Law Commons^™

Default Rules, Wealth Distribution, And Corporate Law Reform: Employment At Will Versus Job Security, David K. Millon

David K. Millon

None available.

Who Let You Into The House?, Lawrence Hamermesh

Lawrence A. Hamermesh

Recent Congressional corporate governance initiatives have reallocated to independent directors the functions of hiring and supervising the work of certain “gatekeepers,” and some have proposed such a reallocation with respect to general counsel, as a means to address cognitive biases and capture by senior management that may prevent inside counsel from identifying and preventing corporate misconduct. That proposal, however, does not sufficiently account for the positive effect on corporate conduct arising from a close relationship of trust and confidence between general counsel and the CEO or other senior managers. Eliminating such a relationship is likely to undermine access to internal …

Beyond Incentives: Making Corporate Whistleblowing Moral In The New Era Of Dodd-Frank Act "Bounty Hunting", Matt A. Vega

Matt A Vega

In this article, I examine the SEC's new whistleblower bounty program authorized by the Dodd-Frank Act. Under the program, which went into effect last year, the SEC is required to pay a bounty to whistleblowers who voluntarily provide the agency with "original information" about a potential securities law violation that leads to a successful SEC or "related" enforcement action and that results in monetary sanctions of sufficient size. When the average SEC settlement is over $18.3 million, whistleblowers can expect the average bounty to be well in the range of $2-5 million.

My contention is that this new program is …

Corporate Takeovers And Corporate Law: Who's In Control?, Lyman P.Q. Johnson, David K. Millon

David K. Millon

No abstract provided.

Beyond Economics In Pay For Performance, Tamara C. Belinfanti

Articles & Chapters

This article argues that while much of the intellectual energy has focused on the economics of executive pay, the challenge of executive compensation is as much a challenge of human behavior as it is one of economics. The raison d’etre of pay for performance (PFP) is to motivate executives to make decisions that are in the best interest of their firm and its shareholders. Attention to the relevant individual, situational, cultural, and institutional dynamics (what I term “behavioral dynamics”) that affect how executives are motivated and how they value future rewards is critical for the sustainability of PFP as a …

Managing Expectations: Does The Directors' Duty To Monitor Promise More Than It Can Deliver?, Lisa Fairfax

All Faculty Scholarship

This article grapples with whether we are expecting too much from the duty of oversight. The directors’ oversight duty refers to directors’ responsibility to actively monitor corporate officers, employees, and corporate affairs. Directors breach their oversight duty when officers and employees engage in wrongdoing that causes harm to the corporation and that wrongdoing can be attributed to directors’ failure to monitor. In other words, oversight liability holds directors liable for their failure to act under circumstances where it can be proven that directors should have acted and their actions could have prevented corporate harm.

The significance of directors’ oversight duty …

The Lessons From Libor For Detection And Deterrence Of Cartel Wrongdoing, Rosa M. Abrantes-Metz, D. Daniel Sokol

UF Law Faculty Publications

In late June 2012, Barclays entered into a $453 million settlement with UK and U.S. regulators due to its manipulation of Libor between 2005 and 2009. Among the agencies that investigated Barclays is the Department of Justice Antitrust Division (as well as other antitrust authorities and regulatory agencies from around the world). Participation in a price fixing conduct, by its very nature, requires the involvement of more than one firm.

We are cautious to draw overly broad conclusions until more facts come out in the public domain. What we note at this time, based on public information, is that the …

Reforming Executive Compensation: What Do We Know And Where Do We Go?, Priyanka Rajagopalan

The Journal of Business, Entrepreneurship & the Law

In this Article, I study a fascinating problem - what are the legal, political and economic implications of regulating executive bonuses? While the Administration's recent consideration of proposals to tax bonuses of AIG executives has sparked a great deal of media speculation and attention, there has been little legal scholarship discussing the various possible consequences of this and other methods of regulating executive compensation. Especially given the growing interest in executive compensation and the possible benefits and costs of regulation in this arena, I believe this paper will make a significant scholarly contribution to the existing literature on corporate governance …

Controlling Shareholders In Concentrated Ownership Structures In Singapore, Wai Yee Wan

Research Collection Yong Pung How School Of Law

The talk outlines the corporate governance challenges in respect of listed companies in Singapore that have concentrated shareholdings.

Revisiting And Re-Evaluating Omnicare 10 Years Later, Megan Wischmeier Shaner

Megan Wischmeier Shaner

Abstract Known as one of the premier business courts in the country, very few decisions of the Delaware Supreme Court have garnered as much criticism as Omnicare, Inc. v. NCS Healthcare, Inc. In a court famously known for issuing unanimous decisions, Omnicare led to two separate dissenting opinions. In the dissents and in the years since its issuance, the majority’s decision has been faulted not only for its doctrinal shortcomings, but also for its potentially negative impact on M&A activity and its poor corporate policy implications. This has led many academics and practitioners to ask whether Omnicare was a normatively …

Revisiting And Re-Evaluating Omnicare 10 Years Later, Megan Wischmeier Shaner

Megan Wischmeier Shaner

Abstract Known as one of the premier business courts in the country, very few decisions of the Delaware Supreme Court have garnered as much criticism as Omnicare, Inc. v. NCS Healthcare, Inc. Indeed, much of the criticism originated from the court itself; in a court famously known for issuing unanimous decisions, Omnicare led to two separate dissenting opinions. In the dissents and in the years since its issuance, the majority’s decision has been faulted not only for its doctrinal shortcomings, but also for its potentially negative impact on merger and acquisition activity and its poor corporate policy implications. This has …

Revisiting And Re-Evaluating Omnicare 10 Years Later, Megan Wischmeier Shaner

Megan Wischmeier Shaner

Abstract Known as one of the premier business courts in the country, very few decisions of the Delaware Supreme Court have garnered as much criticism as Omnicare, Inc. v. NCS Healthcare, Inc. Indeed, much of the criticism originated from the court itself; in a court famously known for issuing unanimous decisions, Omnicare led to two separate dissenting opinions. In the dissents and in the years since its issuance, the majority’s decision has been faulted not only for its doctrinal shortcomings, but also for its potentially negative impact on merger and acquisition activity and its poor corporate policy implications. This has …

The Business Judgment Rule As An Immunity Doctrine, Lori A. Mcmillan

Lori A. McMillan

The business judgment rule is a judicially created doctrine that protects directors from personal civil liability for the decisions they make on behalf of a corporation. In today’s era of corporate scandals, global financial meltdowns, and directorial malfeasance it has become especially important in setting the bar for when directors are appropriately responsible to shareholders for their actions. Traditionally the business judgment rule has been regarded as a standard of liability, although it has never really been explored or enunciated as such. This view determines eligibility for business judgment rule protection of a decision after an examination of certain preconditions. …

Cadbury Twenty Years On, Cally Jordan

Cally Jordan

This year marks the twentieth anniversary of the publication of the Cadbury Report, one of the most significant events in modern corporate governance. The Cadbury Report, and its simple two page “best practices”, triggered a global debate on corporate governance. “Cadbury” codes of corporate governance spread like wildfire. The legacy of the Cadbury Report lives on in the UK with no diminution in the appeal of its voluntary code/comply or explain approach to corporate governance. But there are several clouds looming on the horizon. Comply or explain and voluntary codes of corporate governance appear to have run their course elsewhere …

Ending The Silence: Shareholder Derivative Suits And Amending The Dodd-Frank Act So "Say On Pay" Votes May Be Heard In The Boardroom, William Alan Nelson Ii

University of Miami Business Law Review

No abstract provided.

Consumer Lock-In And The Theory Of The Firm, David Yosifon

Faculty Publications

When shareholders invest in a corporation they become “locked-in” to the prospects of that firm. A shareholder cannot force the firm to buy back her shares, nor can she force it to dissolve and turn over her pro rata share of its assets. She gets nothing for her capital unless the firm profits and pays dividends, or she finds someone else willing to buy her stock. Corporate law scholars have recognized that capital “lock-in” is both a corporate law solution that enables large-scale business to flourish, and a corporate law problem that threatens the growth and proper governance of big …

Using Game Theory And Contractarianism To Reform Corporate Governance: Why Shareholders Should Seek Disincentive Schemes In Executive Compensation Plans, Elias Pete George

Golden Gate University Law Review

Employing a model of game theory, this Article shows how current judge-made law in areas of the duty of loyalty does not adequately prevent corporate managers from violating their fiduciary duty. This Article presents a solution, advising shareholders to reform corporate governance through executive compensation contracts that would properly incentivize corporate managers to comport with their duty of loyalty. Part I examines the rise of contractarianism, the prominent legal academic view of a corporation that helps to guide judicial interpretation of corporate law pertaining to managers’ fiduciary duties. Part II examines agency costs, a subset of transaction costs, and the …

Corporate Tax Risks: A Call For Greater Audit Committee Involvement, Thomas F. Larson

Thomas F Larson

This paper addresses recent turn of the century changes to how the government, the general public, and shareholders view corporate tax risk. The advent of new regulatory regimes necessitates a change in corporate boardroom behavior. This paper advocates a greater and more direct approach to be taken by the audit committee. Specifically, the committee should take control of certain aspects of the evaluation and appropriate levels of tax risk through a number of different ways.

Equity Swaps And Implications In Company Law: An Examination Of Singapore Law, Chao-Hung Christopher Chen

Christopher Chao-hung CHEN

This article explores issues from the use of equity swaps by corporate stakeholders under Singapore law. The article accepts that non-disclosure of economic interests might have an impact on market efficiency and corporate governance. To address potential problems, Singapore should consider revising the Takeover Code, while it requires further regulatory impact analysis to decide whether amendments to the Securities and Futures Act and the Companies Act are needed. As an alternative, companies can use their articles of association to impose a duty of disclosure before statutory intervention. In addition, the trading of equity swaps by directors raises issues about fiduciary …

Corporate Governance And The New Trend Of Directors In Company Law In Other Countries, Christopher Chao-Hung Chen, Shuaisheng Huang

Christopher Chao-hung Chen

No abstract provided.

The Destructive Ambiguity Of Federal Proxy Access, Jill E. Fisch

All Faculty Scholarship

After almost seventy years of debate, on August 25, 2010, the SEC adopted a federal proxy access rule. This Article examines the new rule and concludes that, despite the prolonged rule-making effort, the new rule is ambiguous in its application and unlikely to increase shareholder input into the composition of corporate boards. More troubling is the SEC’s ambiguous justification for its rule which is neither grounded in state law nor premised on a normative vision of the appropriate role of shareholder nominations in corporate governance. Although the federal proxy access rule drew an unprecedented number of comment letters and is …

Shareholder Eugenics In The Public Corporation, Edward B. Rock

All Faculty Scholarship

In a world of active, empowered shareholders, the match between shareholders and public corporations can potentially affect firm value. This article examines the extent to which publicly held corporations can shape their shareholder base. Two sorts of approaches are available: direct/recruitment strategies; and shaping or socialization strategies. Direct/recruitment strategies through which “good” shareholders are attracted to the firm include: going public; targeted placement of shares; traditional investor relations; the exploitation of clientele effects; and de-recruitment. “Shaping” or “socialization” strategies in which shareholders of a “bad” or unknown type are transformed into shareholders of the “good” type include: choice of domicile; …

It's Payback Time, Or Is It?: An Argument To Apply Universal Heightened Standards To All Employee Stock-Based Individual Account Programs In The Post-Enron Era And Why Sarbanes-Oxley's Preventive Measures Do Not Adequately Protect Employee Investor Interests, Sarah Y. Rifaat

Pepperdine Law Review

No abstract provided.

We Talk, You Listen: Should Shareholders' Voices Be Heard Or Stifled When Nominating Directors? How The Proposed Shareholder Director Nomination Rule Will Contribute To Restoring Proper Corporate Governance, Rose A. Zukin

Pepperdine Law Review

No abstract provided.

Challenges And Opportunities For The Indonesian Securities Takeover Regulations: General Framework And Analysis From Dutch Law And Theoretical Perspectives, Yozua Makes

Yozua Makes

This article examines question of the extent to which the rules in Indonesia concerning takeover of a public listed company: (1) facilitate efficient exchange of shares in the capital market with fair protection for all stakeholders in a takeover transaction pursuant to Good Corporate Governance (GCG) principles; and (2) accommodate principles and protection provided in the securities laws of more developed jurisdictions. These issues are addressed by analyzing the current Indonesian legal framework from the perspective of fairness and efficiency in the securities regulations and corporate governance principles. A comparative discussion of laws and regulations in Indonesia and the Netherlands …

The End Of Shareholder Litigation? Allowing Shareholders To Customize Enforcement Through Arbitration Provisions In Charters And Bylaws, Paul D. Weitzel

Paul D. Weitzel

Shareholder litigation has been heavily criticized for its inability to compensate harmed shareholders or deter managerial misconduct. While some have suggested abolishing shareholder litigation altogether, this article takes a more moderate approach. I propose allowing shareholders to enforce charter and bylaw provisions that require arbitration of certain disputes. For example, an acquisitive company may require arbitration of merger-related suits, while allowing non-merger suits to proceed in court. Likewise, a company in an industry known for volatile stock prices could require a price drop of three or four standard deviations before the suit could be brought in court, rather than arbitration. …

The End Of Shareholder Litigation? Allowing Shareholders To Customize Enforcement Through Arbitration Provisions In Charters And Bylaws, Paul D. Weitzel

Paul D. Weitzel

Shareholder litigation has been heavily criticized for its inability to compensate harmed shareholders or deter managerial misconduct. While some have suggested abolishing shareholder litigation altogether, this article takes a more moderate approach. I propose allowing shareholders to enforce charter and bylaw provisions that require arbitration of certain disputes. For example, an acquisitive company may require arbitration of merger-related suits, while allowing non-merger suits to proceed in court. Likewise, a company in an industry known for volatile stock prices could require a price drop of three or four standard deviations before the suit could be brought in court, rather than arbitration. …

Eliminating The Executive Overcompensation Problem: How The Sec And Congress Have Failed And Why The Shareholders Can Prevail, Blake H. Crawford

The Journal of Business, Entrepreneurship & the Law

No abstract provided.

Venture Capital Investments In China: The Use Of Offshore Financing Structures And Corporate Relocations, Jing Li

Michigan Business & Entrepreneurial Law Review

Based on an analysis of the relevant Chinese laws and regulations governing the corporate governance structure of venture capital (“VC”)-invested firms, as well as a discussion on the feasibility of employing different alternatives to make direct and indirect VC investments in Chinese portfolio firms, this article studies a hand-collected sample consisting of the twenty-nine VCbacked Chinese portfolio firms that have been financed and listed from 1990 to 2005 in order to empirically show how these investments were actually made in practice. The findings show that twenty-three out of the twentynine firms received their VC investments in various offshore holding entities, …

New Thinking On "Shareholder Primacy", Lynn A. Stout

Cornell Law Faculty Publications

By the beginning of the twenty-first century, many observers had come to believe that U.S. corporate law should, and does, embrace a "shareholder primacy" rule that requires corporate directors to maximize shareholder wealth as measured by share price. This Essay argues that such a view is mistaken.

As a positive matter, U.S. corporate law and practice does not require directors to maximize "shareholder value" but instead grants them a wide range of discretion, constrained only at the margin by market forces, to sacrifice shareholder wealth in order to benefit other constituencies and the firm itself. Although recent "reforms" designed to …