Law Commons^™

The Road To Becoming A Close Corporation, Yu-Chen Chen

Yu-Chen Chen Esq.

The Road to Becoming a Close Corporation： A Comparative Analysis of the“Shareholders Agreement” in the United States, Japan, and Taiwan＊

Chih-Cheng, Wang＊＊ Chen Yu-Chen＊＊＊

Abstract The term “close corporation” has been defined in a variety of ways by various authorities and commentators. In close corporations, shareholders have difficulty determining the market value for their shares, and they have even more difficulty finding a willing outside buyer for a minority stake, whether restrictions are detailed in the articles of incorporation or a written shareholders agreement. In dealing with the unique features of a close corporation, the Model Statutory Close Corporation Supplement …

Corporate Social Responsibility And Workers’ Rights, Lance A. Compa

Lance A Compa

[Excerpt] Corporate social responsibility (CSR) brings an important dimension to the global economy. CSR can enhance human rights, labor rights, and labor standards in the workplace by joining consumer power and socially responsible business leadership—not just leadership in Nike headquarters in Oregon or Levi Strauss headquarters in California, but leadership in trading house headquarters in Taiwan and Hong Kong, and leadership at the factory level in Dongguan and Shenzhen. Ten years ago, I would not have said this. I viewed corporate social responsibility and corporate codes of conduct as public relations maneuvers to pacify concerned consumers. Behind a facade of …

Discovering The Role Of The Firm: The Separation Criterion And Corporate Law, Daniel F. Spulber

Daniel F Spulber

Professor Daniel F. Spulber presents a theory of the firm based on the ability to separate the objectives of the firm from those of its owners. He introduces a separation criterion which defines a firm as a transaction institution such that the consumption objectives of the institution’s owners can be separated from the objectives of the institution itself. The separation criterion provides a bright line distinction between firms and other types of transaction institutions. Firms under this criterion include profit-maximizing sole proprietorships, corporations, and limited-liability partnerships. Institutions that are not classified as firms include contracts, clubs, workers’ cooperatives, buyers’ cooperatives, …

Ultra Vires Statutes: Alive, Kicking, And A Means Of Circumventing The Scalia Standing Gauntlet In Environmental Litigation, Adam J. Sulkowski

Adam J. Sulkowski

This article makes a critical contribution to the fields of environmental and corporate law. It explains a problem in the citizen enforcement of environmental statutes: the issue of how to establish and secure standing to sue. The article then recommends a novel solution based in corporate law: the application of ultra vires statutes. The article significantly contributes to the scholarly literature on ultra vires statutes by: (1) examining thoroughly the history of the ultra vires doctrine, especially in early American history, (2) clarifying that scholars and practitioners should now cite ultra vires statutes rather than the doctrine, (3) reviewing recent …

The Nonpecuniary Costs Of Sarbanes Oxley, Nicholas V. Vakkur

Nicholas v Vakkur

Sarbanes Oxley is widely considered the most comprehensive economic regulation since the New Deal. While research has evaluated its financial costs, relatively little is known about the non-financial impact of the law upon firms. We develop six hypotheses regarding the non-financial impact of Sarbanes Oxley, incorporating learning from a comprehensive literature review across multiple disciplines. To evaluate this theory, an original survey was developed and implemented on a random sample of Fortune 500 firms (n = 206). An ordered probit model was used to quantify the results. While many economists consider business surveys to be at least as important as …

Who Needs The Stock Market? Part I: The Empirical Evidence, Lawrence E. Mitchell

Lawrence E. Mitchell

Data on historical and current corporate finance trends drawn from a variety of sources present a paradox. External equity has never played a significant role in financing industrial enterprises in the United States. The only American industry that has relied heavily upon external financing is the finance industry itself. Yet it is commonly accepted among legal scholars and economists that the stock market plays a valuable role in American economic life, and a recent, large body of macroeconomic work on economic development links the growth of financial institutions (including, in the U.S, the stock market) to growth in real economic …

The Neoclassical Crisis In U.S. Competition Policy, 1890-1960, Herbert Hovenkamp

Herbert Hovenkamp

ABSTRACT The development of marginalist, or neoclassical, economics led to a fifty-year long crisis in competition policy. Given an industrial structure with sufficient fixed costs, competition always became "ruinous," forcing firms to cut prices to marginal cost without sufficient revenue remaining to pay off investment. Early neoclassicists such as Alfred Marshall were not able to solve this problem. As a result many early twentieth century economists were hostile toward the antitrust laws. The ruinous competition debate came to an abrupt end in the early 1930's, when economists Joan Robinson in Great Britain and particularly Edward Chamberlin in the United States …

Hostile Takeovers In Korea: Turning Point Or Sticking Point For Policy Directions, Young-Cheol K. Jeong

Young-Cheol K. Jeong

While mergers and acquisitions are becoming an important part of Korean economy, poison pills and multiple voting rights are being introduced to deter foreign capital's intrusion to Korean economy. As the Korean economy is dominated by conglomerates with ownership model, this would strengthen the undue power of the founding families. In order to continue to develop the Korean economy with open capitalism, further protection on the incumbent management appointed by the founding families would be abolished, but they should be required to be neutral and ultimately shareholders would have the authority to make a decision of the future the company …

Women And The "New" Corporate Governance, Lisa M. Fairfax, Paula A. Monopoli

Paula A Monopoli

No abstract provided.

Blueprint For Teaching Skills In Practicum And Seminar Courses Using Technology, Andrea L. Johnson

Andrea L Johnson

Abstract: “Blueprint for Teaching Skills in Practicum and Seminar Courses Using Technology” By Professor Andrea L. Johnson, alj@cwsl.edu California Western School of Law 225 Cedar St. San Diego, CA 92101 (619) 525-1474 This article focuses on how to teach skills in practicum and seminar courses using technology. The author conducted a Classroom Assessment Study (“Study”) with 126 students in Business Planning and Telecommunications between 2006-2008. Classroom Assessment is a concept in higher education that uses feedback from students about how they learn from different teaching methods to help them learn skills more effectively. The Study deconstructs the classroom experience using …

The Securities Act At Its Diamond Jubilee: Renewing The Case For A Robust Registration Requirement, Vicky J. Daniels

No abstract provided.

Money Theory And Corporate Finance: From The “Distribution Of Wealth” To The “Distribution Of Dreams”, Irit Haviv-Segal

Irit Haviv-segal

The globalization of capital markets manifests the triumph of the corporation, as a form of organization, over the State. International corporations both weaken states' ability to monitor human activities, and require states to surrender portions of their sovereignty. This article inquires into the sources of this phenomenon. In particular, my main claim is that in enabling incorporation, the State, in fact, surrendered its monopoly over the production of money, and allowed other institutions to produce monetary units as well. The development and growth of giant corporations is directly linked to this capability.

The New Basel Accord: Taking Cues From The Asian Financial Crisis, Megha Sharma

Megha Sharma

In complex financial relations, banks have a crucial role to play. They are the promoters of growth and they contribute in strengthening economies. For the same reason, considerable emphasis is laid on ensuring that banks do not default. Banks are the custodians of savings and generator of funds. At the international front, a crucial initiative in this direction was taken by the Basel Committee on Banking Supervision. The Basel Committee has come out with two Accords till date, namely, the International Convergence of Capital Measurement and Capital Standards, released in 1988 and International Convergence of Capital Measurement and Capital Standards, …

Supplying The Adverb: Corporate Risk-Taking And The Business Judgment Rule, David Rosenberg

David Rosenberg

The business judgment rule precludes judicial review of most decisions by corporate directors. The rule is necessary to protect directors from potential liability for “good faith” decisions that ultimately end in failure. Courts and legal commentators have long emphasized the importance that the rule has in promoting the kind of risk-taking by corporations that has resulted in new ideas, new technologies and new markets. In recent years, Delaware courts have shown so much deference to risk-taking that they have misapplied the still-evolving doctrine of good faith. Professor Rosenberg argues that courts should use the same standards of good faith to …

Standing Under Section 10(B) And Rule 10b-5: The Continued Validity Of The Forced Seller Exception To The Purchaser-Seller Requirement, Eric C. Chaffee

Eric C. Chaffee

Congress drafted section 10(b) of the Securities and Exchange Act of 1934 as a “catchall” antifraud provision to combat a wide variety of manipulative and deceptive activities that can occur in connection with the purchase or sale of a security. Based upon the power granted under section 10(b), the Security and Exchange Commission (“SEC”) enacted Rule 10b-5, and these provisions have become powerful tools in fighting securities fraud. Although Congress explicitly charged the SEC with enforcement of section 10(b) and Rule 10b-5, the Supreme Court of the United States has held that a private right of action exists based upon …

Corporate Philanthropy And The Market For Altruism, Todd Henderson, Anup Malani

Todd Henderson

Academics and businesspeople have long debate the merits of corporate philanthropy. It is our contention that this debate is too narrowly focused on the role of corporations. There is a robust market for philanthropic works – which we call the market for altruism – in which non-profit organizations, the government, and for-profit corporations compete to do good works. We describe this market and the role corporations play in satisfying the demand for altruism. We conclude that corporations should only engage in philanthropy when they have a comparative advantage over non-profits and the government. Moreover, the government must avoid discriminating – …

Implications Of The Uk Companies Act 2006 For Institutional Investors And The Corporate Social Responsibility Movement, Gordon L. Clark, Eric R. W. Knight

Eric R Knight

Non-governmental organisations, activists, and the public-at-large hold large firms accountable on many issues including their environmental footprints and the social standards of their suppliers around the world. For those coming from European social democratic traditions, stakeholders have a legitimate voice in the affairs of the corporation especially in two-tiered governance regimes that separate supervision from management. Notwithstanding attempts to re-write their proper roles and responsibilities, the Anglo-American corporation is widely believed to be the medium for the accumulation of shareholder value.

Recently, however, a counter-argument has emerged suggesting that the UK Companies Act 2006 broke with this tradition to embrace …

Dilution Warrants For Corporate Acquisitions Free Of Private Benefits Of Control, Miguel Augustin Kreling

Miguel Kreling

This paper identifies efficiency costs in corporate control auctions distorted by the valuable extractability of private benefits from control of the auctioned firm by potential acquirers. Such costs may entail suboptimal control transfers to the extent that the present value of all future private benefits constitutes an element of the competing bidders’ valuation of the target. To avoid those efficiency costs, this paper proposes a dilution warrants mechanism. The mechanism essentially presumes that control premia relative to the postacquisition target share market price reflects private benefits. Thus, the dilution warrants confer: (1) on the target’s minority shareholders an opportunity for …

For-Profit Philanthropy, Dana Brakman Reiser

Dana Brakman Reiser

This essay examines Google’s adoption of the novel and unorthodox for-profit philanthropy model. Google created a division of its for-profit company that is tasked with pursuing philanthropic activities. Specifically, this division is responsible for addressing the global issues of climate change, poverty, and emerging diseases. Of course, companies have long blended philanthropic and business objectives. They make contributions, commit to corporate social responsibility, or even form as social enterprises. For-profit philanthropy, though, differs from these familiar techniques in both structure and scale. Likewise, for-profit philanthropy stands in stark contrast to the nonprofit, tax-exempt form of organization typically used by those …

Deeply And Persistently Conflicted: Credit Rating Agencies In The Current Regulatory Environment, Timothy E. Lynch

Timothy E. Lynch

Credit rating agencies have a pervasive and potentially devastating influence on the financial well-being of the public. Yet, despite the recent passage of the Credit Rating Agency Reform Act, credit rating agencies enjoy a relative lack of regulatory oversight. One explanation for this lack of oversight has been the appeal of the potentially self-regulating nature of credit rating agencies that claim to rely deeply on their reputational standing within the financial world. There are strong arguments for doubting this reputational concern, including the conflicting self-interest of credit rating agencies whose profits are gained or lost depending on their ability to …

Gatekeeper Incentive Compensation, Sharon Hannes

Sharon Hannes

A massive wave of corporate fraud in the beginning of the 21st century exposed the failure of corporate gatekeepers. The Sarbanes-Oxley legislation therefore targeted gatekeepers, primarily the auditors, by imposing strict regulation and enhanced independence guidelines. This legislative prescription has arguable benefits while its costs are huge. And, it is still extremely hard to determine from the outside whether the financial statements that were produced at the end of the auditor-client negotiations actually constitute a fair representation of the corporation’s financial position. This paper therefore suggests that a certain type of auditor incentive compensation could work better then regulation. Under …

Will Globalization Be The Death Knell For The Corporate Attorney-Client Privilege In The U.S.? An Opportunity To Re-Examine The Privilege As It Applies To In-House Counsel, Lawton P. Cummings

Lawton P Cummings

Increasingly, enforcement authorities from around the world are engaging in multinational cooperation to investigate and prosecute companies suspected of competition law violations. While corporate investigations have globalized, privilege rules remain localized. While the U.S. recognizes the attorney-client privilege for communications with in-house counsel, several jurisdictions that cooperate with the U.S. in multi-national investigations do not recognize the privilege for such communications. This results in identical evidence receiving un-equal privilege status in parallel proceedings around the globe. Currently, the U.S. is more protective of communications with in-house counsel than many other jurisdictions, disadvantaging U.S. prosecuting authorities as well as civil plaintiffs …

Recognizing The “Bad Barrel” In Public Business Firms: Social And Organizational Factors In Misconduct By Senior Decision-Makers, James A. Fanto

James A. Fanto

The Article argues that laws dealing with business associations do not adequately address the group and organizational factors in misconduct by senior decision-makers of public firms. The law essentially adopts a “bad apple,” rather than a “bad barrel,” perspective: it considers senior-level misconduct to be essentially an individual matter, and group or organizational causes or factors to be insignificant in it. The Article contends that this approach contradicts the learning of those who study groups and organizations, social psychologists and organizational theorists. Since senior-level misconduct is often attributable to group and organizational factors, a response that focuses only upon punishing …

Complexity As A Catalyst Of Market Failure: A Law And Engineering Inquiry, Steven L. Schwarcz

Steven L Schwarcz

This article examines how the complexities of modern investment securities and the assets underlying them can trigger a breakdown of financial markets and also analyzes what should be done to mitigate the potential for market failure. Because these complexities are characteristic of complexities in nonlinear engineering systems, the article’s analysis draws on the literature analyzing these systems.

Is Arbitration Under Attack? Exploring The Recent Judicial Skepticism Of The Class Arbitration Waiver And Innovative Solutions To The Unsettled Legal Landscape, Ramona L. Lampley

Ramona L. Lampley

This article explores the hotly debated field of enforcing arbitration clauses with binding class-action waivers. While the enforcement of arbitration clauses generally, and those with class-action waivers specifically, has undergone much debate in the past three years in both the academic and judicial fora; this article casts a new look on the analysis. Instead of advocating simply for or against the enforcement of the class-action waiver, this article analyzes the dialogue between the consumer products industry and the consuming public, via the court system. This dialogue has resulted in a “new wave” of consumer products arbitration agreements: agreements that are …

Is There Any Viability To Scheme Liability For Secondary Actors After Stoneridge Investment Partners, Llc V. Scientific-Atlanta?, Joanna B. Apolinsky

Joanna B Apolinsky

Imagine a company is having trouble meeting the earnings projections of Wall Street analysts. If the company does not meet the projections by the time it reports its earnings, its stock price will slump. Should it take the hit and watch the fall-out? Or should it somehow manipulate its earnings so they are more in line with the analysts’ projections? If a troubled company’s management chooses this path, the company probably will not be able to go it alone. It would need the assistance of other entities – lawyers, investment bankers, accountants, or possibly contractual third parties – that would …

Corporate Corruption And The Complicity Of Congress And The Supreme Court - The Tortuous Path From Central Bank To Stoneridge Investment Partners, Charles W. Murdock

Charles W. Murdock

The main thrust of this article is that courts and legislatures, particularly the past Republican Congresses and the Supreme Court, as well as lower federal courts, are biased in favor of management; moreover that their failure to hold management to account has emboldened management to engage in illicit behavior and has led to supineness, or worse, by gatekeepers, such as accountants and boards of directors. The willingness of federal courts to disregard blatant corruption and give crooks a free pass by engaging in outcome determinative decision making and strained interpretations of the law is epitomized in the recent decision of …

Failure's Futures: Controlling The Market For Information In Corporate Reorganization, Jonathan C. Lipson

Jonathan C. Lipson

This Article identifies and explores an important gap in bankruptcy theory and policy, with significant implications for the coming wave of major business failures: How to manage information about financially distressed businesses?

The paper makes three claims. First, Chapter 11 of the United States Bankruptcy Code plays a unique informational role, as it creates mechanisms to explain a debtor’s failure and to promote reinvestment. Second, the information functions performed by this system face internal and external threats. Internally, bankruptcy reorganization increasingly resembles an unregulated securities market, dominated by sophisticated, wealthy investors whose motives and strategies are often highly opaque. Their …

Corporate Corruption And The Complicity Of Congress And The Supreme Court - The Tortuous Path From Central Bank To Stoneridge Investment Partners, Llc V. Scientific-Atlanta, Inc. [Rev’D 7/6/08], Charles W. Murdock

Charles W. Murdock

The main thrust of this article is that courts and legislatures, particularly the past Republican Congresses and the Supreme Court, as well as lower federal courts, are biased in favor of management; moreover that their failure to hold management to account has emboldened management to engage in illicit behavior and has led to supineness, or worse, by gatekeepers, such as accountants and boards of directors. The willingness of federal courts to disregard blatant corruption and give crooks a free pass by engaging in outcome determinative decision making and strained interpretations of the law is epitomized in the recent decision of …

Corporate Corruption And The Complicity Of Congress And The Supreme Court - The Tortuous Path From Central Bank To Stoneridge Investment Partners, Charles W. Murdock

Charles W. Murdock

The main thrust of this article is that courts and legislatures, particularly the past Republican Congresses and the Supreme Court, as well as lower federal courts, are biased in favor of management; moreover that their failure to hold management to account has emboldened management to engage in illicit behavior and has led to supineness, or worse, by gatekeepers, such as accountants and boards of directors. The willingness of federal courts to disregard blatant corruption and give crooks a free pass by engaging in outcome determinative decision making and strained interpretations of the law is epitomized in the recent decision of …