Of Ideas, Anthony J. Casey

Seattle University Law Review

The central questions for economic theories of the firm concern how the production of a good is organized (in the market or within a firm) and why that organization prevails. Derivative to these questions, legal scholars ask how the law affects and is affected by any particular organizational structure. Emerging literature looks at these questions in connection with the law of intellectual property. The prevailing theories in that literature focus primarily, though not exclusively, on patent law and generally adopt a property-rights theory of the firm. Those theories, focusing on residual control and hold-up problems, have shown that as patent …


Theories Of The Firm And Judicial Uncertainty, Andrew S. Gold Jun 2011

Theories Of The Firm And Judicial Uncertainty, Andrew S. Gold

Seattle University Law Review

There is no necessary connection between academics’ theories of the firm and judicial theories of the firm. Economists and legal scholars may adopt one theory of the firm, and courts may adopt another. We might even predict this result. Judges are not economists, and as increasingly sophisticated theories of the firm emerge in the academic literature, judges are not well-positioned to keep pace with the evolving accounts. Indeed, judges may reasonably choose to adopt no theory at all. Given these premises, this Essay explores the relationship between academically developed theories of the firm and corporate legal doctrine. Legal scholars who …