Law Commons^™

Shareholder Dividend Options, Zohar Goshen

Faculty Scholarship

This Article proposes a legal norm that shifts discretion over dividend policy from managers to the capital markets (i.e., shareholders). State corporate law could effect such a shift by adopting a rule that mandates shareholder control over the dividend decision. The rule would require every firm to adopt an option mechanism that, at predetermined dates, provided each of the firm's shareholders with the right to select either cash or stock dividends in an amount equal to the shareholder's pro rata share of the firm's earnings. For instance, the law might require that, once a year, the firm offer to each …

Distinguishing Between Consensual And Nonconsensual Advantages Of Liability Rules, Ian Ayres, Eric Talley

Faculty Scholarship

Louis Kaplow and Steven Shavell's thoughtful reply to our recent article contains powerful insights about the relative efficiency of liability and property rules. While we are in agreement that liability rules can be more efficient than property rules when transaction costs are low, we disagree about the cause of this liability-rule advantage. Kaplow and Shaveli believe that liability rules hold only a nonconsensual advantage over property rules (i.e., liability rules tend to induce efficient nonconsensual takings). While granting this oftrecognized nonconsensual advantage, we contend that liability rules may also have a consensual advantage in low-transaction-cost settings (i.e., liability rules facilitate …

An Open Letter To Congressman Gingrich, Bruce Ackerman, Akhil Amar, Jack Balkin, Susan Low Bloch, Philip Chase Bobbitt, Richard Fallon, Paul Kahn, Philip Kurland, Douglas Laycock, Sanford Levinson, Frank Michelman, Michael Perry, Robert Post, Jed Rubenfeld, David Strauss, Cass Sunstein, Harry Wellington

Faculty Scholarship

We urge you to reconsider your proposal to amend the House Rules to require a three-fifths vote for enactment of laws that increase income taxes. This proposal violates the explicit intentions of the Framers. It is inconsistent with the Constitution's language and structure. It departs sharply from traditional congressional practice. It may generate constitutional litigation that will encourage Supreme Court intervention in an area best left to responsible congressional decision.

Unless the proposal is withdrawn now, it will serve as an unfortunate precedent for the proliferation of supermajority rules on a host of different subjects in the future. Over time, …