Law Commons^™

The Exit Structure Of Venture Capital, D. Gordon Smith

Faculty Scholarship

Venture capital contracts contain extensive provisions regulating exit by the venture capitalists. In this Article, Professor Smith employs financial contracting theory in conjunction with original data collected from 367 venture-backed companies to analyze these exit provisions. He concludes that the combination of exit provisions in a typical venture capital relationship serves to lock venture capitalists into the investment during the initial stage. In later stages of the relationship, the venture capitalists acquire increasing control over exit by securing additional seats on the board of directors and by obtaining contractual exit rights. The result is a sophisticated transfer of control from …

Capital Requirements In United States Corporation Law, Richard A. Booth

Working Paper Series

This paper focuses on corporation law in the United States as it relates to capital contributions and capital maintenance. In other words, the paper addresses the provisions of corporation law relating to (1) the obligation of investors to contribute to the corporation a specified amount of capital and (2) the obligation of the corporation to maintain a specified amount of capital (and not to pay it back to the stockholders in the form of dividends or payments to repurchase or redeem shares). Traditionally, the amount of capital that must be contributed to and maintained by a corporation is called the …

Capital Requirements In United States Corporation Law, Richard A. Booth Marbury Research Professor Of Law

Faculty Scholarship

This paper focuses on corporation law in the United States as it relates to capital contributions and capital maintenance. In other words, the paper addresses the provisions of corporation law relating to (1) the obligation of investors to contribute to the corporation a specified amount of capital and (2) the obligation of the corporation to maintain a specified amount of capital (and not to pay it back to the stockholders in the form of dividends or payments to repurchase or redeem shares). Traditionally, the amount of capital that must be contributed to and maintained by a corporation is called the …

Share Price As A Poor Criterion For Good Corporate Law, Lynn A. Stout

Cornell Law Faculty Publications

Academics, reformers, and business leaders all yearn for a single, objective, easy-to-read measure of corporate performance that can be used to judge the quality of public corporation law and practice. This collective desire is so powerful that it has led many commentators to grab onto the first marginally plausible candidate: share price.

Contemporary economic and corporate theory, as well as recent business history, nevertheless warn us against unthinking acceptance of share price as a measure of corporate performance. This Essay offers a brief reminder of some of the many reasons why stock prices often fail to reflect true corporate performance, …

Spare The Rod, Spoil The Director? Revitalizing Directors' Fiduciary Duty Through Legal Liability, Lisa M. Fairfax

Faculty Scholarship

It appears that our society has tacitly agreed to spare corporate directors any significant legal liability—which includes both financial and incarceration—for failing to perform their duties as board members. Thus, over the last twenty years, there has been a virtual elimination of legal liability—particularly in the form of financial penalties—for directors who breach their fiduciary duty of care. This is true despite the fact that we entrust directors with the awesome responsibility of monitoring all of America's corporations as well as the officers and agents within those corporations. More surprisingly, this tacit agreement against legal liability for directors has persisted …

The Corporate Form As A Solution To A Discursive Dilemma, Edward B. Rock

All Faculty Scholarship

I examine the connection between the discursive dilemma and corporate law. The discursive dilemma (or doctrinal paradox) is a distinctive social choice problem that was first identified by Kornhauser and Sager and later used as the basis for a theory of organizational personality by Pettit. I examine the ways in which the corporate form prevents the emergence of the discursive dilemma in the firm context and the extent to which the presence of the discursive dilemma can provide the foundation for a theory of corporate personality.

Economic Efficiency And The Parameters Of Fairness: A Marriage Of Marketplace Morals And The Ethic Of Care, Barbara Ann White

All Faculty Scholarship

This article provides resolutions to a number of conundrums that have vexed policy-makers and scholars for some decades. The most significant conclusion is that efficiency and fairness concerns do not conflict but rather mutually support each other in the goal of maximizing social welfare. This is contrary to the more widely-held view by both advocates of law and economic reasoning and those favoring deontological concerns that a trade-off between fairness and efficiency is inevitable. This article demonstrates how the coalescence of the two frameworks, the cultivation of fairness with law and economics' efficiency maximization, yields greater enhancements of social welfare …

The Fair Value Of Cornfields In Delaware Appraisal Law, Lawrence Hamermesh, Michael L. Wachter

All Faculty Scholarship

The Delaware Supreme Court’s opinions in Weinberger and Technicolor have left a troublesome uncertainty in defining the proper approach to the valuation of corporate shares. That uncertainty – increasingly important as going private mergers become more frequent – can be resolved by a blend of financial and doctrinal analysis. The primary problem—the potential opportunism by controlling shareholders in timing going private mergers—can be addressed by a more complete understanding of corporate finance. The definition of fair value must include not only the present value of the firm’s existing assets, but also the future opportunities to reinvest free cash flow, including …

Digital Vat And Development: D-Vat And D-Velopment, Richard Thompson Ainsworth

Faculty Scholarship

This article suggests that the time is right for developing countries to consider adopting a comprehensive, fully digital VAT, (complete with certified software and trusted third party intermediaries who could assume all of the taxpayer's VAT responsibilities) within the limited group of enterprises encompassed by the large taxpayer group.

Since the e-commerce revolution began in the 1990's, tax policy discussions in developed economies have enlisted "e-solutions" to streamline consumption tax administration, as well as to resolve technical problems.

Inspiration came from the marketplace. Policy-makers observed widespread, business-initiated e-solutions to consumption tax compliance problems in a wide spectrum of jurisdiction. There …

Is Forum-Shopping Corrupting America's Bankruptcy Courts? Review Of Lynn M. Lopucki, "Courting Failure: How Competition For Big Cases Is Corrupting The Bankruptcy Courts", Todd J. Zywicki

George Mason University School of Law Working Papers Series

In his new book, Courting Failure: How Competition for Big Cases is Corrupting the Bankruptcy Courts, Professor Lynn LoPucki’s book argues that that current bankruptcy venue rules have spawned an improper “competition for big cases” that has “corrupted” America’s bankruptcy courts. LoPucki argues that this competition has harmed the bankruptcy system and the economy, transferring wealth from creditors and employees to incumbent management and bankruptcy professionals. He also argues that the competition that has corrupted the American bankruptcy system is being replicated internationally, resulting in a similar competition and similar harm on the global stage.

This essay reviews LoPucki’s book …

Regulating Section 527 Organizations, Gregg D. Polsky, Guy-Uriel E. Charles

Scholarly Works

In this Essay, we consider whether the Federal Election Commission (FEC) has the authority to regulate independent 527 organizations (e.g., Swiftboat Veterans for Truth, Moveon.org, etc.) as political committees under the Federal Election Campaign Act. This issue, which was hotly debated during the last election cycle when it was considered and ultimately tabled by the FEC, is an extremely complex one that requires a deep understanding of election, tax, administrative, and constitutional law. After considering how these areas of law intersect, we conclude that the FEC lacks the authority to regulate independent 527 organizations as political committees.

The Role Of Groups In Norm Transformation: A Dramatic Sketch, In Three Parts, Robert B. Ahdieh

Faculty Scholarship

Legal scholars, as well as economists, have focused limited attention on the role of coordinated groups of market participants - committees, clubs, associations, and the like - in social ordering generally and in the evolution of norms particularly. One might trace this neglect to some presumptive orientation to state actors (expressive law) and autonomous individuals (norm entrepreneurs) as the sole parties of interest in social change. Yet, alternative stories of social ordering and norm change might also be told. Dramatic recent changes in the contracting practices of the sovereign debt markets offer one such story.

Using the latter by way …

From "Federalization" To "Mixed Governance" In Corporate Law: A Defense Of Sarbanes-Oxley, Robert B. Ahdieh

Faculty Scholarship

Since the very moment of its adoption, the Sarbanes-Oxley Act of 2002 has been subject to a litany of critiques, many of them seemingly well-placed. The almost universal condemnation of the Act for its asserted 'federalization' of corporate law, by contrast, deserves short shrift. Though widely invoked - and blithely accepted - dissection of this argument against the legislation shows it to rely either on flawed assumptions or on normative preferences not ordinarily acknowledged (or perhaps even accepted) by those who criticize Sarbanes-Oxley for its federalization of state corporate law.

Once we appreciate as much, we can begin by replacing …

Why Defer To Managers? A Strong-Form Efficiency Model, Richard E. Kihlstrom, Michael L. Wachter

All Faculty Scholarship

We compare the efficiency with which management discretion and shareholder choice regulate hostile tender offers. This is the first paper in a long running debate that rigorously compares these legal rules to analyze both the critical informational assumptions and the interplay of those assumptions with principles of financial market efficiency. A critical innovation of our model is its focus on an informed management’s choice among alternative corporate policies under the protection of the business judgment rule, but where agency costs exist. We assume that corporate assets and reinvestment opportunities are efficiently priced by financial markets, but that markets never learn …

Slides: Long Term Management Of Community Forests: Some Eomf Partner Perspectives, Brian Barkley

Community-Owned Forests: Possibilities, Experiences, and Lessons Learned (June 16-19)

Presenter: Brian Barkley, Ontario Model Forest, Canada

18 slides

Slides: Sustainable Forest Management Of Community Forest Lands: It's A Matter Of Balance, Dave Epperly

Community-Owned Forests: Possibilities, Experiences, and Lessons Learned (June 16-19)

Presenter: Dave Epperly, St. Louis County Forest, MN

28 slides

Slides: New England Forestry Foundation: Private Forests For The Public Good Since 1944, Frank Reed

Community-Owned Forests: Possibilities, Experiences, and Lessons Learned (June 16-19)

Presenter: Frank Reed, New England Forestry Foundation

9 slides

Slides: Forest Grove Municipal Watershed: Using Citizen Involvement To Break Gridlock, Scott Ferguson

Community-Owned Forests: Possibilities, Experiences, and Lessons Learned (June 16-19)

Presenter: Scott Ferguson, City of Forest Grove, OR

23 slides

Slides: Forestry On The Yakama Reservation: The Balancing Of Natural Resources Management, Philip Rigdon

Community-Owned Forests: Possibilities, Experiences, and Lessons Learned (June 16-19)

Presenter: Philip Rigdon, Yakama Nation, Toppenish, WA

64 slides

Slides: Long Term Forest Management: Creating A Forest Management Plan, Don Johnson

Community-Owned Forests: Possibilities, Experiences, and Lessons Learned (June 16-19)

Presenter: Don Johnson, Forest Land Improvement, Inc., NH town forests

51 slides

Slides: Funding For Acquisitions: Creative And Emerging Mechanisms To Tap Private Funds, Peter R. Stein

Community-Owned Forests: Possibilities, Experiences, and Lessons Learned (June 16-19)

Presenter: Peter R. Stein, General Partner, The Lyme Timber Company, Hanover, NH

9 slides

Slides: The Downhill Lever Of Current Forest Finance, Tom Tuchmann

Community-Owned Forests: Possibilities, Experiences, and Lessons Learned (June 16-19)

Presenter: Tom Tuchmann, US Forest Capital, Portland, OR

6 slides

Slides: Public Funding Sources In Mt: State Funding Sources, 3 Partnerships Examples, Alan Wood

Community-Owned Forests: Possibilities, Experiences, and Lessons Learned (June 16-19)

Presenter: Alan Wood, MT Department of Fish, Wildlife and Parks, Helena, MT

12 slides

Slides: Community-Owned Forests: Funding For Acquisition, Missoula, Mt, Tom Cassidy

Community-Owned Forests: Possibilities, Experiences, and Lessons Learned (June 16-19)

Presenter: Thomas Cassidy, The Nature Conservancy, VA

21 slides

Community Forests: A Perspective, Robert Mccullough

Community-Owned Forests: Possibilities, Experiences, and Lessons Learned (June 16-19)

22 pages.

"Robert McCullough teaches in the University of Vermont Graduate Program in Historic Preservation. He wrote The Landscape of Community: Communal Forests in New England."

Slides: Changes In Timberland Ownership: The New Hampshire Experience, Paul Doscher

Community-Owned Forests: Possibilities, Experiences, and Lessons Learned (June 16-19)

Presenter: Paul Doscher, Society for the Protection of New Hampshire Forests, Concord, NH

20 slides

Slides: Randolph Community Forest Partnerships, Ben Eisenberg

Community-Owned Forests: Possibilities, Experiences, and Lessons Learned (June 16-19)

Presenter: Ben Eisenberg, Randolph Community Forest, NH

24 slides

Slides: The Trust For Public Land: Conserving Land For People, Ernest Cook

Community-Owned Forests: Possibilities, Experiences, and Lessons Learned (June 16-19)

Presenter: Ernest Cook, Senior Vice President, Conservation Finance Program, The Trust for Public Land, Boston, MA

19 slides

Slides: Coolbough Natural Areas: Community Forest, Brooks Township, Michigan, Dale Block

Community-Owned Forests: Possibilities, Experiences, and Lessons Learned (June 16-19)

Presenter: Dale Block, Brooks Township Forest, MI

35 slides

Slides: Community Ownership And Management Of Productive Forestland: Building Natural And Social Capital, Keith Bisson, Rodger Krussman

Community-Owned Forests: Possibilities, Experiences, and Lessons Learned (June 16-19)

Presenters: Keith Bisson, Quebec-Labrador Foundation, and Rodger Krussman, The Trust for Public Land

20 slides