Law Commons^™

Toward A Constitutional Review Of The Poison Pill, Lucian A. Bebchuk, Robert J. Jackson Jr.

Ira M. Millstein Center for Global Markets and Corporate Ownership

We argue that the state-law rules governing poison pills are vulnerable to challenges based on preemption by the Williams Act. Such challenges, we show, could well have a major impact on the corporate law landscape.

The Williams Act established a federal regime regulating unsolicited tender offers, but states subsequently developed a body of state antitakeover laws that impose additional impediments to such offers. In a series of well-known cases during the 1970s and 1980s, the federal courts, including the Supreme Court, held some of these state antitakeover laws preempted by the Williams Act. To date, however, federal courts and commentators …

Changes In Ownership: Beyond The Berle-Means Paradigm, Ira M. Millstein Center For Global Markets And Corporate Ownership

Ira M. Millstein Center for Global Markets and Corporate Ownership

The “Changes in Ownership: Beyond the Berle-Means Paradigm” Symposium, held April 2013, explored whether, and how, the recent explosion of new ownership models alters the paradigm of dispersed ownership developed by Adolf Berle and Gardiner Means three generations ago. That model indicated that public corporations were owned by dispersed shareholders whose separate ownership positions were too small to justify extensive monitoring of managerial performance. This view of the distribution of ownership in U.S. corporations has been foundational for both much academic work and for much of corporate law and governance, which have been aimed at addressing the monitoring shortfall.

The …

The Nordic Model Of Corporate Governance: The Role Of Ownership, Ronald J. Gilson

Faculty Scholarship

It is commonplace to credit the invention of the public corporation as an important engine of economic growth. The creation of a long-lived vehicle that gave investors both tradable shares and limited liability allowed talented managers to raise capital to fund enterprise. Writing in 1926, the Economist magazine heralded this role:

The economic historian of the future may assign to the nameless inventor of the principle of limited liability, as applied to trading corporations, a place of honor with Watt and Stephenson, and other pioneers of the Industrial Revolution. The genius of these men produced the means by which man’s …

Ongoing Issues In Russian Corporate Governance, Merritt B. Fox

Faculty Scholarship

This Article concerns Russian corporate governance today. It starts by arguing that there are fundamental differences between the policy questions raised by SOEs and those raised by non-SOEs and that the analysis needs to separate out these two kinds of corporations. The Article then goes on to consider several ongoing issues relating to non-SOEs. To start, it suggests the need for a set of rules, backed by reliably applied stiff sanctions, requiring disclosure of all situations where a person, by himself or as a member of a coordinated group, is the beneficial owner of sufficient shares to be able to …

Systemic Harms And Shareholder Value, John Armour, Jeffrey N. Gordon

Faculty Scholarship

The financial crisis has demonstrated serious flaws in the corporate governance of systemically important financial firms. In particular, the norm that managers should seek to maximize shareholder value, as measured by the stock price, proves to be a faulty guide for managerial action in systemically important firms. This is not only because the failure of such firms will have spillovers that defy the cost-internalization of the tort system, but also because these spillovers will harm their own majoritarian shareholders. The interests of diversified shareholders fundamentally diverge from the interests of managers and other controllers because the failure of a systemically …

The Case For An Unbiased Takeover Law (With An Application To The European Union), Luca Enriques, Ronald J. Gilson, Alessio M. Pacces

Faculty Scholarship

Takeover regulation should neither hamper nor promote takeovers, but instead allow individual companies to decide the contestability of their control. Based on this premise, we advocate a takeover law exclusively made of default and menu rules supporting an effective choice of the takeover regime at the company level. For political economy reasons, we argue that different default rules should apply to newly public companies and companies that are already public when the new regime is introduced. Newly public companies should be governed by default rules that favor the interests of (minority) shareholders over those of management and controlling shareholders, because …