Open Access. Powered by Scholars. Published by Universities.®

Law Commons

Open Access. Powered by Scholars. Published by Universities.®

Articles 1 - 18 of 18

Full-Text Articles in Law

The Uneasy Case For The Inside Director, Lisa Fairfax Nov 2010

The Uneasy Case For The Inside Director, Lisa Fairfax

All Faculty Scholarship

In the wake of recent scandals and the economic meltdown, there is nearly universal support for the notion that corporations must have independent directors. Conventional wisdom insists that independent directors can more effectively monitor the corporation and prevent or otherwise better detect wrongdoing. As the movement to increase director independence has gained traction, inside directors have become an endangered species, relegated to holding a minimal number of seats on the corporate board. This Article questions the popular trend away from inside directors by critiquing the rationales in favor of director independence, and assessing the potential advantages of inside directors. This …


The New Financial Deal: Understanding The Dodd-Frank Act And Its (Unintended) Consequences, David A. Skeel Jr. Oct 2010

The New Financial Deal: Understanding The Dodd-Frank Act And Its (Unintended) Consequences, David A. Skeel Jr.

All Faculty Scholarship

Contrary to rumors that the Dodd-Frank Act is an incoherent mess, its 2,319 pages have two very clear objectives: limiting the risk of the shadow banking system by more carefully regulating derivatives and large financial institutions; and limiting the damage caused by a financial institution’s failure. The new legislation also has a theme: government partnership with the largest Wall Street banks. The vision emerged almost by accident from the Bear Stearns and AIG bailouts of 2008 and the commandeering of the bankruptcy process to rescue Chrysler and GM in 2009. Its implications for derivatives regulation could prove beneficial: Dodd-Frank will …


Business Taxes And International Competitiveness: Understanding How Taxes Can Distort Capital Ownership And Designing A Nondistortive International Tax System, Michael S. Knoll Jul 2010

Business Taxes And International Competitiveness: Understanding How Taxes Can Distort Capital Ownership And Designing A Nondistortive International Tax System, Michael S. Knoll

All Faculty Scholarship

Around the world, policymakers are obsessed with the competitiveness of their domestic companies and domestically based multinational corporations (MNCs). Such concerns frequently influence policy, especially tax policy. In this paper, I develop a theory of how taxes affect the international competitiveness of businesses. I then use that theory to evaluate basic tax policy decisions, such as the choice between residence- and source-based taxation and the level of tax rates, and to understand the impact various provisions in the U.S. Internal Revenue Code are likely to have on the competitiveness of U.S.-based corporations and MNCs.


Securities Intermediaries And The Separation Of Ownership From Control, Jill E. Fisch Jul 2010

Securities Intermediaries And The Separation Of Ownership From Control, Jill E. Fisch

All Faculty Scholarship

The Modern Corporation and Private Property highlighted the evolving separation of ownership and control in the public corporation and the effects of that separation on the allocation of power within the corporation. This essay explores the implications of intermediation for those themes. The article observes that intermediation, by decoupling economic ownership and decision-making authority within the shareholder, creates a second layer of agency issues beyond those identified by Berle and Means. These agency issues are an important consideration in the current debate over shareholder empowerment. The article concludes by considering the hypothetical shareholder construct implicit in the Berle and Means …


The Law Of Vertical Integration And The Business Firm: 1880-1960, Herbert J. Hovenkamp Jan 2010

The Law Of Vertical Integration And The Business Firm: 1880-1960, Herbert J. Hovenkamp

All Faculty Scholarship

Vertical integration occurs when a firm does something for itself that it could otherwise procure on the market. For example, a manufacturer that opens its own stores is said to be vertically integrated into distribution. One irony of history is that both classical political economy and neoclassicism saw vertical integration and vertical contractual arrangements as much less threatening to competition than cartels or other horizontal arrangements. Nevertheless, vertical integration has produced by far the greater amount of legislation at both federal and state levels and has motivated many more political action groups. Two things explain this phenomenon. First, while economists …


Shareholder Democracy And The Curious Turn Toward Board Primacy, Grant M. Hayden, Matthew T. Bodie Jan 2010

Shareholder Democracy And The Curious Turn Toward Board Primacy, Grant M. Hayden, Matthew T. Bodie

All Faculty Scholarship

Corporate law is consumed with a debate over shareholder democracy. The conventional wisdom counsels that shareholders should have more voice in corporate governance, in order to reduce agency costs and provide democratic legitimacy. A second set of theorists, described as “board primacists,” advocates against greater shareholder democracy and in favor of increased board discretion. These theorists argue that shareholders need to delegate their authority in order to provide the board with the proper authority to manage the enterprise and avoid short-term decision making.

In the last few years, the classical economic underpinnings of corporate law have been destabilized by a …


Reply: Clawback To The Future, Miriam A. Cherry, Jarrod Wong Jan 2010

Reply: Clawback To The Future, Miriam A. Cherry, Jarrod Wong

All Faculty Scholarship

In an earlier article also available on Scholarship Commons, Clawbacks: Prospective Contract Measures in an Era of Excessive Executive Compensation and Ponzi Schemes, Minnesota Law Review, Vol. 94, p. 368, 2009, Professors Miriam Cherry and Jarrod Wong set out an initial description and analysis of contractual clawback provisions. In this Reply, Profs. Cherry and Wong address three aspects of Michael Macchiarola's Response: its application of the clawback doctrine to the recoupment of executive compensation; the criticism that the clawbacks doctrine introduces latent subjectivity into contractual analysis; and the apparent operational difficulties in implementing clawbacks.


The Overstated Promise Of Corporate Governance, Jill E. Fisch Jan 2010

The Overstated Promise Of Corporate Governance, Jill E. Fisch

All Faculty Scholarship

Review of Jonathan Macey, Corporate Governance: Promises Kept, Promises Broken (Princeton, 2008)


When The Government Is The Controlling Shareholder: Implications For Delaware, Marcel Kahan, Edward B. Rock Jan 2010

When The Government Is The Controlling Shareholder: Implications For Delaware, Marcel Kahan, Edward B. Rock

All Faculty Scholarship

No abstract provided.


Tracking Berle's Footsteps: The Trail Of The Modern Corporation's Law Chapter, William W. Bratton, Michael L. Wachter Jan 2010

Tracking Berle's Footsteps: The Trail Of The Modern Corporation's Law Chapter, William W. Bratton, Michael L. Wachter

All Faculty Scholarship

No abstract provided.


The Power Of Proxy Advisors: Myth Or Reality?, Stephen Choi, Jill E. Fisch, Marcel Kahan Jan 2010

The Power Of Proxy Advisors: Myth Or Reality?, Stephen Choi, Jill E. Fisch, Marcel Kahan

All Faculty Scholarship

Recent regulatory changes increasing shareholder voting authority have focused attention on the role of proxy advisors. In particular, greater shareholder empowerment raises the question of how much proxy advisors influence voting outcomes.

This Article analyzes the significance of voting recommendations issued by four proxy advisory firms in connection with uncontested director elections. We find, consistent with press reports, that Institutional Shareholder Services (ISS) is the most powerful proxy advisor and that, of the others, only Glass, Lewis & Co. seems to have a meaningful impact on shareholder voting. This Article also attempts to measure the impact of voting recommendations on …


Disputing Limited Liability, Christina L. Boyd, David A. Hoffman Jan 2010

Disputing Limited Liability, Christina L. Boyd, David A. Hoffman

All Faculty Scholarship

This project presents six years of hand-collected federal district court data to analyze the first representative sample of veil piercing litigation. Our method identifies veil piercing complaints through Westlaw's trial pleadings database and codes each case through a detailed examination of PACER records. We test a variety of hypotheses to understand how such litigations are resolved. We find that plaintiffs succeed quite often in veil piercing litigation, if success is defined as winning on motions that do not terminate a case. A variety of legal and extra-legal factors predict such interstitial veil piercing successes. Voluntary creditor causes of action promote …


Virtual Shareholder Meetings Reconsidered, Lisa Fairfax Jan 2010

Virtual Shareholder Meetings Reconsidered, Lisa Fairfax

All Faculty Scholarship

In 2000 Delaware enacted a statute enabling corporations to host meetings solely by electronic means of communication rather than in a physical location. Since that time, several states have followed Delaware's lead, and the American Bar Association has proposed changing the Model Business Corporation Act to provide for some form of virtual shareholder meetings. Many states believed that such meetings would prove to be an important device for shareholders who desire to increase their voice within the corporation. Instead, very few companies have taken advantage of the ability to host such meetings. This Article provides some data on state statutes …


A Comprehensive Theory Of Deal Structure: Understanding How Transactional Structure Creates Value, Michael S. Knoll, Daniel M. G. Raff Jan 2010

A Comprehensive Theory Of Deal Structure: Understanding How Transactional Structure Creates Value, Michael S. Knoll, Daniel M. G. Raff

All Faculty Scholarship

No abstract provided.


Lyondell: A Note Of Approbation, William W. Bratton Jan 2010

Lyondell: A Note Of Approbation, William W. Bratton

All Faculty Scholarship

No abstract provided.


The Case Against Shareholder Empowerment, William W. Bratton, Michael L. Wachter Jan 2010

The Case Against Shareholder Empowerment, William W. Bratton, Michael L. Wachter

All Faculty Scholarship

No abstract provided.


Accountable Care Organizations: A New New Thing With Some Old Problems, Thomas L. Greaney Jan 2010

Accountable Care Organizations: A New New Thing With Some Old Problems, Thomas L. Greaney

All Faculty Scholarship

When pressed for evidence that the proposed health reform legislation will control costs, proponents invariably cite the numerous pilot programs and other innovations in Medicare payment policy contained in the bill. At first blush, the ACO model seems well designed to foster competition among providers. Not unlike health maintenance organizations and other integrated delivery forms, ACOs assume responsibility for coordinating care and thus have strong incentives to provide cost effective care and to do so in a manner that is transparent and hospitable to comparative shoppers. But at the same time, the path of ACO development could prove profoundly anti-competitive. …


The Case For Employee Referenda On Transformative Transactions As Shareholder Proposals, Matthew T. Bodie Jan 2010

The Case For Employee Referenda On Transformative Transactions As Shareholder Proposals, Matthew T. Bodie

All Faculty Scholarship

This Comment describes and advocates for employee referenda as implemented through a SEC Rule 14a-8 shareholder proposal. The proposal provides for a nonbinding referendum amongst all employees whenever the corporation's shareholders must vote to approve a merger, acquisition, sale of substantially all assets, or other transformative transaction. The purpose of the referendum is to provide employees with a voice in the transaction and to provide shareholders with a mechanism for tapping into employee sentiment. Because the referendum would be nonbinding, it is best viewed as an informational tool for shareholders and employees to use in policing management's transactions. Given the …