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Full-Text Articles in Law

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 ...


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 ...


Federal Forum Provisions And The Internal Affairs Doctrine, Dhruv Aggarwal, Albert H. Choi, Ofer Eldar Aug 2020

Federal Forum Provisions And The Internal Affairs Doctrine, Dhruv Aggarwal, Albert H. Choi, Ofer Eldar

Articles

A key question at the intersection of state and federal law is whether corpo- rations can use their charters or bylaws to restrict securities litigation to federal court. In December 2018, the Delaware Chancery Court answered this question in the negative in the landmark decision Sciabacucchi v. Salzberg. The court invalidated “federal forum provisions” (“FFPs”) that allow companies to select federal district courts as the exclusive venue for claims brought under the Secur- ities Act of 1933 (“1933 Act”). The decision held that the internal affairs doc- trine, which is the bedrock of U.S. corporate law, does not permit ...


Golden Parachutes And The Limits Of Shareholder Value, Albert H. Choi, Andrew C.W. Lund, Robert Schonlau Jan 2020

Golden Parachutes And The Limits Of Shareholder Value, Albert H. Choi, Andrew C.W. Lund, Robert Schonlau

Articles

With the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, Congress attempted to constrain change-in-control payments (also known as “golden parachutes”) by giving shareholders the right to approve or disapprove such payments on an advisory basis. This Essay is the first to empirically examine the experience with the Say-on-Golden-Parachute (“SOGP”) vote. We find that unlike shareholder votes on proposed mergers, there is a significant amount of variation with respect to votes on golden parachutes. Notwithstanding the variation, however, the SOGP voting regime is likely ineffective in controlling golden parachute (“GP”) compensation. First, proxy advisors seem ...


Crowdfunding Issuers In The United States, Andrew A. Schwartz Jan 2020

Crowdfunding Issuers In The United States, Andrew A. Schwartz

Articles

Startup companies can now legally sell shares of stock, bonds, or other securities to the broad public using equity crowdfunding, a new type of online capital market modeled on Kickstarter and other reward crowdfunding websites. Through equity crowdfunding, entrepreneurs can go directly to the broad public (the “crowd”) for investment, without having to go through the usual (and costly) process of an initial public offering (IPO). Equity crowdfunding thus offers a chance for all entrepreneurs, regardless of their physical location, gender, or anything else, to solicit investors and raise capital.

In 2012, new federal legislation—the Jumpstart Our Business Startups ...


Remutualization, Erik F. Gerding Jan 2020

Remutualization, Erik F. Gerding

Articles

Policymakers need to rediscover the organizational form of business entity as a tool of financial regulation. Recent and classic scholarship has produced evidence that financial institutions organized as alternative entity forms – including investment bank partnerships and banks and insurance companies organized as mutual or cooperatives – tend to take less risk, exploit customers/consumer less, or commit less misconduct compared to counterparts organized as investor-owned corporations. This article builds off the work of Hill and Painter on investment banks organized as partnerships, Hansmann on the history and economics of banks and insurance companies organized as mutuals and cooperatives, and other scholars ...


Pushing The Envelope: Salzberg V. Sciabacucchi And Delaware's Evolving View Of The Internal Affairs Doctrine, Mark J. Loewenstein Jan 2020

Pushing The Envelope: Salzberg V. Sciabacucchi And Delaware's Evolving View Of The Internal Affairs Doctrine, Mark J. Loewenstein

Articles

In January, 2020, the Delaware Supreme Court handed down its decision in Salzberg v. Sciabacucchi, upholding a provision in a certificate of incorporation that designated the federal courts as the exclusive jurisdiction for the litigation of claims under the federal Securities Act of 1933. The inclusion of these provisions in Delaware charters and bylaws – often referred to as “Federal Forum Provisions” or FFPs – raised important questions as to the reach of the internal affairs doctrine. This doctrine provides that the jurisdiction of incorporation regulates the internal affairs of its corporations: the relationship among and between the corporate officers, directors and ...


Innovating Inclusion: The Impact Of Women On Private Company Boards, Jennifer S. Fan Jan 2019

Innovating Inclusion: The Impact Of Women On Private Company Boards, Jennifer S. Fan

Articles

Eight percent—that is the percentage of women who serve on the boards of directors of private high technology companies. Private companies, particularly high technology companies, have transformed citizens’ daily lives, while the unprecedented availability of private capital has allowed those companies to remain private longer. This rise, however, has also obscured some of the weaknesses of private companies, which are not subject to public disclosure and regulatory oversight: rampant sexual harassment, the lack of women leaders in technology companies, the relative absence of female venture capitalists, and the dearth of female board members, to name a few. Yet thus ...


From Governess To Governance: Advancing Gender Equity In Corporate Leadership, Kellye Y. Testy Jan 2019

From Governess To Governance: Advancing Gender Equity In Corporate Leadership, Kellye Y. Testy

Articles

Even as corporate influence on every aspect of life continues to grow, women (overall, and especially women of color) remain woefully underrepresented in corporate governance roles, particularly on boards of directors. This lack of gender diversity in the corporate boardroom is prevalent not only in more established companies but also persists—often at even higher levels— in new ventures as well. This Essay details the persistent lack of progress over more than a half century in diversifying leadership in corporate governance. This progress is especially concerning given that the benefits of diversity for sound decisionmaking and overall corporate welfare have ...


Woke Capital: The Role Of Corporations In Social Movements, Jennifer S. Fan Jan 2019

Woke Capital: The Role Of Corporations In Social Movements, Jennifer S. Fan

Articles

Iconic companies such as Apple, BlackRock, Delta, Google (now Alphabet), Lyft, Salesforce, and Starbucks, have recently taken very public stances on various social issues. In the past, corporations were largely silent in the face of them. Now the opposite is true—corporations play an increasingly visible role in social movements and there are times when corporations have led the discussion, particularly in areas where they have a self-interest or public opinion supports it. The enormous influence corporations wield on both the economic and social fabric of our society due to the legal framework and norms under which they operate make ...


Mens Rea Reform And Its Discontents, Benjamin Levin Jan 2019

Mens Rea Reform And Its Discontents, Benjamin Levin

Articles

This Article examines the debates over recent proposals for “mens rea reform.” The substantive criminal law has expanded dramatically, and legislators have criminalized a great deal of common conduct. Often, new criminal laws do not require that defendants know they are acting unlawfully. Mens rea reform proposals seek to address the problems of overcriminalization and unintentional offending by increasing the burden on prosecutors to prove a defendant’s culpable mental state. These proposals have been a staple of conservative-backed bills on criminal justice reform. Many on the left remain skeptical of mens rea reform and view it as a deregulatory ...


Negotiating The Lender Of Last Resort: The 1913 Federal Reserve Act As A Debate Over Credit Distribution, Nadav Orian Peer Jan 2019

Negotiating The Lender Of Last Resort: The 1913 Federal Reserve Act As A Debate Over Credit Distribution, Nadav Orian Peer

Articles

“Lending of last resort” is one of the key powers of central banks. As a lender of last resort, the Federal Reserve (the “Fed”) famously supports commercial banks facing distressed liquidity conditions, thereby mitigating destabilizing bank runs. Less famously, lender-of-last-resort powers also influence the distribution of credit among different groups in society and therefore have high stakes for economic inequality. The Fed’s role as a lender of last resort witnessed an unprecedented expansion during the 2007–2009 Crisis when the Fed invoked emergency powers to lend to a new set of borrowers known as “shadow banks”. The decision proved ...


Everything Old Is New Again: Does The '.Sucks' Gtld Change The Regulatory Paradigm In North America?, Jacqueline D. Lipton Jan 2019

Everything Old Is New Again: Does The '.Sucks' Gtld Change The Regulatory Paradigm In North America?, Jacqueline D. Lipton

Articles

In 2012, the Internet Corporation for Assigned Names and Numbers (“ICANN”) took the unprecedented step of opening up the generic Top Level Domain (“gTLD”) space for entities who wanted to run registries for any new alphanumeric string “to the right of the dot” in a domain name. After a number of years of vetting applications, the first round of new gTLDs was released in 2013, and those gTLDs began to come online shortly thereafter. One of the more contentious of these gTLDs was “.sucks” which came online in 2015. The original application for the “.sucks” registry was somewhat contentious with ...


Disregarding The Salomon Principle: An Empirical Analysis, 1885–2014, Peter B. Oh, Alan J. Dignam Jan 2019

Disregarding The Salomon Principle: An Empirical Analysis, 1885–2014, Peter B. Oh, Alan J. Dignam

Articles

For over a century UK courts have struggled to negotiate a coherent approach to the circumstances in which the Salomon principle –that a corporation is a separate legal entity–will be disregarded. Empirical analysis can facilitate our understanding of this mercurial area of the law. Examining UK cases from 1885 to 2014, we created a final dataset of 213 cases coded for 15 different categories. Key findings confirm historical patterns of uncertainty and a low but overall fluctuating disregard rate, declining recently. Criminal/fraud/deception claims link strongly to disregard outcomes. Private law rates are low but tort claims have ...


Texas Gulf Sulphur And The Genesis Of Corporate Liability Under Rule 10b-5, Adam C. Pritchard, Robert B. Thompson Oct 2018

Texas Gulf Sulphur And The Genesis Of Corporate Liability Under Rule 10b-5, Adam C. Pritchard, Robert B. Thompson

Articles

This Essay explores the seminal role played by SEC v. Texas Gulf Sulphur Co. in establishing Rule 10b-5’s use to create a remedy against corporations for misstatements made by their officers. The question of the corporation’s liability for private damages loomed large for the Second Circuit judges in Texas Gulf Sulphur, even though that question was not directly at issue in an SEC action for injunctive relief. The judges considered both, construing narrowly “in connection with the purchase or sale of any security,” and the requisite state of mind required for violating Rule 10b-5. We explore the choices ...


(At Least) Thirteen Ways Of Looking At Election Lies, Helen Norton Jan 2018

(At Least) Thirteen Ways Of Looking At Election Lies, Helen Norton

Articles

Lies take many forms. Because lies vary so greatly in their motivations and consequences (among many other qualities), philosophers have long sought to catalog them to help make sense of their diversity and complexity. Legal scholars too have classified lies in various ways to explain why we punish some and protect others. This symposium essay offers yet another taxonomy of lies, focusing specifically on election lies — that is, lies told during or about elections. We can divide and describe election lies in a wide variety of ways: by speaker, by motive, by subject matter, by audience, by means of delivery ...


The Evolution Of Entrepreneurial Finance: A New Typology, J. Brad Bernthal Jan 2018

The Evolution Of Entrepreneurial Finance: A New Typology, J. Brad Bernthal

Articles

There has been an explosion in new types of startup finance instruments. Whereas twenty years ago preferred stock dominated the field, startup companies and investors now use at least eight different instruments—six of which have only become widely used in the last decade. Legal scholars have yet to reflect upon the proliferation of instrument types in the aggregate. Notably missing is a way to organize instruments into a common framework that highlights their similarities and differences.

This Article makes four contributions. First, it catalogues the variety of startup investment forms. I describe novel instruments, such as revenue-based financing, which ...


Board Rooms And Jail Cells- Assessing Ngo Approaches To Private Environmental Governance, Joshua Galperin Jan 2018

Board Rooms And Jail Cells- Assessing Ngo Approaches To Private Environmental Governance, Joshua Galperin

Articles

Staff of the Nature Conservancy often find themselves in corporate board rooms. Staff of Greenpeace often find themselves in jail cells. The Nature Conservancy (TNC) prides itself on its non-confrontational, collaborative deal making, partnering closely with corporations like chemical giant Dow and agricultural lightning rod Monsanto. Both Dow and Monsanto, in fact, are members of TNC’s Business Council along with the likes of BP, Shell, and Cargill. Greenpeace, on the other hand, prides itself on direct action, civil disobedience, and non-violent confrontation. Greenpeace has launched combative operations against Dow, Monsanto, and other TNC collaborators. While business partners praise TNC ...


Piling On? An Empirical Study Of Parallel Derivative Suits, Stephen J. Choi, Jessica Erickson, Adam C. Pritchard Nov 2017

Piling On? An Empirical Study Of Parallel Derivative Suits, Stephen J. Choi, Jessica Erickson, Adam C. Pritchard

Articles

Using a sample of all companies named as defendants in securities class actions between July 1, 2005 and December 31, 2008, we study parallel suits relying on state corporate law arising out of the same allegations as the securities class actions. We test several ways that parallel suits may add value to a securities class action. Most parallel suits target cases involving obvious indicia of wrongdoing. Moreover, we find that although a modest percentage of parallel suits are filed first, over 80 percent are filed after a securities class action (termed “follow-on” parallel suits). We find that parallel suits and ...


China's 'Corporatization Without Privatization' And The Late 19th Century Roots Of A Stubborn Path Dependency, Nicholas Howson Oct 2017

China's 'Corporatization Without Privatization' And The Late 19th Century Roots Of A Stubborn Path Dependency, Nicholas Howson

Articles

This Article analyzes the contemporary program of “corporatization without privatization” in the People's Republic of China (PRC) directed at China's traditional state-owned enterprises (SOEs) through a consideration of long ago precursor enterprise establishments--starting from the last Chinese imperial dynasty's creation of “government-promoted/-supervised, merchant-financed/-operated” (guandu shangban) firms in the latter part of the nineteenth century. While analysts are tempted to see the PRC corporations with listings on international exchanges that dominate the global economy and capital markets as expressions of “convergence,” this Article argues that such firms in fact show deeply embedded aspects of path dependency ...


Contracting Out Of The Fiduciary Duty Of Loyalty: An Empirical Analysis Of Corporate Opportunity Waivers, Gabriel Rauterberg, Eric Talley Jun 2017

Contracting Out Of The Fiduciary Duty Of Loyalty: An Empirical Analysis Of Corporate Opportunity Waivers, Gabriel Rauterberg, Eric Talley

Articles

For centuries, the duty of loyalty has been the hallowed centerpiece of fiduciary obligation, widely considered one of the few “mandatory” rules of corporate law. That view, however, is no longer true. Beginning in 2000, Delaware dramatically departed from tradition by granting incorporated entities a statutory right to waive a crucial part of the duty of loyalty: the corporate opportunities doctrine. Other states have since followed Delaware’s lead, similarly permitting firms to execute “corporate opportunity waivers.” Surprisingly, more than fifteen years into this reform experiment, no study has attempted to either systematically measure the corporate response to these reforms ...


The Fallacious Objections To The Tax Treatment Of Carried Interest, Douglas A. Kahn, Jeffrey H. Kahn Jun 2017

The Fallacious Objections To The Tax Treatment Of Carried Interest, Douglas A. Kahn, Jeffrey H. Kahn

Articles

“The tax treatment of carried interest has become a notorious bete noire for many politicians and some academicians and practitioners. Both 2016 presidential candidates denounced the current tax treatment and vowed to change it. President Obama described the current treatment as a "tax loophole" which should be closed. Others have also characterized the current tax treatment as an abusive loophole.' It is the thesis of this article that those criticisms are unfounded. To the contrary, the current tax treatment accords with sound tax policy and is proper and appropriate. Given the broad approval that attended the attacks on carried interest ...


Astroturf Activism, Melissa J. Durkee Jan 2017

Astroturf Activism, Melissa J. Durkee

Articles

Corporate influence in government is more than a national issue; it is an international phenomenon. For years, businesses have been infiltrating international legal processes. They secretly lobby lawmakers through front groups: “astroturf” imitations of grassroots organizations. But because this business lobbying is covert, it has been underappreciated in both the literature and the law.

This Article unearths the “astroturf activism” phenomenon. It offers an original descriptive account that classifies modes of business access to international officials and identifies harms, then develops a critical analysis of the laws that regulate this access. I show that the perplexing set of access rules ...


Sharing Economy Meets The Sherman Act: Is Uber A Firm, A Cartel, Or Something In Between?, Mark Anderson Jan 2017

Sharing Economy Meets The Sherman Act: Is Uber A Firm, A Cartel, Or Something In Between?, Mark Anderson

Articles

The sharing economy is a new industrial structure that is made possible by instantaneous internet communication and changes in the life, work, and purchasing habits of individual entrepreneurs and consumers. Antitrust law is an economic regulatory scheme dating back to 1890 in the United States that is designed to address centrally controlled concentrations of economic power and the threats that those concentrations pose to consumer interests and economic efficiency. In order to accommodate a modern enterprise structure in which thousands or millions of independent contractors join forces to provide a service by agreement among themselves, antitrust law requires re-envisioning and ...


Standing After Snowden: Lessons On Privacy Harm From National Security Surveillance Litigation, Margot E. Kaminski Jan 2017

Standing After Snowden: Lessons On Privacy Harm From National Security Surveillance Litigation, Margot E. Kaminski

Articles

Article III standing is difficult to achieve in the context of data security and data privacy claims. Injury in fact must be "concrete," "particularized," and "actual or imminent"--all characteristics that are challenging to meet with information harms. This Article suggests looking to an unusual source for clarification on privacy and standing: recent national security surveillance litigation. There we can find significant discussions of what rises to the level of Article III injury in fact. The answers may be surprising: the interception of sensitive information; the seizure of less sensitive information and housing of it in a database for analysis ...


Disruptive Platforms, Margot Kaminski Jan 2017

Disruptive Platforms, Margot Kaminski

Articles

No abstract provided.


Corporate Governance, Compliance, Social Responsibility, And Enterprise Risk Management In The Trump/Pence Era, Marcia Narine Weldon Jan 2017

Corporate Governance, Compliance, Social Responsibility, And Enterprise Risk Management In The Trump/Pence Era, Marcia Narine Weldon

Articles

No abstract provided.


Who Needs Contracts? Generalized Exchange Within Investment Accelerators, Brad Bernthal Jan 2017

Who Needs Contracts? Generalized Exchange Within Investment Accelerators, Brad Bernthal

Articles

This Article investigates why an expert volunteers on behalf of startups that participate in a novel type of small venture capital (“VC”) fund known as a mentor-driven investment accelerator (“MDIA”). A MDIA organizes a pool of seasoned individuals – called “mentors” – to help new companies. An obvi- ous organizational strategy would be to contract with mentors. Mentors in- stead voluntarily assist. Legal studies of norm-based exchanges do not explain what this Article calls the “mentorship conundrum”—i.e., the puzzling moti- vation of a mentor to volunteer within otherwise for-profit environments. This Article is the first to bridge the insights of ...


Responsible Resource Development And Prevention Of Sex Trafficking: Safeguarding Native Women And Children On The Fort Berthold Reservation, Kathleen Finn, Erica Gadja, Thomas Perin, Carla Fredericks Jan 2017

Responsible Resource Development And Prevention Of Sex Trafficking: Safeguarding Native Women And Children On The Fort Berthold Reservation, Kathleen Finn, Erica Gadja, Thomas Perin, Carla Fredericks

Articles

In 2010, large deposits of oil and natural gas were found in the Bakken shale formation, much of which is encompassed by the Fort Berthold Indian reservation, home to the Mandan, Hidatsa, and Arikara Nation (“MHA Nation” or “Three Affiliated Tribes” or “the Tribe”). However, rapid oil and gas development has brought an unprecedented rise of violent crime on and near the Fort Berthold reservation. Specifically, the influx of well-paid male oil and gas workers, living in temporary housing often referred to as “man camps,” has coincided with a disturbing increase in sex trafficking of Native women. The social risks ...


Benefit Corporation Law, Mark J. Loewenstein Jan 2017

Benefit Corporation Law, Mark J. Loewenstein

Articles

This article compares the approaches to benefit corporation legislation, particularly the Model Legislation proposed by B Lab, on the one hand, and the Delaware and Colorado laws, on the other.