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Full-Text Articles in Law

Potential Competition And Antitrust Analysis: Monopoly Profits Exceed Duopoly Profits, Steven C. Salop Apr 2021

Potential Competition And Antitrust Analysis: Monopoly Profits Exceed Duopoly Profits, Steven C. Salop

Georgetown Law Faculty Publications and Other Works

This short note prepared for an OECD meeting in June 2021 examines several antitrust issues involving analysis of potential competition. While the analysis is not new, it is still useful to collect them together in a unified fashion to show how they are related. In this regard, all the analysis and conclusions flow from the overarching (and obvious) points that exclusionary conduct and agreements that maintain monopoly power very often harm consumers, and that monopoly profits typically exceed the combined duopoly profits earned by the dominant firm and the entrant, if there is successful entry. While this is not inevitably ...


Corruption In Capsules: How It Is Legal For Companies To Put Harmful Ingredients In Vitamins And Dietary Supplements, Emily Leggiero Apr 2021

Corruption In Capsules: How It Is Legal For Companies To Put Harmful Ingredients In Vitamins And Dietary Supplements, Emily Leggiero

English Department: Research for Change - Wicked Problems in Our World

The vitamin and supplement industry has increased exponentially in profits as well as potential products on the market since the turn of the century. However, these products are not regulated, nor do they undergo any premarket clinical research or testing. Public health is compromised by vitamins and supplements that are available for American consumption that is disproportionately unregulated to their chemically similar counterparts. This wicked problem is facilitated through the combination of historical legislative definitions that has since been distorted for corrupt administrative gain through the allotment of corporate expenditures. Company disbursements are made to the same policymakers that create ...


Mergers, Macs, And Covid-19, Brian Jm Quinn Apr 2021

Mergers, Macs, And Covid-19, Brian Jm Quinn

Boston College Law School Faculty Papers

The conventional wisdom is that MAE/MACs in merger agreements provide an opportunity for buyers to renegotiate merger agreements in the event of intervening adverse events. However, the experience following the COVID-19 outbreak suggests that the conventional wisdom is incorrect or at least overstated. In fact, MAE/MACs shift the risk of exogenous adverse events (like COVID-19) to buyers while leaving only the risks of adverse endogenous and semi-endogenous events with the seller. The consequence of this risk-shifting is to strictly limit the circumstances under which a buyer can credibly lean on a MAE/MAC to threaten to terminate a ...


The “Value” Of A Public Benefit Corporation, Jill E. Fisch, Steven Davidoff Solomon Apr 2021

The “Value” Of A Public Benefit Corporation, Jill E. Fisch, Steven Davidoff Solomon

Faculty Scholarship at Penn Law

We examine the “value” a PBC form provides for publicly-traded corporations. We analyze the structure of the PBC form and find that other than requiring a designated social purpose it does not differ significantly in siting control and direction with shareholders. We also examine the purpose statements in the charters of the most economically significant PBCs. We find that, independent of structural limitations on accountability, these purpose statements are, in most cases, too vague and aspirational to be legally significant, or even to serve as a reliable checks on PBC behavior. We theorize, and provide evidence, that without a legal ...


Corporate Personhood And The Putative First Amendment Right To Discriminate, Kent Greenfield, Daniel A. Rubens Apr 2021

Corporate Personhood And The Putative First Amendment Right To Discriminate, Kent Greenfield, Daniel A. Rubens

Boston College Law School Faculty Papers

Corporations increasingly assert the right to discriminate, based either on free speech claims, religious freedom claims, or statutory claims arising from the Religious Freedom Restoration Act. Such claims have been considered by the Supreme Court in Hobby Lobby (RFRA) and Masterpiece Cakeshop (First Amendment), and in both cases the Court held in favor of the business.

In neither case, however, did the Court address a fundamental flaw with the arguments of the company asserting the speech and religion claims: that the claims depend on the rejection of corporate personhood. The putative religious and speech claims arose not from the beliefs ...


Brief Of Amici Curiae Scholars Of The Law Of Non-Profit Organizations In Support Of Respondent: Americans For Prosperity Foundation V. Matthew Rodriguez, Nos. 19-251 & 19-255, Ellen P. Aprill, Roger Colinvaux, Sean Delany, James Fishman, Brian D. Galle, Philip Hackney, Jill R. Horwitz, Cindy Lott, Ray D. Madoff, Jill S. Manny, Nancy A. Mclaughlin, Richard Schmalbeck Mar 2021

Brief Of Amici Curiae Scholars Of The Law Of Non-Profit Organizations In Support Of Respondent: Americans For Prosperity Foundation V. Matthew Rodriguez, Nos. 19-251 & 19-255, Ellen P. Aprill, Roger Colinvaux, Sean Delany, James Fishman, Brian D. Galle, Philip Hackney, Jill R. Horwitz, Cindy Lott, Ray D. Madoff, Jill S. Manny, Nancy A. Mclaughlin, Richard Schmalbeck

Amici Briefs

The twelve individuals filing this amicus brief are professors and scholars of the law of nonprofit organizations. No party in this case represents all three of charity’s key stakeholders: charities, states, and taxpayers who underwrite the charities’ funding. Amici are participating in this litigation in order to aid the Court in understanding how these three interests depend on one another. They also attempt to provide a clearer understanding of state supervision of charities and how that supervision related to federal tax law.


A Lesson From Startups: Contracting Out Of Shareholder Appraisal, Jill E. Fisch Mar 2021

A Lesson From Startups: Contracting Out Of Shareholder Appraisal, Jill E. Fisch

Faculty Scholarship at Penn Law

Appraisal is a controversial topic. Policymakers have debated the goals served by the appraisal remedy, and legislatures have repeatedly revised appraisal statutes in an effort to meet those goals while minimizing the cost and potential abuse associated with appraisal litigation. Courts have struggled to determine the most appropriate valuation methodology and the extent to which that methodology should depend on case-specific factors. These difficulties are exacerbated by variation in the procedures by which mergers are negotiated and the potential for conflict-of-interest transactions.

Private ordering offers a market-based alternative to continued legislative or judicial efforts to refine the appraisal remedy. Through ...


Stealth Governance: Shareholder Agreements And Private Ordering, Jill E. Fisch Mar 2021

Stealth Governance: Shareholder Agreements And Private Ordering, Jill E. Fisch

Faculty Scholarship at Penn Law

Corporate law has embraced private ordering -- tailoring a firm’s corporate governance to meet its individual needs. Firms are increasingly adopting firm-specific governance through dual-class voting structures, forum selection provisions and tailored limitations on the duty of loyalty. Courts have accepted these provisions as consistent with the contractual theory of the firm, and statutes, in many cases, explicitly endorse their use. Commentators too support private ordering for its capacity to facilitate innovation and enhance efficiency.

Private ordering typically occurs through firm-specific charter and bylaw provisions. VC-funded startups, however, frequently use an alternative tool – shareholder agreements. These agreements, which have largely ...


Lifting Labor’S Voice: A Principled Path Toward Greater Worker Voice And Power Within American Corporate Governance, Leo E. Strine Jr., Aneil Kovvali, Oluwatomi O. Williams Feb 2021

Lifting Labor’S Voice: A Principled Path Toward Greater Worker Voice And Power Within American Corporate Governance, Leo E. Strine Jr., Aneil Kovvali, Oluwatomi O. Williams

Faculty Scholarship at Penn Law

In view of the decline in gain sharing by corporations with American workers over the last forty years, advocates for American workers have expressed growing interest in allowing workers to elect representatives to corporate boards. Board level representation rights have gained appeal because they are a highly visible part of codetermination regimes that operate in several successful European economies, including Germany’s, in which workers have fared better.

But board-level representation is just one part of the comprehensive codetermination regulatory strategy as it is practiced abroad. Without a coherent supporting framework that includes representation from the ground up, as is ...


Duty And Diversity, Chris Brummer, Leo E. Strine Jr. Feb 2021

Duty And Diversity, Chris Brummer, Leo E. Strine Jr.

Faculty Scholarship at Penn Law

In the wake of the brutal deaths of George Floyd and Breonna Taylor, a slew of reforms from Wall Street to the West Coast have been introduced, all aimed at increasing Diversity, Equity, and Inclusion (“DEI”) in corporations. Yet the reforms face difficulties ranging from possible constitutional challenges to critical limitations in their scale, scope and degree of legal obligation and practical effects. In this Article, we provide an old answer to the new questions facing DEI policy, and offer the first close examination of how corporate law duties impel and facilitate corporate attention to diversity. Specifically, we show that ...


Should Corporations Have A Purpose?, Jill E. Fisch, Steven Davidoff Solomon Feb 2021

Should Corporations Have A Purpose?, Jill E. Fisch, Steven Davidoff Solomon

Faculty Scholarship at Penn Law

The hot topic in corporate governance is the debate over corporate purpose and, in particular, whether corporations should shift their purpose from the pursuit of shareholder wealth to pursuing a broader conception of stakeholder or societal value. We argue that this debate has overlooked the critical predicate questions of whether a corporation should have a purpose at all and, if so, why,

We address these questions by examining the historical, legal and theoretical justifications for corporate purpose. We find that none of the three provides a basis for requiring a corporation to articulate a particular purpose or for a given ...


Reconsidering The Evolutionary Erosion Account Of Corporate Fiduciary Law, William W. Bratton Jan 2021

Reconsidering The Evolutionary Erosion Account Of Corporate Fiduciary Law, William W. Bratton

Faculty Scholarship at Penn Law

This Article reconsiders the dominant account of corporate law’s duty of loyalty, which asserts that the courts have steadily relaxed standards of fiduciary scrutiny applied to self-dealing by corporate managers across more than a century of history—to the great detriment of the shareholder interest. The account originated in Harold Marsh, Jr.’s foundational article, Are Directors Trustees? Conflicts of Interest and Corporate Morality, published in The Business Lawyer in 1966. Marsh’s showing of historical lassitude has been successfully challenged in a recent book by Professor David Kershaw. This Article takes Professor Kershaw’s critique a step further ...


Limited Liability Partnerships: An (Overlooked) Hole In The Shield, Lin (Lynn) Bai, Sarah Harden Jan 2021

Limited Liability Partnerships: An (Overlooked) Hole In The Shield, Lin (Lynn) Bai, Sarah Harden

Faculty Articles and Other Publications

There is a split of judicial authority on whether limited liability applies when the creditor is a partner of a limited liability partnership. The New York Court of Appeals narrowly interpreted the partnership statute and denied the applicability, but the California Court of Appeals upheld it. The difference has been overlooked by the legal and business communities. This paper shows that the narrow interpretation is inconsistent with the legislative intent, laden with procedural obstacles in enforcement, and inharmonious with settled legal doctrines and tenets of law-making.


Shareholder Primacy And The Moral Obligation Of Directors, Mark J. Loewenstein, Jay Geyer Jan 2021

Shareholder Primacy And The Moral Obligation Of Directors, Mark J. Loewenstein, Jay Geyer

Articles

One of the most written-about and important topics in corporate law is the fiduciary obligations of corporate directors. Increasingly, critics of American capitalism have urged that corporations, and implicitly, corporate directors, act in a more socially responsible fashion and thus eschew the notion that shareholder primacy is the exclusive guide to a director’s fiduciary duty. Under this view, directors must consider the effect of their actions on “stakeholders” other than shareholders and be guided by morality—doing the right thing—when making business judgments.

When directors move away from shareholder primacy, however, decision-making becomes more difficult and problematic. This ...


Reversing The Fortunes Of Active Funds, Adi Libson, Gideon Parchomovsky Jan 2021

Reversing The Fortunes Of Active Funds, Adi Libson, Gideon Parchomovsky

Faculty Scholarship at Penn Law

In 2019, for the first time in the history of U.S. capital markets, passive funds surpassed active funds in terms of total assets under management. The continuous growth of passive funds at the expense of active funds is a genuine cause for concern. Active funds monitor the management and partake of decision-making in their portfolio companies. Furthermore, they improve price efficiency and managerial performance by engaging in informed trading. The buy/sell decisions of active funds provide other market participants reliable information about the quality of firms. The cost of active investing is significant and it is exclusively borne ...


Is There A Delaware Effect For Controlled Firms?, Edward Fox Jan 2021

Is There A Delaware Effect For Controlled Firms?, Edward Fox

Articles

The impact of Delaware incorporation on firm value remains a central question in corporate law. Despite the difficulty scholars have had in agreeing on an answer to this question, there is a consensus that Delaware has long enjoyed stable and important advantages in the expertise of its judiciary and its extensive case law. These advantages are believed to be particularly important for firms with a controlling shareholder. This Article attempts to empirically measure the effect of Delaware incorporation on these controlled firms and thus helps us understand the market value of Delaware’s judiciary and case law. It finds, surprisingly ...


Noncompetes And Other Post-Employment Restraints On Competition: Empirical Evidence From Trade Secret Litigation, Christopher B. Seaman Jan 2021

Noncompetes And Other Post-Employment Restraints On Competition: Empirical Evidence From Trade Secret Litigation, Christopher B. Seaman

Scholarly Articles

Noncompete clauses in employment agreements are both common and controversial. An estimated twenty-eight million Americans—nearly twenty percent of the U.S. workforce—are currently bound by a noncompete. The traditional view that noncompete agreements can facilitate increased productivity by encouraging employers to invest in employee training has been challenged by numerous legal and economics scholars in recent years, who contend noncompetes hinder employment options for skilled workers and limit information spillovers, which are both vital drivers of innovation. Based on these claims, several states have recently limited the enforcement of noncompetes, and legislation is pending at the federal level ...


Does Tax Matter? Evidence On Executive Compensation After 162(M)'S Repeal, Gregg Polsky, Brian Galle, Andrew Lund Jan 2021

Does Tax Matter? Evidence On Executive Compensation After 162(M)'S Repeal, Gregg Polsky, Brian Galle, Andrew Lund

Scholarly Works

As part of the most sweeping federal tax reform in a generation, the Tax Cuts and Jobs Act (“TCJA”) radically altered the tax treatment of compensation paid to senior executives of public companies. Prior to the TCJA, payment of such compensation in excess of one million dollars was non-deductible except to the extent the compensation was performance-based. The TCJA eliminated the exception so that all senior executive compensation above one million dollars is now non-deductible regardless of whether it is performance-based or not.

This reform provides a natural experiment to study the role of tax law in influencing managerial pay ...


From Mandates To Governance: Restructuring The Employment Relationship, Brett Mcdonnell, Matthew T. Bodie Jan 2021

From Mandates To Governance: Restructuring The Employment Relationship, Brett Mcdonnell, Matthew T. Bodie

All Faculty Scholarship

Employers are saddled with a dizzying array of responsibilities to their employees. Meant to advance a wide array of workplace policies, these demands have saddled employment with the burden of numerous social ends. However, that system has increasingly come under strain, as companies seek to shed employment relationships and workers lose important protections when terminated. In this Article, we propose that employers and employees should be given greater flexibility with a move from mandates to governance. Many of the employment protections required from employers stem from employees’ lack of organizational power. The imbalance is best addressed by providing workers with ...


Codetermination In Theory And Practice, Grant M. Hayden, Matthew T. Bodie Jan 2021

Codetermination In Theory And Practice, Grant M. Hayden, Matthew T. Bodie

All Faculty Scholarship

A system of shared corporate governance between shareholders and workers, codetermination has been mostly ignored within the U.S. corporate governance literature. When it has made an appearance, it has largely served as a foil for shareholder primacy and an example of corporate deviance. However, over the last twenty years—and especially in the last five—empirical research on codetermination has shown surprising results as to the system’s efficiency, resilience, and benefits to stakeholders. This Article reviews the extant American legal scholarship on codetermination and provides a fresh look at the current state of codetermination theory and practice. Rather ...


Challenging Gender Discrimination In Closely Held Firms: The Hope And Hazards Of Corporate Oppression Doctrine, Meredith R. Miller Jan 2021

Challenging Gender Discrimination In Closely Held Firms: The Hope And Hazards Of Corporate Oppression Doctrine, Meredith R. Miller

Scholarly Works

The #MeToo Movement has ushered sexual harassment out of the shadows and thrown a spotlight on the gender pay gap in the workplace. Harassment and unfair treatment have, however, been difficult to extinguish. This has been true for all workers, including partners – those women who are owners in their firms and claim that they have suffered harassment or unfair treatment based on gender. That is because a partner’s lawsuit for discrimination often will suffer an insurmountable hurdle: plaintiff’s status as a partner in the firm means that they may not be considered an “employee” under the relevant employment ...


Pension Fiduciaries And Climate Change: A Canadian Perspective, Maziar Peihani Jan 2021

Pension Fiduciaries And Climate Change: A Canadian Perspective, Maziar Peihani

Faculty Publications

Climate change has emerged as a major issue of financial risk for Canadian pension funds when determining where to place investments. The author argues that while such pension funds recognize climate change as an issue that holds the potential for significant financial risk, the funds’ current approach to climate-related risks faces critical limitations. The author identifies the current practices of the five largest pension funds in Canada when faced with climate-related financial risks, then discusses the key shortcomings in current practices among the pension funds in three main areas.
First, the author examines organizational governance, which seeks to understand investment ...


Pluralism And Convergence: Judicial Standardization In Canadian Corporate Law, Camden Hutchison Jan 2021

Pluralism And Convergence: Judicial Standardization In Canadian Corporate Law, Camden Hutchison

Faculty Publications

This article uses statistical analysis of judicial decisions to address whether (and to what extent) the common law of corporations varies among the provinces. The primary findings are: (1) as measured by the number of case citations, provincial courts of appeal favour precedent from their home provinces; (2) the Supreme Court of Canada exerts a powerful standardizing influence across the provinces; and (3) on balance (and despite the “home province” bias of provincial courts of appeal), Canadian corporate law is largely homogeneous, with little variation among provincial jurisdictions. This article concludes that—for a variety of reasons—it is unlikely ...


New Perspectives In Corporate Law, Asaf Raz Jan 2021

New Perspectives In Corporate Law, Asaf Raz

SJD Dissertations

“The life of the law has not been logic: it has been experience,” wrote Oliver Wendell Holmes in 1881, laying the foundation for what would become the legal realist movement, and subsequently much of the way we think about, practice, adjudicate, and study the law today. Yet what if the life of the law has been both logic and experience? What if the law has its own structure, taxonomy, and unwaivable principles, which in turn operate to make the world a better place, even in extra-legal terms (economic, social, or otherwise)? This debate, regarding the proper balance between internal and ...


Cleaning Corporate Governance, Jens Frankenreiter, Cathy Hwang, Yaron Nili, Eric L. Talley Jan 2021

Cleaning Corporate Governance, Jens Frankenreiter, Cathy Hwang, Yaron Nili, Eric L. Talley

Faculty Scholarship

Although empirical scholarship dominates the field of law and finance, much of it shares a common vulnerability: an abiding faith in the accuracy and integrity of a small, specialized collection of corporate governance data. In this paper, we unveil a novel collection of three decades’ worth of corporate charters for thousands of public companies, which shows that this faith is misplaced.

We make three principal contributions to the literature. First, we label our corpus for a variety of firm- and state-level governance features. Doing so reveals significant infirmities within the most well-known corporate governance datasets, including an error rate exceeding ...


Contractual Evolution, Matthew Jennejohn, Julian Nyarko, Eric L. Talley Jan 2021

Contractual Evolution, Matthew Jennejohn, Julian Nyarko, Eric L. Talley

Faculty Scholarship

Conventional wisdom portrays contracts as static distillations of parties’ shared intent at some discrete point in time. In reality, however, contract terms evolve in response to their environments, including new laws, legal interpretations, and economic shocks. While several legal scholars have offered stylized accounts of this evolutionary process, we still lack a coherent, general theory that broadly captures the dynamics of real-world contracting practice. This paper advances such a theory, in which the evolution of contract terms is a byproduct of several key features, including efficiency concerns, information, and sequential learning by attorneys who negotiate several deals over time. Each ...


Codeterminination In Theory And Practice, Grant M. Hayden, Matthew T. Bodie Jan 2021

Codeterminination In Theory And Practice, Grant M. Hayden, Matthew T. Bodie

Faculty Journal Articles and Book Chapters

Codetermination—a system of shared corporate governance between shareholders and workers—has been mostly ignored within the U.S. corporate governance literature. When it has made an appearance, it has largely served as a foil for shareholder primacy and as an example of corporate deviance. However, over the last fifteen years—and especially in the last five—empirical research on codetermination has shown surprising results as to the system’s efficiency, resilience, and benefits to stakeholders.

This Article reviews the extant American legal scholarship on codetermination and provides a fresh look at the current state of codetermination theory and practice ...


Executive Pay Clawbacks And Their Taxation, David Walker Jan 2021

Executive Pay Clawbacks And Their Taxation, David Walker

Faculty Scholarship

Executive pay clawback provisions require executives to repay previously received compensation under certain circumstances, such as a downward adjustment to the financial results upon which their incentive pay was predicated. The use of these provisions is on the rise, and the SEC is expected to soon finalize rules implementing a mandatory, no-fault clawback requirement enacted as part of the Dodd-Frank legislation. The tax issue raised by clawbacks is this: should executives be allowed to recover taxes previously paid on compensation that is returned to the company as a result of a clawback provision? This Article argues that a full tax ...


Corporate Adolescence: Why Did “We” Not Work?, Donald C. Langevoort, Hillary A. Sale Jan 2021

Corporate Adolescence: Why Did “We” Not Work?, Donald C. Langevoort, Hillary A. Sale

Georgetown Law Faculty Publications and Other Works

This article explores a series of rent-seeking behaviors and fiduciary deficits that are playing a role in the “growth” and demise of U.S. companies. Start-up financing occurs through exemptions that remove disclosure obligations required in public markets, assuming that private ordering suffices. The exemptive-privilege premise is that parties to financing rounds will be faithful agents, i.e., fiduciaries, to their sources of capital. Where there are conflicts of interest, fiduciary deficits will arise unless either the threat of litigation for breaches of duty sufficiently deters the resulting opportunism or the sources of capital are themselves sufficiently watchful and savvy ...


Dr. Marye. Maida Order Denying Defendant Clerisy Corporation’S Motion For Interlocutory Injunction And Plaintiffs’ Motion For Judgment On The Pleadings, John J. Goger Dec 2020

Dr. Marye. Maida Order Denying Defendant Clerisy Corporation’S Motion For Interlocutory Injunction And Plaintiffs’ Motion For Judgment On The Pleadings, John J. Goger

Georgia Business Court Opinions

No abstract provided.