Law Commons^™

Imperatives Of Corporate Governance On Corporate Citizenship In Nigeria, Professor Dr. S. Gozie Ogbodo, Dr. Godwin Luke Umoru

Annual Survey of International & Comparative Law

This paper seeks to examine and interrogate the conceptual ideas and frameworks of corporate governance; its relationship and relevance to corporate citizenship and the elements that describe what is meant by corporate citizenship. Various perspectives of the role which corporate governance plays as a major influence on corporate citizenship and corporate social responsibility were clearly shown. Also shown is the meaning which is ascribed to corporate governance, its core principles, the rhetoric and realities concerning the effect of a corporation’s pursuit of power and profit on corporate citizenship, legal and social responsibilities and the significant paradigm shift. Situating the concept …

Index Funds And The Future Of Corporate Governance: Theory, Evidence, And Policy, Scott Hirst, Lucian Bebchuk

Faculty Scholarship

Index funds own an increasingly large proportion of American public companies. The stewardship decisions of index fund managers—how they monitor, vote, and engage with their portfolio companies—can be expected to have a profound impact on the governance and performance of public companies and the economy. Understanding index fund stewardship, and how policymaking can improve it, is thus critical for corporate law scholarship. In this Article we contribute to such understanding by providing a comprehensive theoretical, empirical, and policy analysis of index fund stewardship.

We begin by putting forward an agency-costs theory of index fund incentives. Stewardship decisions by index funds …

Civil Rights And Shareholder Activism: Sec V. Medical Committee For Human Rights, Sarah C. Haan

Sarah Haan

This article builds upon the author's remarks at the 2018-2019 Lara D. Gass Annual Symposium: Civil Rights and Shareholder Activism at Washington and Lee University School of Law, February 15, 2019.

What does “corporate democracy” mean? How far does federal law go to guarantee public company investors a say in a firm’s policies on important social, environmental, or political issues? In 1972, the U.S. Supreme Court appeared ready to start sketching the contours of corporate democracy—and then, at the last minute, it pulled back. This Article tells the story of Securities and Exchange Commission v. Medical Committee for Human Rights …

Civil Rights And Shareholder Activism: Sec V. Medical Committee For Human Rights, Sarah C. Haan

Washington and Lee Law Review

This article builds upon the author's remarks at the 2018-2019 Lara D. Gass Annual Symposium: Civil Rights and Shareholder Activism at Washington and Lee University School of Law, February 15, 2019.

What does “corporate democracy” mean? How far does federal law go to guarantee public company investors a say in a firm’s policies on important social, environmental, or political issues? In 1972, the U.S. Supreme Court appeared ready to start sketching the contours of corporate democracy—and then, at the last minute, it pulled back. This Article tells the story of Securities and Exchange Commission v. Medical Committee for Human Rights …

Transnational Corporate Governance Codes: Lessons From Regulating Related Party Transactions In Hong Kong And Singapore, Christopher C. H. Chen, Wai Yee Wan

Research Collection Yong Pung How School Of Law

Many jurisdictions around the world, includingAsia, have corporate governance codes largely based on the transnational codedrafted by the Organisation for Economic Cooperation and Development (OECD).The core ideas underpinning the OECD’s principles of corporate governance are boardindependence and proper management of conflicts of interest. These ideas, drawnfrom the Anglo-American model of corporate governance, are designed to protectcompanies and their shareholders. However, the question remains as to whether atransnational corporate governance code is always appropriate and effective, particularlywhen the kinds of companies listed on the stock exchange significantly differfrom the Anglo-American model. In this article, we examine Hong Kong andSingapore, two Asian …

Crashing The Boards: A Comparative Analysis Of The Boxing Out Of Women On Boards In The United States And Canada, Diana C. Nicholls Mutter

The Journal of Business, Entrepreneurship & the Law

This paper will first provide a critical, comparative look at the Canadian and the federal American responses to the under-representation of women on boards of large, publicly traded corporations. There will be a discussion about the competing conceptions which emerge in addressing the regulation of women on boards in the United States and Canada and why each jurisdiction implemented its policy when it did. The conceptions arising out of questions about under-representation of women on boards tend to fall within two categories: business case rationales and normative rationales. Given the competing conceptions of this issue, this paper will attempt to …

Toward Fair And Sustainable Capitalism: A Comprehensive Proposal To Help American Workers, Restore Fair Gainsharing Between Employees And Shareholders, And Increase American Competitiveness By Reorienting Our Corporate Governance System Toward Sustainable Long-Term Growth And Encouraging Investments In America’S Future, Leo E. Strine Jr.

All Faculty Scholarship

To promote fair and sustainable capitalism and help business and labor work together to build an American economy that works for all, this paper presents a comprehensive proposal to reform the American corporate governance system by aligning the incentives of those who control large U.S. corporations with the interests of working Americans who must put their hard-earned savings in mutual funds in their 401(k) and 529 plans. The proposal would achieve this through a series of measured, coherent changes to current laws and regulations, including: requiring not just operating companies, but institutional investors, to give appropriate consideration to and make …

Singapore Company Law And The Economy: Reciprocal Influence Over 50 Years, Vincent Ooi, Cheng Han Tan

Research Collection Yong Pung How School Of Law

A strong reciprocal relationship has existed between Singapore Company Law (SCL) and the economy since Independence in 1965. Swift Parliamentary responses to economic events and successful implementation of Government policies has made it possible to clearly attribute cause and effect to statutory amendments and economic events in turn, proving the reciprocal relationship between the two. The first theme of this article seeks to explain the fundamental characteristics of SCL that have resulted in such an unusually strong reciprocal relationship: (1) Autochthonous nature of SCL; (2) Responsive nature of legislation; and (3) Government control at multiple levels of implementation. The second …

Law And Corporate Governance, Robert P. Bartlett, Eric L. Talley

Robert Bartlett

Pragmatic and effective research on corporate governance often turns critically on appreciating the legal institutions surrounding corporate entities – yet such nuances are often unfamiliar or poorly specified to economists and other social scientists without legal training. This chapter organizes and discusses key legal concepts of corporate governance, including statutes, regulations, and jurisprudential doctrines that “govern governance” in private and public companies, with concentration on the for-profit corporation. We review the literature concerning the nature and purpose of the corporation, the objects of fiduciary obligations, the means for decision making within the firm, as well as the overlay of state …

The Stewardship Of Trust In The Global Value Chain, Kishanthi Parella

Kish Parella

Global governance has not yet caught up with the globalization of business. As a result, our headlines provide daily accounts of the extent and consequences of these "governance gaps." The ability of corporations to evade state control also contributes to an unusual, even frightening, phenomenon: corporations are governing like states. Some governance functions traditionally delivered by state actors are now increasingly undertaken by transnational corporations. One area that is experiencing this substitution is dispute resolution of human rights. Corporations and other business enterprises, individually or collectively, are creating a variety of grievance mechanisms to address human rights and other conflicts …

Theory, Evidence And Policy On Dual-Class Shares: A Country-Specific Response To A Global Debate, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

Dual-class shares have become one of the most controversial issues in today´s capital markets and corporate governance debates around the world. Namely, it is not clear whether companies should be allowed to go public with dual-class shares and, if so, which restrictions (if any) should be imposed. Three primary regulatory models have been adopted to deal with dual-class shares: (i) prohibitions, existing in countries like the United Kingdom, Germany, Spain, Colombia, or Argentina; (ii) the permissive model adopted in several jurisdictions, including Canada, Sweden, the Netherlands, and particularly the United States; and (iii) the restrictive approach recently implemented in Hong …

The Case Against The Implementation Of Loyalty Shares In Spain, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

The Spanish Ministry of Economy has recently released a new bill that, among other aspects, proposes an amendment of the Spanish Companies Act to allow listed companies to adopt loyalty shares. These shares will confer additional voting rights to those shareholders staying in the corporation for at least two years. For that purpose, the company only needs to approve the adoption of loyalty shares by a qualified majority. Therefore, following the Italian (rather than the French) model of loyalty shares, the adoption of loyalty shares in Spain will be done as an opt-in rule.

The (Re)Introduction Of Dual-Class Share Structures In Hong Kong: A Historical And Comparative Analysis, Hui Robin Huang, Wei Zhang, Siu Cheung Kelvin Lee

Research Collection Yong Pung How School Of Law

In April 2018, Hong Kong issued new listing rules to introduce the dual-class share structure, also known as weighted voting rights (WVR), under which a special class of shareholders’ voting rights are conferred disproportionately with respect to their equity interest. The WVR was used in Hong Kong in the 1980s but was banned in 1989. The debate on the WVR was rekindled by the Alibaba event in 2013. The WVR structure has benefits and costs. Thus, Hong Kong lays down relevant supporting mechanisms, including entry requirements, disclosure requirements and safeguard requirements. The WVR regime in Hong Kong appears to be …

Making Sustainability Disclosure Sustainable, Jill E. Fisch

All Faculty Scholarship

Sustainability is receiving increasing attention from issuers, investors and regulators. The desire to understand issuer sustainability practices and their relationship to economic performance has resulted in a proliferation of sustainability disclosure regimes and standards. The range of approaches to disclosure, however, limit the comparability and reliability of the information disclosed. The Securities & Exchange Commission (SEC) has solicited comment on whether to require expanded sustainability disclosures in issuer’s periodic financial reporting, and investors have communicated broad-based support for such expanded disclosures, but, to date, the SEC has not required general sustainability disclosure.

This Article argues that claims about the relationship …

Social Activism Through Shareholder Activism, Lisa Fairfax

All Faculty Scholarship

In 1952, the SEC altered the shareholder proposal rule to exclude proposals made “primarily for the purpose of promoting general economic, political, racial, religious, social or similar causes.” The SEC did not reference civil rights activist James Peck or otherwise acknowledge that its actions were prompted by Peck’s 1951 shareholder proposal to Greyhound for desegregating seating. Instead, the SEC indicated that its change simply reflected a codification of a position the SEC staff had taken in 1945.

Today, the shareholder proposal rule has evolved, giving way to several amendments that now enable shareholders to submit proposals on the proxy statement …

Propuesta Para La Mejora Y Modernización De La Legislación Societaria En Ecuador [Proposal For The Improvement And Modernization Of Corporate Law In Ecuador] In Spanish, Aurelio Gurrea-Martinez, Cesar Coronel Jones

Research Collection Yong Pung How School Of Law

This paper seeks to provide some policy recommendations for the improvement and modernization of corporate law in Ecuador. These proposals have been based on the international literature and the particular features of Ecuador (that is, a country with many micro and small companies, state-owned enterprises, underdeveloped capital markets, unsophisticated courts, among other aspects). Secondly, since the legal, economic and institutional features of Ecuador can be found in other Latin American countries, this paper also seeks to be helpful to other countries in the region planning to reform their corporate laws. Finally, this paper seeks to contribute to the improvement and …

Should Shareholders Be Rewarded For Loyalty? European Experiments On The Wedge Between Tenured Voting And Takeover Law, Chiara Mosca

Michigan Business & Entrepreneurial Law Review

Corporate law reveals its democratic background when it comes to the general meetings of shareholders, finding, on both sides of the Atlantic, its most tangible expression in the “one share, one vote” principle. While, in the political landscape, the “one person, one vote” standard is absolute dogma and weighting votes according to people’s preferences and interests has never proved feasible, in the corporate scenario the one share, one vote principle is constantly challenged by the incentives of companies and their shareholders to shape corporate rights according to specific needs. In this respect, some legislators (specifically in France and Italy) have …

Reforming Pensions While Retaining Shareholder Voice, David H. Webber

Faculty Scholarship

Public pension and labor union funds have been the driving force in diversified shareholder activism. They have also fended off attacks on jobs and proactively created jobs for fund contributors. These funds currently represent almost $4 trillion in assets over which workers have substantial control. That worker control - and the collective nature of defined benefit pension plans - is the necessary precondition for their shareholder activism. Both worker control and collective investment are directly threatened by the rise of defined contribution funds, particularly by well-funded efforts to promote the 401(k) in the public sector, the last bastion of the …

From Apathy To Activism: The Emergence, Impact, And Future Of Shareholder Activism As The New Corporate Governance Norm, Lisa M. Fairfax

All Faculty Scholarship

The conventional and long-held view that public company shareholders are, and should be, rationally apathetic is waning. Today, public company shareholders are active. Such shareholders have actively sought to increase their voting power and influence over director elections and other important corporate matters. These shareholders not only have been voting, but they also have been voting against management preferences. Moreover, public company shareholders increasingly have begun to request, and in some instances demand, that corporate officers and directors engage with them around a range of issues. The shift away from shareholder apathy reflects a radical departure from the traditional corporate …

Board Governance For The Twenty-First Century, Faith Stevelman, Sarah C. Haan

Scholarly Articles

A decade after the global financial crisis, corporate governance is in a state of flux. A conceptual shift is underway. Years ago, in "first wave" governance, boards had a cozy relationship with the company C-suite. In "second wave" governance, which took hold in the 1970s, legal academics reimagined the board's role, conceptualizing directors as monitors charged with limiting waste and abuse that can arise in agency relationships. Now, we find ourselves at the threshold of "third wave" governance, in which boards are asked to grapple immediately and candidly with both the financial aspects of business and new environmental, social, and …

Disclosure's Purpose, Hillary A. Sale

Georgetown Law Faculty Publications and Other Works

The United States securities regulatory infrastructure requires disclosure of a wide array of information both by and about covered companies. The basic purpose of the disclosures is to level the playing field – for investors, for issuers, and for the public. Although investor protection is the disclosure goal often touted, this article develops the purposes of disclosure extending beyond investors to issuers and the public. Indeed, the disclosure system is designed to level the playing field for issuers— addressing confidentiality concerns, for example. In addition, the system helps to promote confidence in the markets, which, in turn, enables growth and …

Mandatory Corporate Social Responsibility? Legislative Innovation And Judicial Application In China, Li-Wen Lin

All Faculty Publications

Corporate social responsibility (CSR) is often understood as voluntary corporate behavior beyond legal compliance. The recent emergence of CSR legislation is challenging this typical understanding. A number of countries including China, Indonesia and India have expressly stated in corporate law that companies shall undertake CSR. The CSR law is controversial. Critics of CSR see the law as an unwise effort to challenge profit maximization as the only social responsibility of the corporation. Even CSR advocates welcome the CSR law with great caution. Given the vague statutory language of CSR, the practical application of the law places high demands on the …

Private Ownership At A Public Crossroads: Studying The Rapidly Evolving World Of Corporate Ownership, Ira M. Millstein Center For Global Markets And Corporate Ownership

Ira M. Millstein Center for Global Markets and Corporate Ownership

Capital formation in the United States is currently in the midst of a significant transition with largely unexplored consequences for the ownership and control of American business, as well as significant implications for the future of the public equity markets. Although public equity markets remain vast and important, they are no longer the primary source of capital for business formation and growth. Increasingly, capital for business formation and growth is being raised — and held — privately from a relatively new set of institutional investors (most importantly, venture capital and private equity funds). As a result, ownership and control over …

Insulation By Separation: When Dual-Class Stock Met Corporate Spin-Offs, Young Ran Kim, Geeyoung Min

Utah Law Faculty Scholarship

The recent rise of shareholder engagement has revamped companies’ corporate governance structures so as to empower shareholder rights and to constrain managerial opportunism. Notwithstanding the general trend, this Article uncovers corporate spin-off transactions — which divide a single company into two or more companies — as a unique mechanism that insulates the management from shareholder intervention. In a spin-off, the company’s managers can fundamentally change the governance arrangements of the new spun-off company without being subject to monitoring mechanisms, such as shareholder approval or market check. Those changes often empower managers over shareholders. Furthermore, most spin-off transactions enjoy tax benefits. …

A One-Size-Fits-All Approach To Corporate Governance Codes And Compliance By Smaller Listed Firms: An Examination Of Companies Listed In Hong Kong And Singapore, Christopher C. H. Chen

Research Collection Yong Pung How School Of Law

This article examines the impact of a one-size-fits-all corporate governance code on smaller listed firms, which should have fewer resources to hire more qualified independent directors for their boards and board committees. After examining data from a sample of companies listed in Hong Kong and Singapore, we find some limited support for these resources-based arguments. While smaller firms do not necessarily have a lower proportion of board members who are independent directors, some evidence suggests that smaller firms do pay less to independent directors and that these directors have to serve on multiple board committees. Although many larger firms also …

A New Standard For Governance: Reflections On Worker Representation In The United States, Julian Constain

Fordham Journal of Corporate & Financial Law

The contemporary state of corporate law in the United States is one that is skewed toward the archaic principle of shareholder primacy. This narrow conception of corporate purpose has resulted in governance mechanisms that tend to overlook the many stakeholders that are affected by, and, in turn, affect the bottom line of modern corporations. In the wake of the recently proposed Accountable Capitalism Act, this Note investigates the viability of adopting a system of mandated worker board representation—codetermination—in the United States. The Note employs a comparative analysis of the German and Swedish experiences with codetermination, and then evaluates the policy, …

Citizen Capitalism: How A Universal Fund Can Provide Influence And Income To All (2019), Lynn A. Stout, Sergio Gramitto, Tamara Belinfanti

Books

Corporations have a huge influence on the life of every citizen--this book offers a visionary but practical plan to give every citizen a say in how corporations are run while also gaining some supplemental income. It lays out a clear approach that uses the mechanisms of the private market to hold corporations accountable to the public.

This would happen through the creation of what the authors call the Universal Fund, a kind of national, democratic, mega mutual fund. Every American over eighteen would be entitled to a share and would participate in directing its share voting choices. Corporations and wealthy …

Unraveling China's Capital Market Growth: A Political Economy Account, Tamar Groswald Ozery

SJD Dissertations

With modern, successful firms that operate globally and a capital market that is the second largest in the world, corporate governance in China has long passed the point of an “adjust or perish” prognostic. Yet its firm governance and capital market functions maintain strong idiosyncrasies that go against many fundamentals in economics and legal thought. These idiosyncrasies are products of the underlying configurations of China’s political economy and the shifts within it. Political economy in China has a determinant role on the ways corporate ownership is organized, firms operate, and the capital market functions. It is responsible for many of …

Annual Report 2018, Ira M. Millstein Center For Global Markets And Corporate Ownership

Ira M. Millstein Center for Global Markets and Corporate Ownership

We are excited to update you after a very active 2018, which brought about positive change here at the Millstein Center.

Securities Disclosure As Soundbite: The Case Of Ceo Pay Ratios, Steven A. Bank, George S. Georgiev

Faculty Articles

This Article analyzes the history, design, and effectiveness of the highly controversial CEO pay ratio disclosure rule, which went into effect in 2018. Based on a regulatory mandate contained in the Dodd-Frank Act of 2010, the rule requires public companies to disclose the ratio between CEO pay and median worker pay as part of their annual filings with the Securities and Exchange Commission (SEC). The seven-year rulemaking process was politically contentious and generated a level of public engagement that was virtually unprecedented in the long history of the SEC disclosure regime. The SEC sought to minimize compliance costs by providing …