Law Commons^™

Public Primacy In Corporate Law, Dorothy S. Lund

Seattle University Law Review

This Article explores the malleability of agency theory by showing that it could be used to justify a “public primacy” standard for corporate law that would direct fiduciaries to promote the value of the corporation for the benefit of the public. Employing agency theory to describe the relationship between corporate management and the broader public sheds light on aspects of firm behavior, as well as the nature of state contracting with corporations. It also provides a lodestar for a possible future evolution of corporate law and governance: minimize the agency costs created by the divergence of interests between management and …

Corporate Law In The Global South: Heterodox Stakeholderism, Mariana Pargendler

Seattle University Law Review

How do the corporate laws of Global South jurisdictions differ from their Global North counterparts? Prevailing stereotypes depict the corporate laws of developing countries as either antiquated or plagued by problems of enforcement and misfit despite formal convergence. This Article offers a different view by showing how Global South jurisdictions have pioneered heterodox stakeholder approaches in corporate law, such as the erosion of limited liability for purposes of stakeholder protection in Brazil and India, the adoption of mandatory corporate social responsibility in Indonesia and India, and the large-scale program of Black corporate ownership and empowerment in South Africa, among many …

Layered Fiduciaries In The Information Age, Zhaoyi Li

Indiana Law Journal

Technology companies such as Facebook have long been criticized for abusing customers’ personal information and monetizing user data in a manner contrary to customer expectations. Some commentators suggest fiduciary law could be used to restrict how these companies use their customers’ data.1 Under this framework, a new member of the fiduciary family called the “information fiduciary” was born. The concept of an information fiduciary is that a company providing network services to “collect, analyze, use, sell, and distribute personal information” owes customers and end-users a fiduciary duty to use the collected data to promote their interests, thereby assuming fiduciary liability …

Table Of Contents

Seattle University Law Review

Table of Contents

The Virginia Company To Chick-Fil-A: Christian Business In America, 1600–2000, Joseph P. Slaughter

Seattle University Law Review

This Article argues that the proprietors of what the author terms “Christian Business Enterprises” (CBEs) would strenuously disagree with Justice Ginsburg and assert that their express mission is to earn a profit while propagating their religious values. As such, they operate businesses “infused with religion,” where Christian values are interwoven into the very fabric of the company and how the firm relates to its stakeholders, employees, customers, suppliers, and communities.

This Article further demonstrates the rich heritage of religious for-profit businesses throughout American history by focusing on a series of Protestant CBEs that led to today’s CBE giants: Chick-fil-A and …

Delaware's Peril, Marcel Kahan

Maryland Law Review

No abstract provided.

Leveraging Corporate Law: A Broader Account Of Delaware’S Competition, Christopher M. Bruner

Maryland Law Review

No abstract provided.

The Beginning Of History For Corporate Law: Corporate Government, Social Purpose And The Case Of Sutton’S Hospital (1612), David Smith

Seattle University Law Review

This Symposium Article is an invitation to rethink the Anglo-American history of corporate law from different perspectives. This Article uses new sources to investigate Sutton’s Hospital and corporate development in England during the sixteenth and seventeenth centuries. By doing so, the analysis reveals overlooked connections between the history of corporate law, religious thought, and social purpose. In turn, the recognition of these connections challenges the received history of pre-modern corporate law. Although this history shapes contemporary Anglo-American debates over corporate personality and purpose, few have scrutinized its underlying assumptions.

Religious Roots Of Corporate Organization, Amanda Porterfield

Seattle University Law Review

Religion and corporate organization have developed side-by-side in Western culture, from antiquity to the present day. This Essay begins with the realignment of religion and secularity in seventeenth-century America, then looks to the religious antecedents of corporate organization in ancient Rome and medieval Europe, and then looks forward to the modern history of corporate organization. This Essay describes the long history behind the entanglement of business and religion in the United States today. It also shows how an understanding of both religion and business can be expanded by looking at the economic aspects of religion and the religious aspects of …

Religious Roots Of Corporate Organization, Amanda Porterfield

Seattle University Law Review

Religion and corporate organization have developed side-by-side in Western culture, from antiquity to the present day. This Essay begins with the realignment of religion and secularity in seventeenth-century America, then looks to the religious antecedents of corporate organization in ancient Rome and medieval Europe, and then looks forward to the modern history of corporate organization. This Essay describes the long history behind the entanglement of business and religion in the United States today. It also shows how an understanding of both religion and business can be expanded by looking at the economic aspects of religion and the religious aspects of …

Blockchain Stock Ledgers, Kevin V. Tu

Indiana Law Journal

American corporate law contains a seemingly innocuous mandate. Corporations must maintain appropriate books and records, including a stock ledger with the corporation's shareholders and stock ownership. The importance of accurate stock ownership records is obvious. Corporations must know who owns each of its outstanding shares at any point in time. Among other things, this allows corporations to determine who receives dividends and who is entitled to vote. In theory, keeping accurate records of stock ownership should be a simple matter. But despite diligent efforts, serious share discrepancies plague corporations, and reconciliation is often functionally impossible. Doing so may require the …

The Grip Of Nationalism On Corporate Law, Mariana Pargendler

Indiana Law Journal

Part I provides a brief overview of the relationship between corporate law and nationalism and demonstrates their interaction in the historical experiences of several key jurisdictions. These vignettes are merely illustrative, but they indicate how deep the link between nationalism and corporate law can be. Part II summarizes the evidence on the economic effects of foreign corporate control, showing that it is ultimately inconclusive. Part III explains why corporate law can be an attractive instrument to accomplish nationalist objectives and explores the possible regulatory responses to this phenomenon. Part IV analyzes the implications of these findings for future developments in …

Proxy Access Voting: Evaluating Proxy Access And The Recent Phenomenon Of Corporations Adopting Shareholder Protective Policies, Danielle Vukovich

San Diego International Law Journal

Shareholders hold a financial stake in a corporation, and therefore are often viewed as owners of the corporation and believed to be in control for all corporate actions. However, their powers are circumscribed. Board of directors committees nominate directors to serve the corporation and these directors have the power to select the corporation’s officers. The committees provide shareholders a slate of proposed directors that are voted on and approved at the annual shareholder meeting. Shareholders may also propose their own slate of directors, but this typically requires a proxy contest, which can be expensive due to the costs both associated …

"Special," Vestigial, Or Visionary? What Banking Regulation Tells Us About The Corporation—And Vice Versa, Robert C. Hockett, Saule T. Omarova

Seattle University Law Review

A remarkable yet seldom noted set of parallels exists between modern U.S. bank regulation, on the one hand, and what used to be garden-variety American corporate law, on the other hand. For example, just as bank charters are matters not of right but of conditional privilege even today, so were all corporate charters not long ago. Just as chartered banks are authorized to engage only in limited, enumerated activities even today, so were all corporations restricted not long ago. And just as banks are subject to strict capital regulation even today, so were all corporations not long ago. In this …

The Widening Scope Of Directors' Duties: The Increasing Impact Of Corporate Social And Environmental Responsibility, Thomas Clarke

Seattle University Law Review

This Article concerns the widening scope of directors’ duties under the increasing impact of the pressures for corporate social and environmental responsibility. Narrow interpretations of directors’ duties that focus simply on the commercial success of the business and relegate other considerations to externalities are not tenable in the present context. The dawning realization of the global consequences of imminent climate change provides a series of inescapable challenges for business enterprises.

Corporations In The Flow Of Culture, Greg Urban

Seattle University Law Review

As an anthropologist, coming out of three decades of research among indigenous Brazilian populations, I naturally saw modern for-profit business corporations as tribes—the collective bearers of adaptive cultural know-how. They appeared to me to be the entities housing the culture needed to produce commodities, to trade commodities on the open market, or both. I was also, of course, aware of the legal concept of the corporation as fictive person capable of owning property and having standing in court cases, which I thought of as akin to the anthropological corporation insofar as both recognized the group as social actor. However, it …

Culture In Corporate Law Or: A Black Corporation, A Christian Corporation, And A Māori Corporation Walk Into A Bar . . ., Gwendolyn Gordon

Seattle University Law Review

Recent Supreme Court cases have entrenched a new image of corporate civic identity, assigning to the corporate person rights and abilities based upon the cultural characteristics, social ties, civic commitments, and internal lives of the human beings involved in it. This vision of the corporation is exemplified in recent cases implicating a corporate right to engage in political speech (Citizens United v. Federal Election Commission) and a right of corporations to be free of government interference regarding religious convictions (Burwell v. Hobby Lobby Stores, Inc.). Although much is being written about the soundness of the results in these cases and …

The English East India Company And The Modern Corporation: Legacies, Lessons, And Limitations, Philip J. Stern

Seattle University Law Review

The English East India Company was first chartered in 1600, endured until the late nineteenth century, and, in a clever act of corporate resurrection, has even recently returned as a global, upmarket retail outlet selling fine foods and commemorative coins. It has also endured in the popular imagination and culture, churning out heroes and villains alike in film, television, and video games. The script writer for a forthcoming BBC miniseries, in which the East India Company stars as the prime antagonist, even noted recently that the Company was like “the CIA, the NSA, and the biggest, baddest multinational corporation on …

What Might Replace The Modern Corporation? Uberization And The Web Page Enterprise, Gerald F. Davis

Seattle University Law Review

The number of public corporations in the United States has been in decline for almost twenty years. Alternative forms of organization, from LLCs and benefit corporations to Linux and Wikipedia, provide robust competition to traditional corporations, while short-lived, project-based enterprises that assemble supply chains from available parts are increasingly cost effective. Yet our understanding of corporate governance has not kept pace with the new organization of the economy and we continue to treat the public corporation with dispersed ownership as the default form of doing business. Meanwhile, many of the corporations going public in recent years have abandoned traditional standards …

Notes On The Difficulty Of Studying The Corporation, Marina Welker

Seattle University Law Review

In the award-winning documentary The Corporation, public intellectuals and activists characterize corporations as “externalizing machines,” “doom machines,” “persons with no moral conscience,” and “monsters trying to devour as much profit as possible at anyone’s expense.” In other footage, people on the street personify corporations: “General Electric: a kind old man with lots of stories;” “Nike: young, energetic;” “Microsoft: aggressive;” “McDonald’s: young, outgoing, enthusiastic;” “Monsanto: immaculately dressed;” “Disney: goofy;” “The Body Shop: deceptive.” The documentary, like screenwriter and legal scholar Joel Bakan’s book The Corporation: The Pathological Pursuit of Profit and Power, imparts dissonant messages about corporations. On the one hand, …

The Theory Of Fields And Its Application To Corporate Governance, Neil Fligstein

Seattle University Law Review

My goal here is twofold. First, I want to introduce the theory of strategic action fields to the law audience. The main idea in field theory in sociology is that most social action occurs in social arenas where actors know one another and take one another into account in their action. Scholars use the field construct to make sense of how and why social orders emerge, reproduce, and transform. Underlying this formulation is the idea that a field is an ongoing game where actors have to understand what others are doing in order to frame their actions. Second, I want …

Remarks: The Declining Role Of Outside Counsel In Enhancing Ethical Conduct By Corporations, Jed S. Rakoff

Seattle University Law Review

Judge Rakoff’s remarks from the seventh annual Berle Symposium, held May 26–27, 2015 at Seattle University School of Law.

The Rhetoric Of Negative Externalities, Claire A. Hill

Seattle University Law Review

Negative externalities are costs imposed on third parties. The paradigmatic example is pollution. A firm manufactures a product that generates toxic waste, and dumps the waste; society pays for the associated cost, including, for instance, the community’s health problems caused by the waste. Profit is supposed to measure the firm’s revenues in excess of the associated costs; because this cost is not included, the firm’s profits are higher than they should be, and there is more pollution than there should be. What is privately optimal diverges from what is socially optimal. The concept of negative externalities is intuitively appealing. It …

Agency Theory As Prophecy: How Boards, Analysts, And Fund Managers Perform Their Roles, Jiwook Jung, Frank Dobbin

Seattle University Law Review

In 1976, Michael Jensen and William Meckling published a paper reintroducing agency theory that explained how the modern corporation is structured to serve dispersed shareholders. They purported to describe the world as it exists but, in fact, they described a utopia, and their piece was read as a blueprint for that utopia. We take a page from the sociology of knowledge to argue that, in the modern world, economic theories function as prescriptions for behavior as much as they function as descriptions. Economists and management theorists often act as prophets rather than scientists, describing the world not as it is, …

Who Wants To Watch? A Comment On The New International Paradigm Of Financial Consumer Market Regulation, Toni Williams

Seattle University Law Review

This Article explores the capacity of the G20’s model of financial consumer protection to reconfigure relationships between financial firms and consumers, focusing in particular on the market conduct of financial firms. Although this Article does not focus directly on Adolf A. Berle’s work, it does engage with some of his enduring concerns about economic relations between corporations, regulators, and individuals; the socialcontext of those economic relations; and the role of law and legal regulation in shaping market relations. More specifically, this Article considers new international regulatory principles related to corporate social responsibility— a recurring theme of Berle’s work11—in the somewhat …

Dinner Parties During “Lost Decades”: On The Difficulties Of Rethinking Financial Markets, Fostering Elite Consensus, And Renewing Political Economy, David A. Westbrook

Seattle University Law Review

This Article addresses two groups of problems that ought to be understood in relation to one another. This Article has three movements. In Part II, I discuss conceptual obstacles to forming the new elite consensus that rethinking the role of financial markets requires. To produce policy reform, it is not enough to have new ideas; the ideas must be understood, adopted, and acted upon by people. Policy reform is thus always a function of conversations. In Part III, I discuss some possible ways the elite consensus might be formed. In Part V, the conclusion, I offer a preliminary assessment of …

On The Rise Of Shareholder Primacy, Signs Of Its Fall, And The Return Of Managerialism (In The Closet), Lynn A. Stout

Seattle University Law Review

In their 1932 opus "The Modern Corporation and Public Property," Adolf Berle and Gardiner Means famously documented the evolution of a new economic entity—the public corporation. What made the public corporation “public,” of course, was that it had thousands or even hundreds of thousands of shareholders, none of whom owned more than a small fraction of outstanding shares. As a result, the public firm’s shareholders had little individual incentive to pay close attention to what was going on inside the firm, or even to vote. Dispersed shareholders were rationally apathetic. If they voted at all, they usually voted to approve …

Rebalancing Private Placement Regulation, William K. Sjostrom, Jr.

Seattle University Law Review

Regulating securities offerings entails balancing investor protection and capital formation. Inevitably, this balance gets upset. As financial markets evolve, Congress passes new legislation, the Securities and Exchange Commission (SEC) adopts new rules, and the courts issue unanticipated opinions. These events upset the balance because they happen in an uncoordinated and haphazard manner and oftentimes produce unintended consequences.The Article proceeds as follows. To set the stage, Part II provides background on the Securities Act and describes the differences between public offerings and private placements. Part III explains why rebalancing private placement regulation may be warranted. Part IV offers proposed statutory language …

Equity Derivatives And The Challenge For Berle’S Conception Of Corporate Accountability, Janis Sarra

Seattle University Law Review

With the proliferation of equity derivatives and related structured financial products, the North American conception of corporate governance faces a new and distinct challenge to its underlying premises.This Article analyzes these developments with a focus on the implications for director and officer accountability and corporate sustainability, using the occasion of the third symposium of the Adolf A. Berle, Jr. Center on Corporations, Law & Society to consider whether Berle’s analysis of corporate accountability offers any insights into how to address the uncoupling of economic interest and legal rights in corporate governance. Part II of this Article sets the context for …

Hedge Funds And Risk Decoupling: The Empty Voting Problem In The European Union, Wolf-Georg Ringe

Seattle University Law Review

The law must remain adaptive and responsive to the constantly changing challenges of our society and our business life. One of the most pressing challenges of the past years is the emergence of alternative investment funds, in particular hedge funds, which masterfully exploit the traditional categories of corporate law, financial derivatives, and risk management. This Article is only concerned with the first of these two forms— negative decoupling.9 It looks at the various forms of negative riskdecoupling strategies and tries to shed light on their overall desirability. Three distinct theoretical perspectives are used as an analytical framework to examine the …