Law Commons^™

Out Of The Shadows: Requiring Strategic Management Disclosure, Nadelle Grossman

Nadelle Grossman

Under federal securities laws and related regulations, public companies must disclose a host of information about their risk management processes to protect firm value. By contrast, these companies need not disclose virtually anything about their strategic management processes to generate firm value. As a result, investors are given a lopsided picture of firm processes to create value, undermining one of the federal securities laws’ central purposes of ensuring that investors receive complete information about public firms.

To address this concern, I propose that the Securities and Exchange Commission require public firms to disclose those qualities of their strategic management processes …

Out Of The Shadows: Requiring Strategic Management Disclosure, Nadelle Grossman

Nadelle Grossman

Under federal securities laws and related regulations, public companies must disclose a host of information about their risk management processes to protect firm value. By contrast, these companies need not disclose virtually anything about their strategic management processes to generate firm value. As a result, investors are given a lopsided picture of firm processes to create value, undermining one of the federal securities laws’ central purposes of ensuring that investors receive complete information about public firms.

To address this concern, I propose that the Securities and Exchange Commission require public firms to disclose those qualities of their strategic management processes …

The Cooperative As Proletarian Corporation: Property Rights Between Corporation, Cooperatives And Globalization In Cuba, Larry Cata Backer

Larry Cata Backer

Since the 1970s, the issue of the relationship between productive property, the state and the individual has been contested in Marxist Leninist states. While China has moved to a more managerial form of relationship, states like Cuba continue to adhere to more strict principles of state control of productive property. However, in the face of recent financial upheavals and Cuba’s long effort to create alternative forms of regional economic engagement, Cuba’s approach to economic regulation has been undergoing limited change. This essay considers the form and scope of Cuban approaches to economic reorganization in the wake of the adoption of …

Executive Compensation: In A Culture Of Greed And Selfishness Is There Toom For A Theory Of "Enough"?, Robert Carl Downs

Bob Downs

This article evaluates the current status of high executive compensation in the United States, including the background of the problem, current and past attempts and proposals to control the escalating increases in executive pay. It also includes proposals to address the legal, moral and practical issues involved in excessive pay.

The Business Judgment Rule As An Immunity Doctrine, Lori A. Mcmillan

Lori A. McMillan

The business judgment rule is a judicially created doctrine that protects directors from personal civil liability for the decisions they make on behalf of a corporation. In today’s era of corporate scandals, global financial meltdowns, and directorial malfeasance it has become especially important in setting the bar for when directors are appropriately responsible to shareholders for their actions. Traditionally the business judgment rule has been regarded as a standard of liability, although it has never really been explored or enunciated as such. This view determines eligibility for business judgment rule protection of a decision after an examination of certain preconditions. …

Private Lawmaking And The Architecture Of Confidentiality In Nonprofit Boardrooms, Norman I. Silber

Norman I. Silber

Abstract

Placement of the boundary line between transparent and confidential deliberation inside a boardroom affects the quality, efficiency, and fairness of corporate decision making. Policies which do not insist upon confidentiality can improve the perceived legitimacy of decisions and of those who make them; confidentiality can improve the ability to implement decisions effectively. The degree of transparency facilitated by these policies affects the volume and quality of available information. In the nonprofit boardroom, the boundaries that are set by governance rules also reflect and give shape to institutional structures and cultural norms.

This article explores justifications for changing from a …

"Systemic Poverty As A Cause Of Recessions", Robert Ashford

College of Law - Faculty Scholarship

This article argues that the failure to address and ameliorate systemic poverty is a major cause of recessions. Recessions occur (and sub-optimal employment and growth persist) when a critical mass of market participants come to believe that the distribution of future earning capacity is not sufficient to purchase what can be produced despite the physical and technological capacity to employ available labor and capital to produce more over the same period even at lower unit cost. The essence of systemic poverty is widespread inadequate earning capacity. In recessionary periods, with rising unemployment, the problem of inadequate earning capacity (which perennially …

Cadbury Twenty Years On, Cally Jordan

Cally Jordan

This year marks the twentieth anniversary of the publication of the Cadbury Report, one of the most significant events in modern corporate governance. The Cadbury Report, and its simple two page “best practices”, triggered a global debate on corporate governance. “Cadbury” codes of corporate governance spread like wildfire. The legacy of the Cadbury Report lives on in the UK with no diminution in the appeal of its voluntary code/comply or explain approach to corporate governance. But there are several clouds looming on the horizon. Comply or explain and voluntary codes of corporate governance appear to have run their course elsewhere …

Corporate Laibility And Foreign Acts Of Torture: Aziz V. Alcolac, Inc., C. Alexander Cable

South Carolina Law Review

No abstract provided.

Consumer Lock-In And The Theory Of The Firm, David Yosifon

Faculty Publications

When shareholders invest in a corporation they become “locked-in” to the prospects of that firm. A shareholder cannot force the firm to buy back her shares, nor can she force it to dissolve and turn over her pro rata share of its assets. She gets nothing for her capital unless the firm profits and pays dividends, or she finds someone else willing to buy her stock. Corporate law scholars have recognized that capital “lock-in” is both a corporate law solution that enables large-scale business to flourish, and a corporate law problem that threatens the growth and proper governance of big …

Charging Less To Make More: The Causes And Effects Of The Corporate Inversion Trend In The U.S. And The Implications Of Lowering The Corporate Tax Rate, Tyler Dumler

Tyler M. Dumler

This article explores the effect lowering the corporate tax rate would have on U.S. multinational corporations (MNCs). Instead of creating patchwork legislation, such as section 7874 to the Internal Revenue Code, this article advocates adopting changes to the underlying problems which give MNCs incentives to expatriate. By attacking the underlying problems of corporate tax legislation, this article concludes that lowering the corporate tax rate is the long-term solution for the U.S. government to address MNC tax avoidance.

M&A Fiduciary Duties: Delaware’S Murky Jurisprudence, Daniel J. Morrissey

Dan Morrissey

The article deals with the fiduciary duties of corporate officials in mergers and acquisitions, particularly as they have been defined by the Delaware Courts. It focuses on judicial decisions over the last several decades and includes a discussion of some of the most recent significant ones.

The article also describes how those duties may vary depending on the type of corporate event that is occurring and contains commentary on the nature of those obligations. Where corrupt activity is present or there is no showing that these transactions are in the public interest, they should not be permitted to go forward. …

Challenging Traditional Thought: No Default Fiduciary Duties In Delaware Limited Liability Companies After Auriga, Peter I. Tsoflias, Ann E. Conaway

Peter I. Tsoflias

We agree with Chief Justice Myron T. Steele in his article, Freedom of Contract and Default Contractual Duties in Delaware Limited Partnerships and Limited Liability Companies, that the proper default rule for Delaware limited liability companies (“LLCs”) formed under the Delaware Limited Liability Company Act (“DLLCA” or “Act”) is the contractual duty of good faith and fair dealing. In this article we invite each reader to set aside bias, pre-conceived legal opinions, and rote legal training and to listen. Hearing each legal argument and searching for – not assuming – the most appropriate answer to the question of default duties …

Major Violations For The Ncaa: How The Ncaa Can Apply The Dodd-Frank Act To Reform Its Own Corporate Goverance Scheme, Jason Rudderman

Jason Rudderman

This paper applies the Dodd-Frank Act, and specifically its corporate governance laws, to the National Collegiate Athletic Associate (NCAA). The NCAA has experienced rapid, largely uncontrolled growth over the past decade that has led to an influx of corporate governance and regulatory problems within its member institutions. As with financial institutions, the influx of money itself is not the inherent problem. Money in college athletics is good. When large schools succeed, they help support smaller schools in their conference through revenue sharing plans. It is the lack of control and governance mechanisms regulating the influx of money that poses the …

Slicing The Shadow: A Proposal For Updating U.S. International Taxation, Reuven S. Avi-Yonah

Articles

In the article Avi-Yonah proposed that the United States tax multinational corporations using a formulary apportionment system based solely on income derived from sales. The background for the article was drawn principally from Robert Reich’s The Work of Nations (1991), and the analysis was inspired by Stanley I. Langbein’s work on transfer pricing, especially his seminal article "The Unitary Method and the Myth of Arm’s Length," Tax Notes, Feb. 17, 1986, p. 625; see also Louis Kauder, "Intercompany Pricing and Section 482: A Proposal to Shift From Uncontrolled Comparables to Formulary Apportionment Now," Tax Notes, Jan. 25, 1993, p. 485.

Chinese Investment In Africa: China’S Empathetic Support Of Poor And Despotic Regimes, And The Competition Western Companies Face, Richard W. Gove

Richard W Gove

This paper discusses the recent economic parallels and interconnections between China and the different nations in Africa, especially sub-Saharan Africa. In 2009, China surpassed the United States to become Africa’s largest trade partner, and China has committed to establishing stronger connections with African economies. Much of the increase in trade is a result of China’s thirst for oil and Africa’s desperate need for foreign investment. However, many legal issues surround Chinese involvement in Africa, especially public corruption, and the instability of African regimes has created political risk that leaves China with little competition and Africa with few alternatives. The main …

Vive La Petite Difference: Camp, Obama, And Territoriality Reconsidered, Reuven S. Avi-Yonah

Articles

The recent tax reform proposals by House Ways and Means Committee Chair David Camp, R-Mich., and by President Obama seem to offer starkly contrasting visions of how to reform the taxation of foreign-source income earned by U.S.-based multinational enterprises.1 Both acknowledge the problem, which is that U.S.-based MNEs currently have more than $1 trillion of ‘‘permanently reinvested’’ income offshore, which they cannot bring back to the U.S. without incurring a 35 percent tax penalty. However, they seem to offer radically different solutions: Under the Camp proposal, a participation exemption will enable U.S.-based MNEs to bring back the income without paying …

Shareholder Eugenics In The Public Corporation, Edward B. Rock

All Faculty Scholarship

In a world of active, empowered shareholders, the match between shareholders and public corporations can potentially affect firm value. This article examines the extent to which publicly held corporations can shape their shareholder base. Two sorts of approaches are available: direct/recruitment strategies; and shaping or socialization strategies. Direct/recruitment strategies through which “good” shareholders are attracted to the firm include: going public; targeted placement of shares; traditional investor relations; the exploitation of clientele effects; and de-recruitment. “Shaping” or “socialization” strategies in which shareholders of a “bad” or unknown type are transformed into shareholders of the “good” type include: choice of domicile; …

Transparency Between Norm, Technique And Property In International Law And Governance—The Example Of Corporate Disclosure Regimes And Environmental Impacts, Larry Cata Backer

Larry Cata Backer

This article considers the role of transparency in corporate governance, focusing on the regulatory forms in international environmental law and policy. It is divided into five sections. After this Introduction, Section II considers conventional sources of international environmental law for its transparency effects on the environmental impacts of business activity, looking at both hard law and soft law frameworks. While there is a substantial and growing body of public international hard and soft law frameworks in environmental governance, much of that is focused on the role of states and the information and participation rights of affected communities in the political …

Personal Jurisdiction For The Twenty-First Century: The Implications Of Mcintyre And Goodyear Dunlop Tires, Howard B. Stravitz

South Carolina Law Review

No abstract provided.

The (Theoretical) Future Of Personal Jurisdiction: Issues Left Open By Goodyear Dunlop Tires V. Brown And J. Mcintyre Machinery V. Nicastro, Roberta Brilmayer, Matthew Smith

South Carolina Law Review

No abstract provided.

The Case Of The Retired Justice: How Would Justice John Paul Stevens Have Voted In J. Mcintyre Machinery, Ltd. V. Nicastro, Rodger Daniel Citron

South Carolina Law Review

No abstract provided.

The Overlap Of Tax And Financial Aspects Of Real Estate Ventures, Bradley T. Borden

Bradley T. Borden

This article examines the effect partnership tax law has on financial aspects of real estate ventures. It introduces the relevance of the aggregate and entity views of tax partnerships (i.e., LLCs, LPs, and other partnerships) and demonstrates how those views can greatly affect financial projections for each of the members of a real estate venture. It also demonstrates how financial calculations can vary significantly depending upon how closely analysts track a tax partnership’s allocation method. Finally, the article serves as a primer for tax practitioners who are unfamiliar with the financial tools that are so prevalent in real estate analysis, …

Law Firm Ethics In The Shadow Of Corporate Social Responsibility, Christopher J. Whelan

Christopher J Whelan

Corporate clients, and in particular global corporations, are gaining influence and control of law firm practices in ways that would have been unthinkable in the past. Through various mechanisms, such as ‘Outside Counsel Guidelines,’ ‘Codes of Practice’ and the like, corporate clients set standards which lawyers are expected to follow. We have examined over 20 sets of Guidelines and conducted over 20 interviews with outside, in-house and general counsel.

The topics incorporated in the guidelines vary to a great extent. However, while some clearly protect the direct and immediate interests of the client – provisions relating to billing and conflicts …

Janus Capital Group V. First Derivative Traders: A Call To Rewind Securities Law Jurisprudence To Protect Investors – A Practitioner’S Guide And Policy Perspective, Max Schatzow

Max Schatzow

As of 1989, the federal courts were inundated with more Rule 10b-5 litigation than all of the other provision of the federal securities law combined. The Securities Enforcement Commission’s (“SEC”) Rule 10b-5 (“Rule 10b-5,” “the rule,” or “10b-5”) makes it unlawful for certain persons to make material misrepresentations. On June 12, 2011, The Supreme Court in Janus Capital held that those certain persons were those who have the “ultimate authority” over a statement. The Supreme Court in Janus left many litigators and regulators in the securities field grasping for answers. A progeny of cases have been tried under Rule 10b-5 …

Neither Persons Nor Associations: Why Recent Corporate Law Scholarship Undercuts Citizens United And The Constitutional Rights Of Corporations, David Ciepley

David Ciepley

This Article challenges the Supreme Court’s practice of extending constitutional rights to corporations, using Citizens United (2010) as the focal point of its analysis. Originally, corporations were understood to receive all their rights in grant from government. This precluded their holding constitutional rights against government. In the late 19th century, two new theories arose that conflate corporations with natural persons and thus attribute to corporations some of the rights of natural persons: (1) the “association” theory, which treats the corporation as little more than an association of natural persons, and (2) the “real entity” theory, which treats the corporation as …

A Contractarian Critique Of Citizens United, Joseph F. Morrissey

Joseph F. Morrissey

Abstract

In Citizens United v. Federal Election Commission, a 5–4 majority overturned a congressional enactment limiting corporate electioneering. Decided in 2010, the Citizens United opinion has already been harshly criticized by a broad spectrum of people, ranging from President Obama to Ben & Jerry. A group of senators has even called for a constitutional amendment to undo the results of that decision.

In this article, I criticize the majority opinion in Citizens United for ignoring the prevailing contractarian view of a corporation. In so doing, the majority arrived at the false conclusion that corporations should be entitled to the constitutional …

Forum Shopping And The Cost Of Access To Justice: Cost And Certainty In International Commercial Litigation And Arbitration, Ali Assareh

Ali Assareh

International commercial transactions sometimes give rise to disputes. Resolving these disputes requires access to justice (whether through litigation or arbitration), and access to justice costs money⎯in some cases, enough money to overshadow the substance of the underlying dispute. Knowing this, international commercial parties almost always include a “dispute resolution” clause in their contracts. Yet, despite their prevalence and importance in managing future arbitration and litigation costs, dispute resolution clauses are often poorly negotiated and hastily drafted, perhaps because some factors that affect the cost of resolving future disputes are not known by the parties ex ante. But, while some factors …

Politicians As Fiduciaries, D. Theodore Rave

Teddy Rave

When incumbent legislators draw the districts from which they are elected, the conflict of interest is glaring: they can and do gerrymander district lines to entrench themselves. Despite recognizing that such incumbent self-dealing works a democratic harm, the Supreme Court has not figured out what to do with political gerrymandering claims, which inherently require first-order decisions about the allocation of raw political power—decision that courts are institutionally ill-suited to make. But the same type of agency problem arises all the time in corporate law. And though we do not think courts are any better at making business decisions than political …

The Roberts Court Gets Down To Business: The Business Cases, Kenneth W. Starr

Pepperdine Law Review

No abstract provided.