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Articles 1 - 30 of 149
Full-Text Articles in Law
Reforming Shareholder Claims In Isds, Julian Arato, Kathleen Claussen, Jaemin Lee, Giovanni Zarra
Reforming Shareholder Claims In Isds, Julian Arato, Kathleen Claussen, Jaemin Lee, Giovanni Zarra
Articles
ISDS stands alone in empowering shareholders to bring claims for reflective loss (SRL) – meaning claims over harms allegedly inflicted upon the company, but which somehow affect share value. National systems of corporate law and public international law regimes generally bar SRL claims for strong policy reasons bearing on the efficiency and fairness of the corporate form. Though not necessitated by treaty text, nor beneficial in policy terms, ISDS tribunals nevertheless allow shareholders broad and regular access to seek relief for reflective loss. The availability of SRL claims in ISDS ultimately harms States and investors alike, imposing surprise ex post …
The Elastic Corporate Form In International Law, Julian Arato
The Elastic Corporate Form In International Law, Julian Arato
Articles
The corporate form is being distorted by international law. Surprisingly, this is occurring in the law of foreign investment, where one would expect the stability and efficiency of corporate formalities to matter most. The main driver is a highly enforceable mode of treaty-based arbitration known as investor-state dispute settlement (ISDS), which affords foreign investors a private right of action to sue sovereign states. Questions of corporate law come up regularly in ISDS. But when addressing them, tribunals have varied widely in their respect for core formalities. This is undermining the basic relationships among all corporate stakeholders—including shareholders, management, creditors, governments, …
Deal Protection Devices, Albert H. Choi
Deal Protection Devices, Albert H. Choi
Articles
In mergers and acquisitions transactions, a buyer and a seller will often agree to contractual mechanisms (deal protection devices) to deter third parties from jumping the deal and to compensate a disappointed buyer. With the help of auction theory, this Article analyzes various deal protection devices, while focusing on the two most commonly used mechanisms: match rights and target termination fees. A match right gives the buyer a right to “match” a third party’s offer so as to prevent the third party from snatching the target away, while a termination fee compensates the buyer when a third party acquires the …
The Separation Of Voting And Control: The Role Of Contract In Corporate Governance, Gabriel V. Rauterberg
The Separation Of Voting And Control: The Role Of Contract In Corporate Governance, Gabriel V. Rauterberg
Articles
The default rules of corporate law make shareholders’ control rights a function of their voting power. Whether a director is elected or a merger is approved depends on how shareholders vote. Yet, in private corporations shareholders routinely alter their rights by contract. This phenomenon of shareholder agreements—contracts among the owners of a firm— has received far less attention than it deserves, mainly because detailed data about the actual contents of shareholder agreements has been lacking. Private companies disclose little, and shareholder agreements are thought to play a trivial or nonexistent role in public companies. I show that this is false—fifteen …
Lecture In Human Rights: Tax Policy, Global Economics, Labor And Justice In Light Of Covid-19, Reuven S. Avi-Yonah
Lecture In Human Rights: Tax Policy, Global Economics, Labor And Justice In Light Of Covid-19, Reuven S. Avi-Yonah
Articles
International Tax Law has extensive ramifications on the wealth gap between wealthy developed nations and poor developing nations. This divide in prosperity has been made clear again in the global response to the COVID-19 pandemic. Developing nations are currently ill-equipped to adapt to, and regulate, an equitable system of taxation on a domestic level. A further challenge is the difficulty of ensuring that foreign investors, especially multinational corporations, are able to comply with tax regulations. Developed nations such as the United States and members of the European Union must continue to work with developing nations to reduce tax evasion and …
The Economics Of Class Action Waivers, Albert H. Choi, Kathryn E. Spier
The Economics Of Class Action Waivers, Albert H. Choi, Kathryn E. Spier
Articles
Many firms require consumers, employees, and suppliers to sign class action waivers as a condition of doing business with the firm, and the U.S. Supreme Court has endorsed companies’ ability to block class actions through mandatory individual arbitration clauses. Are class action waivers serving the interests of society or are they facilitating socially harmful business practices? This paper synthesizes and extends the existing law and economics literature by analyzing the firms’ incentive to impose class action waivers. While in many settings the firms’ incentive to block class actions may be aligned with maximizing social welfare, in many other settings it …
Federalizing Tax Justice, Reuven Avi-Yonah, Orli Avi-Yonah, Nir Fishbien, Hayian Xu
Federalizing Tax Justice, Reuven Avi-Yonah, Orli Avi-Yonah, Nir Fishbien, Hayian Xu
Articles
The United States is the only large federal country that does not have an explicit way to reduce the economic disparities among more and less developed regions. In Germany, for example, federal revenues are distributed by a formula that takes into account the relative level of wealth of each state (the so-called Finanzausgleich, or fiscal equalization). Similar mechanisms are found in Australia, Canada, India, and other large federal countries. The United States, on the other hand, has no such explicit redistribution. Each state is generally considered equal and sovereign, and the federal government does not distribute revenues to equalize …
Is There A Delaware Effect For Controlled Firms?, Edward Fox
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, that …
A Positive Dialectic: Beps And The United States, Reuven S. Avi-Yonah
A Positive Dialectic: Beps And The United States, Reuven S. Avi-Yonah
Articles
This essay addresses the interaction between the changes in the international tax regime identified by Mason and U.S. international tax policy. Specifically, I will argue that contrary to the general view, the United States actively implemented the Organisation for Economic Co-Operation and Development (OECD)/G20 Base Erosion and Profit Shifting (BEPS) recommendations through the Tax Cuts and Jobs Act of 2017 (TCJA). Moreover, the changes of the TCJA influenced the current OECD effort of BEPS 2.0. Thus, the current state of affairs can be characterized as a constructive dialogue: The OECD moves (BEPS 1), the United States responds (TCJA), the OECD …
Federal Forum Provisions And The Internal Affairs Doctrine, Dhruv Aggarwal, Albert H. Choi, Ofer Eldar
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 charter …
Consent, Coercion, And Employment Law, Samuel R. Bagenstos
Consent, Coercion, And Employment Law, Samuel R. Bagenstos
Articles
The Roberts Court has recently handed several high-profile wins in labor and employment law cases to anti-labor and pro-employer forces. This paper argues that those decisions replicate crucial moves made by some infamous Lochner-era cases — and that those same moves continue to underlie key elements of labor and employment doctrine more generally. In particular, these decisions rest on a contestable understanding of free worker choice. This paper begins by examining the key recent Roberts Court decisions and demonstrates that they appear to invoke at least two distinct and conflicting understandings of employee and employer choice. It then turns to …
Does Capital Bear The U.S. Corporate Tax After All? New Evidence From Corporate Tax Returns, Edward Fox
Does Capital Bear The U.S. Corporate Tax After All? New Evidence From Corporate Tax Returns, Edward Fox
Articles
This article uses U.S. corporate tax return data to assess how government revenue would have changed if, over the period 1957–2013, corporations had been subject to a hypothetical corporate cash flow tax—that is, a tax allowing for the immediate deduction of investments in long-lived assets like equipment and structures—rather than the corporate tax regime actually in effect. Holding taxpayer behavior fixed, the data indicate actual corporate tax revenue over the most recent period (1995–2013) differed little from that under the hypothetical cash flow tax. This result has three important implications. First, capital owners appear to bear a large fraction of …
Golden Parachutes And The Limits Of Shareholder Voting, Albert H. Choi, Andrew C.W. Lund, Robert Schonlau
Golden Parachutes And The Limits Of Shareholder Voting, 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 …
Inter Vivos Transfers Of Ownership In Family Firms, James R. Hines Jr., Niklas Potrafke, Marina Riem, Christoph Schinke
Inter Vivos Transfers Of Ownership In Family Firms, James R. Hines Jr., Niklas Potrafke, Marina Riem, Christoph Schinke
Articles
This paper examines the determinants of inter vivos (lifetime) transfers of ownership in German family firms between 2000 and 2013. Survey evidence indicates that owners of firms with strong current business conditions transfer ownership at higher rates than others. When a firm’s self-described business condition improves from “normal” to “good,” the relative likelihood of an inter vivos transfer increases by 46 percent. Inter vivos transfer rates also rose following a 2009 reform that reduced transfer taxes. These patterns suggest that transfer taxes significantly influence rates and timing of inter vivos ownership transfers.
The Games They Will Play: Tax Games, Roadblocks, And Glitches Under The 2017 Tax Legislation, David Kamin, David Gamage, Ari Glogower, Rebecca Kysar, Darien Shanske, Reuven S. Avi-Yonah, Lily Batchelder, J. Clifton Fleming, Daniel Hemel, Mitchell Kane, David Miller, Daniel Shaviro, Manoj Viswanathan
The Games They Will Play: Tax Games, Roadblocks, And Glitches Under The 2017 Tax Legislation, David Kamin, David Gamage, Ari Glogower, Rebecca Kysar, Darien Shanske, Reuven S. Avi-Yonah, Lily Batchelder, J. Clifton Fleming, Daniel Hemel, Mitchell Kane, David Miller, Daniel Shaviro, Manoj Viswanathan
Articles
The 2017 tax legislation brought sweeping changes to the rules for taxing individuals and business, the deductibility of state and local taxes, and the international tax regime. The complex legislation was drafted and passed through a rushed and secretive process intended to limit public comment on one of the most consequential pieces of domestic policy enacted in recent history. This Article is an effort to supply the analysis and deliberation that should have accompanied the bill’s consideration and passage, and describes key problem areas in the new legislation. Many of the new changes fundamentally undermine the integrity of the tax …
The Private Law Critique Of International Investment Law, Julian Arato
The Private Law Critique Of International Investment Law, Julian Arato
Articles
This Article argues that investment treaties subtly constrain how nations organize their internal systems of private law, including laws of property, contracts, corporations, and intellectual property. Problematically, the treaties do so on a one-size-fits-all basis, disregarding the wide variation in values reflected in these domestic legal institutions. Investor-state dispute settlement exacerbates this tension, further distorting national private law arrangements. This hidden aspect of the system produces inefficiency, unfairness, and distributional inequities that have eluded the regime's critics and apologists alike.
Texas Gulf Sulphur And The Genesis Of Corporate Liability Under Rule 10b-5, Adam C. Pritchard, Robert B. Thompson
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 of the …
Antitrust's Unconventional Politics, Daniel A. Crane
Antitrust's Unconventional Politics, Daniel A. Crane
Articles
Antitrust law stands at its most fluid and negotiable moment in a generation. The bipartisan consensus that antitrust should solely focus on economic efficiency and consumer welfare has quite suddenly come under attack from prominent voices calling for a dramatically enhanced role for antitrust law in mediating a variety of social, economic, and political friction points, including employment, wealth inequality, data privacy and security, and democratic values. To the bewilderment of many observers, the ascendant pressures for antitrust reforms are flowing from both wings of the political spectrum, throwing into confusion a conventional understanding that pro-antitrust sentiment tacked left and …
Does The United States Still Care About Complying With Its Wto Obligations?, Reuven S. Avi-Yonah
Does The United States Still Care About Complying With Its Wto Obligations?, Reuven S. Avi-Yonah
Articles
The Tax Cuts and Jobs Act of 2017 (“TCJA”) contains a provision that on its face appears to be a blatant violation of the WTO’s Subsidies and Countervailing Measures (SCM) rules. New IRC section 250 applies a reduced 13.125% tax rate to “foreign derived intangible income” (FDII), which is defined as income derived in connection with (1) property that is sold by the taxpayer to any foreign person for a foreign use or (2) services to any foreign person or with respect to foreign property. In other words, this category comprises exports for property and services, including royalties from the …
China's 'Corporatization Without Privatization' And The Late 19th Century Roots Of A Stubborn Path Dependency, Nicholas Howson
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 unique to the Chinese context …
Evaluating Beps, Reuven Avi-Yonah, Haiyan Xu
Evaluating Beps, Reuven Avi-Yonah, Haiyan Xu
Articles
This article evaluates the recently completed Base Erosion and Profit Shifting (BEPS) project of the G20 and OECD and offers some alternatives for reform.
Contracting Out Of The Fiduciary Duty Of Loyalty: An Empirical Analysis Of Corporate Opportunity Waivers, Gabriel Rauterberg, Eric Talley
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 or …
Problems With Destination-Based Corporate Taxes And The Ryan Blueprint, Reuven S. Avi-Yonah, Kimberly Clausing
Problems With Destination-Based Corporate Taxes And The Ryan Blueprint, Reuven S. Avi-Yonah, Kimberly Clausing
Articles
With the election of Donald Trump and the Republican Party’s domination of Congress, House Speaker Paul Ryan’s blueprint for fundamental tax reform requires more careful analysis. The Ryan blueprint combines reduced individual rates with a destination-based cash flow type business tax applicable to all businesses. The destination-based business tax at the center of the blueprint has several major problems: It is incompatible with our WTO obligations, it is incompatible with our tax treaties, and it will not eliminate the problems of income shifting and inversions it is designed to address. In addition, these proposals generate vexing technical problems that are …
In Defense Of The Restatement Of Liability Insurance Law, Tom Baker, Kyle D. Logue
In Defense Of The Restatement Of Liability Insurance Law, Tom Baker, Kyle D. Logue
Articles
The importance of liability law to the American system of justice, and to the US economy in general, are well known. Somewhat less well known, at least among non-lawyers, is the corresponding centrality of liability insurance. For most non-contractual legal claims for damages that are brought against individuals or firms, there is some form of liability insurance coverage. Such coverage, provided by state-regulated insurance companies, ranges from auto and homeowners’ policies (sold to consumers throughout the country) to commercial general liability policies (sold to businesses of all sizes) to professional liability policies of various sorts (including Directors and Officers coverage …
International Tax Avoidance -- Introduction, Reuven S. Avi-Yonah
International Tax Avoidance -- Introduction, Reuven S. Avi-Yonah
Articles
Tax avoidance and evasion is a hot topic. On the evasion (illegal activity by individuals) front, the various leaks culminating in the Panama Papers have once again revealed the scope of evasion by the global elite. Gabriel Zucman conservatively estimated the annual revenue loss at $200 billion. On the tax avoidance (legal activity by corporations) front, the OECD BEPS project has estimated the scope of avoidance by multinationals at between $100 and $240 billion per year. By comparison, total US corporate tax revenues are about $400 billion per year. The articles in this volume reflect various aspects of these troubling …
The Sec's Shift To Administrative Proceedings: An Empirical Assessment, Stephen J. Choi, Adam C. Prichard
The Sec's Shift To Administrative Proceedings: An Empirical Assessment, Stephen J. Choi, Adam C. Prichard
Articles
Congress has repeatedly expanded the authority of the SEC to pursue violations of securities laws in proceedings adjudicated by the SEC's own administrative law judges, most recently through the Dodd-Frank Act. We report the results from an empirical study of SEC enforcement actions against non-financial public companies to assess the impact of the Dodd-Frank Act on the balance between civil court and administrative enforcement actions. We show a general decline in the number of court actions and an increase in the number of administrative proceedings post-Dodd-Frank. At the same time, we show an increase in average civil penalties post-Dodd-Frank for …
Tax Treatment Of A Marijuana Business, Douglas A. Kahn, Howard Bromberg
Tax Treatment Of A Marijuana Business, Douglas A. Kahn, Howard Bromberg
Articles
Currently, twenty-eight states and the District of Columbia allow the use of marijuana for medical purposes and permit the conduct of a business marketing of marijuana for that purpose. Eight of those states and the District of Columbia permit the recreational use of marijuana. There is reason to believe that more states will decriminalize the marketing of marijuana. However, marijuana is listed in Schedule 1 of the federal Controlled Substances Act of 1970 (CSA) which makes it illegal under federal law to manufacture or distribute marijuana even when it is legal to do so under local state law. In a …
Country By Country Reporting And Corporate Privacy: Some Unanswered Questions, Reuven S. Avi-Yonah
Country By Country Reporting And Corporate Privacy: Some Unanswered Questions, Reuven S. Avi-Yonah
Articles
Corporate privacy is an oxymoron. Individuals have a right to privacy, which the Supreme Court has recognized at least since Griswold v. Connecticut (1965). Warren and Brandeis’ famous defense of the right to privacy (1890) clearly applied only to individuals, because only individuals have the kind of feelings that are affected by invasions of privacy. Corporations are legal entities, and the concept of privacy does not apply to them, as the Supreme Court held in 1906. Thus, any objection to making corporate tax returns public cannot rest on the right to privacy. In fact, corporate returns were made public in …
Multinational Firms And Tax Havens, Anna Gumpert, James R. Hines Jr., Monika Schnitzer
Multinational Firms And Tax Havens, Anna Gumpert, James R. Hines Jr., Monika Schnitzer
Articles
Multinational firms with operations in high-tax countries can benefit the most from reallocating taxable income to tax havens, though this is sufficiently difficult and costly that only 20.4% of German multinational firms have any tax haven affiliates. Among German manufacturing firms, a 1 percentage point higher foreign tax rate is associated with a 2.3% greater likelihood of owning a tax haven affiliate. This is consistent with tax avoidance incentives and contrasts with earlier evidence for U.S. firms. The relationship is less strong for firms in service industries, possibly reflecting the difficulty of reallocating taxable service income.
Carrot Or Stick? The Shift From Voluntary To Mandatory Disclosure Of Risk Factors, Karen K. Nelson, Adam C. Pritchard
Carrot Or Stick? The Shift From Voluntary To Mandatory Disclosure Of Risk Factors, Karen K. Nelson, Adam C. Pritchard
Articles
This study investigates risk factor disclosures, examining both the voluntary, incentive-based disclosure regime provided by the safe harbor provision of the Private Securities Litigation Reform Act as well as the SEC's subsequent mandate of these disclosures. Firms subject to greater litigation risk disclose more risk factors, update the language more from year to year, and use more readable language than firms with lower litigation risk. These differences in the quality of disclosure are pronounced in the voluntary disclosure regime, but converge following the SEC mandate as low-risk firms improved the quality of their risk factor disclosures. Consistent with these findings, …