Law Commons^™

The Agency Costs Of Activism: Information Leakage, Thwarted Majorities, And The Public Morality, John C. Coffee Jr.

Faculty Scholarship

Few doubt that hedge fund activism has radically changed corporate governance in the United States – for better or for worse. Proponents see activists as desirable agents of change who intentionally invest in underperforming companies to organize more passive shareholders to support their proposals to change the target’s business model and/or management. So viewed, the process is fundamentally democratic, with institutional shareholders determining whether or not to support the activist’s proposals.

Skeptics respond that things do not work this simply. Actual proxy contests are few, and most activist engagements are resolved through private settlement negotiations between the activists, who rarely …

Heading Off A Cliff? The Tax Reform Man Cometh, And Goeth, Michael J. Graetz

Faculty Scholarship

The major tax policy challenge of the 21st century is the need to address the nation’s fiscal condition fairly and in a manner conducive to economic growth. But since California adopted Proposition 13 nearly forty years ago, antipathy to taxes has served as the glue that has held the Republican coalition together. Even though our taxes as a percentage of our economy are low by OECD standards and low by our own historical experience, anti-tax attitudes have become even more important for Republicans politically, since they now find it hard to agree on almost anything else. So revenue-positive, or even …

Free Markets, State Involvement, And The Wto: Chinese State Owned Enterprises (Soes) In The Ring, Petros C. Mavroidis, Merit E. Jano

Faculty Scholarship

The WTO has struggled with the treatment of nonmarket economies (NMEs). What was a nonissue in the original GATT (because of the homogeneity of participants) became quite an issue with the accession of formally centrally planned economies, which were not transformed to market economies, at least not in the eyes of the incumbents. Contracting this issue has proved to be so far always wanting, and leaving it to adjudicators has not produced good results either. With respect to Chinese SOEs this risks continuing to be an issue, since the contractually agreed deadline (2016) after which China should not be treated …

Trade Agreements, Regulatory Sovereignty And Democratic Legitimacy, Bernard Hoekman, Charles F. Sabel

Faculty Scholarship

Governments increasingly are seeking to use bilateral and regional trade agreements to reduce the cost-increasing effects of differences in product market regulation. They also pursue regulatory cooperation independent of trade agreements. It is important to understand what is being done through bilateral or plurilateral mechanisms to address regulatory differences, and to identify what, if any, role trade agreements can play in supporting international regulatory cooperation. This paper reflects on experience to date in regulatory cooperation and the provisions of recent trade agreements involving advanced economies that have included regulatory cooperation. We argue for a re-thinking by trade officials of the …

Border Adjustments And The Conservation Of Tax Planning, David M. Schizer

Faculty Scholarship

This article is based on Schizer’s keynote address at the 17th annual NYU-KPMG Tax Symposium on March 10.

In this article, Schizer argues that U.S. corporate and shareholder taxes need to be reformed, and the corporate rate should be much lower. In reforming this dysfunctional regime, according to Schizer, Congress should keep both of these taxes as a form of built-in redundancy; if one tax is avoided, the other can still be collected. More generally, Congress should be wary of Utopian solutions. Tax reform is more likely to change tax planning than to eliminate it entirely, Schizer concludes. For instance, …

The Lost Volume Seller, R.I.P., Victor P. Goldberg

Faculty Scholarship

If the buyer breaches a sales contract, and if the seller can be characterized as a lost volume seller, courts and commentators have argued that the seller should be made whole by compensation for its lost profits. This paper argues that framing the problem in this way leads to an absurd result. The buyer has a termination option and the remedy should be the implicit option price. The lost profit remedy sets a price on that option, a price that bears no relation to reality. Examination of the case law suggests three conclusions: (a) the remedy often sets an excessive …

A Note On Victoria Laundry, Victor P. Goldberg

Faculty Scholarship

In Victoria Laundry v Newman, Asquith LJ claimed that the headnote in Hadley v. Baxendale was “definitely misleading” noting that had it been accurate, the decision would have been decided the other way. In this note, I argue that the headnote was not misleading and, even if it were, his conclusion did not follow. His interpretation lowered the standard for finding liability for consequential damage. Given the facts, Victoria Laundry would have lost, even with his new standard. His solution was simple: alter the facts.

How Should The E.U. Respond To Brexit And Trump?: The Lessons From Trade Wars, John C. Coffee Jr.

Faculty Scholarship

The U.K.’s decision to exit the E.U. (popularly known as “Brexit”) sets the stage for a potential retaliatory trade war. Similarly, the aggressive nationalism of U.S. President Donald Trump does also. In both cases, game theory suggests how such a conflict might be resolved. This paper first examines three standard game theory models – the Chicken Game, the Prisoner’s Dilemma, and the Stag-Hunt Game – and then turns to the strong incentives for rent-seeking by special interests and considers how rent-seeking likely affects how these games might play out. Although the conventional wisdom expects that the U.K. will suffer retaliation …