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Articles 1 - 30 of 30
Full-Text Articles in Law
Enforceability Of Mandatory Arbitration Clauses For Shareholder-Corporation Disputes, Garry D. Hartlieb
Enforceability Of Mandatory Arbitration Clauses For Shareholder-Corporation Disputes, Garry D. Hartlieb
Michigan Business & Entrepreneurial Law Review
Investor litigation is an increasingly vexatious field of law. Nearly every time a significant change of control or corporate ownership occurs, plaintiffs’ attorneys file standardized complaints to set in motion class action suits. Ultimately, the settlements shareholders receive fail to achieve the practical effects that parties on both sides desire. Shareholders may receive pennies on the dollar of what they allege was lost by corporate wrongdoing, and, in some cases, shareholders may not receive monetary recovery as the settlement requires only that the corporation to make changes to its governing documents. These suits distract directors and management from the core …
The Compliance Case For Social Enterprise, Joseph W. Yockey
The Compliance Case For Social Enterprise, Joseph W. Yockey
Michigan Business & Entrepreneurial Law Review
Social enterprises generate revenue to solve social, humanitarian, and ecological problems. Their products are not a means to the end of profits, but rather profits are a means to the end of their production. This dynamic presents many of the same corporate governance issues facing other forprofit firms, including legal compliance. The author contends, however, that traditional strategies for corporate compliance are incongruent to the social enterprise’s unique normative framework. Specifically, traditional compliance theory, with its prioritization of shareholder interests, stands at odds with the social enterprise’s mission-driven purpose. Attention to this distinction is essential for developing effective compliance and …
Reverse Cross-Listings -- The Coming Race To List In Emerging Markets And An Enhanced Understanding Of Classical Bonding, Nicholas C. Howson, Vikramaditya S. Khanna
Reverse Cross-Listings -- The Coming Race To List In Emerging Markets And An Enhanced Understanding Of Classical Bonding, Nicholas C. Howson, Vikramaditya S. Khanna
Law & Economics Working Papers
This paper examines the implications for the traditional "legal bonding" hypothesis arising from future "reverse" cross-listings, meaning the cross-listing by issuers from jurisdictions with stronger investor protections into capital markets and on exchanges where investor protections are deemed less robust. We use as examples the first "Indian Depositary Receipt" or IDR IPO in May 2010, and IPOs we believe will complete on a future Shanghai Stock Exchange "international board". This analysis serves to dilute one of the long-standing negative implications of the traditional legal bonding account -- that reverse cross-listings by issuers from jurisdictions with stronger investor protections into weaker …
A Blended Approach To Reducing The Costs Of Shareholder Litigation, Valian A. Afshar
A Blended Approach To Reducing The Costs Of Shareholder Litigation, Valian A. Afshar
Michigan Law Review
Multiforum litigation and federal securities law class actions impose heavy costs on corporations and their shareholders without producing proportionate benefits. Both are largely the result of the agency problem between shareholders and their attorneys, driven more by the attorneys’ interests in generating fees than by the interests of their clients. In response to each of these problems, commentators have recommended a number of solutions. Chief among them are forum selection and mandatory arbitration provisions in a corporation’s charter or bylaws. This Note recommends that corporations unilaterally adopt both forum selection and mandatory arbitration bylaws to address shareholder lawsuits under state …
Protecting The State From Itself? Regulatory Interventions In Corporate Governance And The Financing Of China’S 'State Capitalism', Nicholas C. Howson
Protecting The State From Itself? Regulatory Interventions In Corporate Governance And The Financing Of China’S 'State Capitalism', Nicholas C. Howson
Law & Economics Working Papers
From the start of China’s "corporatization without privatization" process in the late 1980s, a Chinese corporate governance regime apparently shareholder-empowering and determined by enabling legal norms has been altered by mandatory governance mechanisms imposed by a state administrative agency, most often to protect minority shareholders against exploitation by the party state controlling shareholders which are the accepted powers of "state capitalism." This chapter reviews the path of that benign intervention and the structural reasons for it, and then speculates on why this novel identity of the Chinese party state’s “fragmented authoritarianism” continues to be tolerated by the same party state, …
Reverse Cross-Listings - The Coming Race To List In Emerging Markets And An Enhanced Understanding Of Classical Bonding, Nicholas C. Howson, Vikramaditya Khanna
Reverse Cross-Listings - The Coming Race To List In Emerging Markets And An Enhanced Understanding Of Classical Bonding, Nicholas C. Howson, Vikramaditya Khanna
Articles
Studies have found that when a U.S. issuer lists abroad on a foreign exchange, its shares exhibit negative abnormal returns. This negative movement may be because the market expects that the foreign listing will facilitate undetectable insider trading on the foreign exchange or other conduct impermissible in the United States.
Protecting Whistleblower Protections In The Dodd-Frank Act, Samuel C. Leifer
Protecting Whistleblower Protections In The Dodd-Frank Act, Samuel C. Leifer
Michigan Law Review
In 2008, the United States fell into its worst economic recession in over seventy years. In response, Congress enacted the near-comprehensive Dodd–Frank Wall Street Reform and Consumer Protection Act. Section 922 of Dodd–Frank, in particular, includes specific provisions designed to incentivize and protect corporate whistleblowers. These provisions demonstrated Congress’s belief that a comprehensive and robust whistleblower protection scheme was essential to preventing many of the abuses that caused the financial crisis. Unfortunately, this section’s inconsistent language has produced conflicting decisions within the federal judiciary. In accordance with the Securities and Exchange Commission (“SEC”)’s own reading of Section 922, several district …
Reconciling Tax Law And Securities Regulation, Omri Marian
Reconciling Tax Law And Securities Regulation, Omri Marian
University of Michigan Journal of Law Reform
Issuers in registered securities offerings must disclose the expected tax consequences to investors investing in the offered securities (“nonfinancial tax disclosure”). This Article advances three arguments regarding nonfinancial tax disclosures. First, nonfinancial tax disclosure practice, as the Securities and Exchange Commission (the SEC) has sanctioned it, does not fulfill its intended regulatory purposes. Currently, nonfinancial tax disclosures provide irrelevant information, sometimes fail to provide material information, create unnecessary transaction costs, and divert valuable administrative resources to the enforcement of largely-meaningless requirements. Second, the practical reason for this failure is the SEC and tax practitioners’ unsuccessful attempt to address investors’ heterogeneous …
Formulary Appointment In The U.S. International Income Tax System: Putting Lipstick On A Pig?, J. Clifton Fleming Jr., Robert J. Peroni, Stephen E. Shay
Formulary Appointment In The U.S. International Income Tax System: Putting Lipstick On A Pig?, J. Clifton Fleming Jr., Robert J. Peroni, Stephen E. Shay
Michigan Journal of International Law
An affiliated corporate group consists of two or more corporations linked by sufficient stock ownership to cause them to function as an economic unit instead of as independent economic actors. Thus, an affiliated corporate group engaged in international business is often referred to as a multinational enterprise (MNE), a term that we will use throughout this Article. When corporate members of an MNE engage in transactions among themselves, the prices they employ (transfer prices) will significantly affect the amount of overall MNE income that is allocated to each member and, hence, to the tax bases of the various countries in …
Concentrated Ownership And Corporate Control: Wallenberg Sphere And Samsung Group, Hwa-Jin Kim
Concentrated Ownership And Corporate Control: Wallenberg Sphere And Samsung Group, Hwa-Jin Kim
Law & Economics Working Papers
Samsung Group’s success cannot be attributed to its corporate governance structure, at least thus far. The corporate governance of Samsung has been rather controversial. As the group faces the succession issue the corporate governance has become as crucial as their new products and services. Samsung has discovered a role model on the other side of the planet, Wallenberg Sphere in Sweden. Much effort has been made to learn about Wallenberg’s arrangements and key to its success. However, a fundamental difference between the institutions in Sweden and Korea has made the corporate structures of the two groups radically different. Wallenberg uses …
Can Self-Regulation Work? Lessons From The Private Security And Military Industry, Daphné Richemond-Barak Phd
Can Self-Regulation Work? Lessons From The Private Security And Military Industry, Daphné Richemond-Barak Phd
Michigan Journal of International Law
The private security and military industry has undergone a dramatic shift over the past decade—from an under-regulated sphere of activity to one in which an array of self-regulatory schemes has emerged. These regulatory initiatives took shape as states, security companies, and the broader public recognized the need to clarify the legal framework applicable to private security and military companies. Private contractors, once regarded as mercenaries, have over the past two decades played an increasingly central role in support of modern militaries. Reasons for this phenomenon range from budgetary policy to the need for specialized expertise most readily available in the …
A Disclosure-Focused Approach To Compelled Commercial Speech, Andrew C. Budzinski
A Disclosure-Focused Approach To Compelled Commercial Speech, Andrew C. Budzinski
Michigan Law Review
In 2010, the Food and Drug Administration passed a rule revising compelled disclaimers on tobacco products pursuant to the Family Smoking Prevention and Tobacco Control Act. The rule required that tobacco warnings include something new: all tobacco products now had to bear one of nine graphic images to accompany the text. Tobacco companies filed suit contesting the constitutionality of the rule, arguing that the government violated their right to free commercial speech by compelling disclosure of the graphic content. Yet First Amendment jurisprudence lacks a doctrinally consistent standard for reviewing such compelled disclosures. Courts’ analyses typically depend on whether the …
Aftermarketfailure: Windows Xp's End Of Support, Andrew Tutt
Aftermarketfailure: Windows Xp's End Of Support, Andrew Tutt
Michigan Law Review First Impressions
After 12 years, support for Windows XP will end on April 8, 2014. So proclaims a Microsoft website with a helpful clock counting down the days. "What does this mean?" the website asks. "It means you should take action." You should "migrate to a current supported operating system - such as Windows 8.1 - so you can receive regular security updates to protect [your] computer from malicious attacks." The costs of mass migration will be immense. About 30% of all desktop PCs are running Windows XP right now. An estimated 10% of the U.S. government's computers run Windows XP, including …
The Devil In The Details: Reflections On The Camp Draft, Reuven S. Avi-Yonah
The Devil In The Details: Reflections On The Camp Draft, Reuven S. Avi-Yonah
Articles
The discussion draft of the Tax Reform Act of 2014 (TRA 14) released by House Ways and Means Committee Chair Dave Camp, R-Mich., on February 26 represents a major effort for fundamental and far-reaching reform of U.S. tax law. Unfortunately, while many parts of the proposal seem sensible as an effort to bring back the spirit of 1986, the international tax reform proposals are deeply flawed and based on obsolete assumptions of the world that faces U.S. multinationals in 2014.
The 1 Percent Solution: Corporate Tax Returns Should Be Public (And How To Get There), Reuven S. Avi-Yonah, Ariel Siman
The 1 Percent Solution: Corporate Tax Returns Should Be Public (And How To Get There), Reuven S. Avi-Yonah, Ariel Siman
Articles
The justification for publishing corporate tax returns is that corporations are given immense benefits by the state that bestows upon them unlimited life and limited liability, and therefore they owe the public the information of how they treat the state that created them. Tax returns, like the financial disclosures that publicly traded corporations must file with the SEC, also provide useful information to shareholders, creditors, and the investing public.
Back From The Dead: Reviving Transfer Pricing Enforcement, Reuven S. Avi-Yonah
Back From The Dead: Reviving Transfer Pricing Enforcement, Reuven S. Avi-Yonah
Articles
The OECD has recently come to recognize that the transfer pricing system does not work as intended. In its report on base erosion and profit shifting 2013 WTD 140-17: Other Administrative Documents, the OECD recognizes that BEPS results in revenue losses that affect all states, especially poorer ones; that systematic tax avoidance by the richest and most powerful companies in the world undermines the general legitimacy of taxation; that it gives MNEs significant competitive advantages over purely domestic firms, resulting in inefficient allocations of investment and major distortions to economic activity; and that it skews the decisions of the MNEs …
The Jobs Act Trojan Horse: A Gift To Startups With Something Else Inside?, Erik Gordon
The Jobs Act Trojan Horse: A Gift To Startups With Something Else Inside?, Erik Gordon
Michigan Business & Entrepreneurial Law Review
This Comment will analyze which provisions of the Act are consistent with the purpose that sponsors would have the public believe, that emphasized by the name “JOBS Act,” and distinguish them from those provisions that serve as menacing soldiers hidden under the cover of a name that diverts attention from the Act’s true purpose.
Legally "Strong" Shareholders Of Japan, Gen Goto
Legally "Strong" Shareholders Of Japan, Gen Goto
Michigan Business & Entrepreneurial Law Review
Foreign investors often criticize Japanese corporations for not paying enough attention to the interests of their shareholders. It might surprise these critics, then, to learn that shareholders’ legal rights under the Japanese Companies Act are actually quite strong. Indeed, many of the rights that shareholders’ rights advocates often support, including shareholders’ power to alter a corporate charter without board consent, shareholders’ power to control dividend payments, majority voting for board elections, shareholders’ power to replace the board of directors, and shareholder access to a corporate ballot—all of which are strongly debated elsewhere— are already effective in Japan. Moreover, derivative suits …
Insider Trading And Other Securities Frauds In The United States: Lessons For Chile, Dante Figueroa
Insider Trading And Other Securities Frauds In The United States: Lessons For Chile, Dante Figueroa
Michigan Business & Entrepreneurial Law Review
This Article is a comparative analysis of insider trading law in the United States and Chile. The study summarily reviews the historical, political, and legal foundations of insider trading regulation in both jurisdictions, identifying areas of convergence, as well as areas in which the Chilean securities market could benefit vis- ` a-vis the more advanced experience of the considerably larger American securities market. The Article also highlights the axiological closeness between both jurisdictions concerning the protection of inside corporate information and the fiduciary role of those who intervene in securities markets in their various capacities (as investors, shareholders, corporate officers, …
Enhancing The Legal And Regulatory Environment For Investment In Social Enterprise, Dilpreet K. Minhas
Enhancing The Legal And Regulatory Environment For Investment In Social Enterprise, Dilpreet K. Minhas
Michigan Business & Entrepreneurial Law Review
The objectives of this Note are: 1) to provide readers interested in social enterprise and entrepreneurship an introduction to these endeavors and the growing trend toward using them; 2) to present the challenges stemming from the legal and financial frameworks surrounding social investment activity, which can inhibit the survival and growth of social enterprises; and 3) to propose suggestions for addressing such challenges and limitations in order to better support the survival of social enterprise. Part II and Part III provide a broad perspective of the types of investment in and nurturing of social entrepreneurship in the U.S. Part IV …
From Revolutionary To Palace Guard: The Role And Requirements Of Intermediaries Under Proposed Regulation Crowdfunding, Andrew D. Stephenson, Brian R. Knight, Matthew Bahleda
From Revolutionary To Palace Guard: The Role And Requirements Of Intermediaries Under Proposed Regulation Crowdfunding, Andrew D. Stephenson, Brian R. Knight, Matthew Bahleda
Michigan Business & Entrepreneurial Law Review
Intermediaries in securities crowdfunding face significant requirements as a result of the statutory mandates of Title III of the JOBS Act. The SEC, in its proposed rules, provided structure to these requirements. The proposed rules would create strict requirements for intermediaries regarding their relationships with investors and how they undertake crowdfunding transactions under Section 4(a)(6) of the Securities Act. The proposed rules would also create and establish the guidelines for funding portals, a new type of limited purpose securities broker. While some commentators decry the SEC for placing undue burdens and legal liabilities on intermediaries in securities crowdfunding, the SEC …
Hobby Lobby And The Pathology Of Citizens United, Ellen D. Katz
Hobby Lobby And The Pathology Of Citizens United, Ellen D. Katz
Articles
Four years ago, Citizens United v. Federal Election Commission held that for-profit corporations possess a First Amendment right to make independent campaign expenditures. In so doing, the United States Supreme Court invited speculation that such corporations might possess other First Amendment rights as well. The petitioners in Conestoga Wood Specialties Corp. v. Sebelius are now arguing that for-profit corporations are among the intended beneficiaries of the Free Exercise Clause and, along with the respondents in Sebelius v. Hobby Lobby Stores, that they also qualify as “persons” under the Religious Freedom Restoration Act (RFRA). Neither suggestion follows inexorably from Citizens United, …
Concentrated Ownership And Corporate Control: Wallenberg Sphere And Samsung Group, Hwa-Jin Kim
Concentrated Ownership And Corporate Control: Wallenberg Sphere And Samsung Group, Hwa-Jin Kim
Articles
Samsung Group’s success cannot be attributed to its corporate governance structure, at least thus far. The corporate governance of Samsung has been rather controversial. As the group faces the succession issue the corporate governance has become as crucial as their new products and services. Samsung has discovered a role model on the other side of the planet, Wallenberg Sphere in Sweden. Much effort has been made to learn about Wallenberg’s arrangements and key to its success. However, a fundamental difference between the institutions in Sweden and Korea has made the corporate structures of the two groups radically different. Wallenberg uses …
Corporate Taxation And Corporate Social Responsibility, Reuven S. Avi-Yonah
Corporate Taxation And Corporate Social Responsibility, Reuven S. Avi-Yonah
Articles
This Article will address the question of whether publicly traded U.S. corporations owe a duty to their shareholders to minimize their corporate tax burden through any legal means, or if instead, strategic behaviors like aggressive tax-motivated transactions are inconsistent with corporate social responsibility (“CSR”). I believe the latter holds true, regardless of one’s view of the corporation. Under the “artificial entity” view, such behavior undermines the constitutive relationship between the corporation and the state. Under the “real view,” such behavior runs contrary to the normal obligation of citizens to comply with the law (even absent effective enforcement). And under the …
Just Say No: Corporate Taxation And Corporate Social Responsibility, Reuven S. Avi-Yonah
Just Say No: Corporate Taxation And Corporate Social Responsibility, Reuven S. Avi-Yonah
Law & Economics Working Papers
This article will address the question whether publicly traded US corporations owe a duty to their shareholders to minimize their corporate tax burden in any way that they may be able to get away with from a purely legal perspective. First, however, to render the subsequent discussion a bit more concrete, I will describe a recently unveiled case study of corporate tax aggressiveness.
'Quack Corporate Governance' As Traditional Chinese Medicine – The Securities Regulation Cannibalization Of China's Corporate Law And A State Regulator's Battle Against Party State Political Economic Power, Nicholas C. Howson
Articles
From the start of the People’s Republic of China’s (PRC) “corporatization ” project in the late 1980s, a Chinese corporate governance regime subject to increasingly enabling legal norms has been determined by mandatory regulations imposed by the PRC securities regulator, the China Securities Regulatory Commission (CSRC). Indeed, the Chinese corporate law system has been cannibalized by all - encompassing securities regulation directed at corporate governance, at least for companies with listed stock. This Article traces the path of that sustained intervention and makes a case — wholly contrary to the “quack corporate governance” critique much aired in the United States …
How Serious Is The Problem Of Base Erosion And Profit Shifting?, James R. Hines Jr.
How Serious Is The Problem Of Base Erosion And Profit Shifting?, James R. Hines Jr.
Articles
In recent years, the problem of base erosion and profit shifting (BEPS) by multinational corporations has entered the public consciousness as a potentially important impediment to tax collections. The purpose of this article is to identify the nature of BEPS, consider empirical evidence of its magnitude, and evaluate proposed policy responses. There is considerable evidence that multinational firms arrange their affairs in a tax-sensitive manner, from which it is easy—indeed, perhaps a little too easy—to infer that beps is a serious problem. There are journalistic accounts of apparently spectacular international tax-avoidance schemes used by multinational corporations, though these stories commonly …
Toward Greater Guidance: Reforming The Definitions Of The Foreign Corrupt Practices Act, Matthew W. Muma
Toward Greater Guidance: Reforming The Definitions Of The Foreign Corrupt Practices Act, Matthew W. Muma
Michigan Law Review
The Foreign Corrupt Practices Act of 1977 is the cornerstone of the United States’ efforts to combat the involvement of U.S. companies and individuals in corruption abroad. Enforced by both the Securities and Exchange Commission (“SEC”) and the Department of Justice (“DOJ”), the Act targets companies and individuals that pay bribes to “foreign officials,” a nebulous category of persons that includes everyone from foreign cabinet members to janitors at companies only partially owned by a foreign state. After only sporadic enforcement in the early years of the Act’s existence, the SEC and DOJ now bring many cases annually. This increased …