Law Commons^™

Politics And The Business Corporation, Robert H. Sitkoff

Law & Economics Working Papers Archive: 2003-2009

This essay explores the policy bases for, and the political economy of, the law's long-standing regulation of corporate political speech. The essay has three parts. First, it contends that the conventional justifications for regulating corporate interventions in politics -- that corporate donations unnaturally skew the political discourse (bad politics) and that corporate political donations harm shareholders (agency costs) -- assume irrational investors and substantial capital market inefficiency. Drawing on public choice theory, the essay also explores the aim of retarding rent-seeking as an alternative justification for regulating corporate interventions in politics. Second, the essay reexamines the history of the regulation …

Valuation Averaging: A New Procedure For Resolving Valuation Disputes, Keith Sharfman

Rutgers Law School (Newark) Faculty Papers

In this Article, Professor Sharfman addresses the problem of "discretionary valuation": that courts resolve valuation disputes arbitrarily and unpredictably, thus harming litigants and society. As a solution, he proposes the enactment of "valuation averaging," a new procedure for resolving valuation disputes modeled on the algorithmic valuation processes often agreed to by sophisticated private firms in advance of any dispute. He argues that by replacing the discretion of judges and juries with a mechanical valuation process, valuation averaging would cause litigants to introduce more plausible and conciliatory valuations into evidence and thereby reduce the cost of valuation litigation and increase the …

Trust Law, Corporate Law, And Capital Market Efficiency, Robert H. Sitkoff

Law & Economics Working Papers Archive: 2003-2009

In both the publicly-traded corporation and the private donative trust a crucial task is to minimize the agency costs that arise from the separation of risk-bearing and management. But where the law of corporate governance evolved in the shadow of capital-market checks on agency costs, trust governance did not. Thus, even more than that of close corporations, the law and study of private trusts offers an illuminating counterfactual -- a control, as it were -­ for a playful thought experiment about the importance of capital market efficiency to the law and study of public corporations. The animating idea for this …

Advancing To Corporate Tax Integration: A Laissez-Faire Approach, Anthony P. Polito

South Carolina Law Review

No abstract provided.

Lawyers In The Perfect Storm, Mark A. Sargent

Working Paper Series

The multiple corporate collapses and scandals of recent years, for which "Enron" is a convenient shorthand, resulted from a perfect storm in which regulatory oversight, the law of fiduciary duty, gatekeepers, market discipline, and contractual incentives all failed to prevent gross self-dealing, conflicts of interest, and deception, or themselves produced perverse consequences. The story of this simultaneous failure of the structures in place since the New Deal and before, has received considerable attention in both the popular and scholarly literature, but is summarized here to provide a context for consideration of the contributions that lawyers made to the perfect storm. …

A Broader View Of Corporate Inversions: The Interplay Of Tax, Corporate And Economic Implications, Orsolya Kun

ExpressO

Multinational corporations have, in substantial numbers, moved their corporate residence from the U.S. to Bermuda, for the purpuse of minimizing U.S. taxation on their worldwide income. This study reviews the forms of these "corporate inversion transactions," and explores their tax implications, as well as their corporate governance implications and motivations. It is the first scholarly study to examine the corporate governance implications of inversions, and it concludes that previously unexplored aspects of the change of corporate domicile result in substantial reduction of accountability of directors and officers and significant impediments to enforcement of shareholder rights.

The Rational Exuberance Of Structuring Venture Capital Startups, Victor Fleischer

ExpressO

This Article takes the bursting of the dot com bubble as an opportunity to reevaluate the tax structure of venture capital startups. By organizing startups as corporations rather than as partnerships, investors and entrepreneurs seem to leave money on the table by failing to fully use tax losses -- especially since the vast majority of startups fail. Conventional wisdom attributes the lack of attention paid to losses to a "gambler's mentality" or optimism bias. I argue here that the use of the corporate form is, in fact, rational, or at least that there is a method to the madness.

I …

The Trajectory Of (Corporate Law) Scholarship, Brian R. Cheffins

ExpressO

While considerable attention is devoted to legal scholarship, little has been written on the process by which academic writing on law evolves. This paper departs from the existing pattern and examines five potential trajectories for legal scholarship. One is based on the idea that knowledge “accumulates” as part of “progress” towards a better understanding of the matters under study. The second is the concept of the “paradigm”, derived from work done on the history and sociology of science. The third focuses on the idea that academic endeavor concerning law yields useful ideas since market forces are at work. The fourth …

Corporate Governance After Enron And Global Crossing: Comparative Lessons For Cross-National Improvement, Edward S. Adams

Indiana Law Journal

No abstract provided.

Mergers And Acquisitions In Europe: Analysis Of Ec Competition Regulations, Youngjun Lee

LLM Theses and Essays

This paper analyzes three competition regulations in the European Community—article 85 and 86 of the EC Treaty and the EC Merger Regulation. Specifically, article 85 focuses on the market structure and article 86 focuses on the market dominance. The paper explores the Merger Regulation, its objectives and its scope. The amendment to the Merger Regulation extending its scope to include smaller-scale mergers and cooperative joint ventures is explained. The paper concludes with the extraterritoriality of the EC competition regulations.

The Stateless Corporation Finds A Home: Alienage Jurisdiction And Dependent Overseas Territories - J.P. Morgan Chase Bank V. Traffic Stream (Bvi) Infrastructure Limited, Michael Cornell Dypski

San Diego International Law Journal

The purpose of this Article is to discuss the evolution of the alienage jurisdiction statute and the status of overseas dependent territories in light of the recent Supreme Court decision. Part I of this Article will provide a brief historical background of 28 U.S.C. § 1332 and its purpose. Part II will discuss the concepts of the state and statelessness, as well as the role of dependent territories in international affairs. Part III will discuss and analyze the various federal decisions seemingly at loggerheads with each other on the issue of federal jurisdiction over dependent territories. Finally, Part IV will …

Ozymandias As Community Project: Managerial/Corporate Social Responsibility And The Failure Of Transparency, Claire Moore Dickerson

Claire Moore Dickerson

Transparency is ineffectual as a contraint when the relevant society accepts what it sees. Far from encouraging compliance with international norms, national governments reflect a short-term perception of national interest.

Racial Stereotypes, Broadcast Corporations, And The Business Judgment Rule, Leonard M. Baynes

University of Richmond Law Review

No abstract provided.

The Provisional Director Remedy For Corporate Deadlock: A Proposed Model Statute, Susanna Ripken

Susanna K. Ripken

The article discusses a unique remedy for shareholder and director deadlock within corporations: the appointment of provisional directors to corporate boards. Provisional directors are neutral third parties who are appointed by courts to act temporarily as tie-breaking directors in corporations paralyzed by deadlock. Provisional directors possess the same rights and powers of ordinary directors to vote at meetings. The provisional director remedy is a valuable dispute resolution mechanism that shares similarities with other alternative forms of dispute resolution, including arbitration, mediation, and a hybrid form called mediation-arbitration.

The appointment of a provisional director raises concerns about both the autonomy rights …

Premiums In Stock-For-Stock Mergers And Some Consequences In The Law Of Director Fiduciary Duties, Lawrence A. Hamermesh

Lawrence A. Hamermesh

No abstract provided.

Sorting Through The Soup: How Do Llcs, Llps And Lllps Fit Withing The Regulations And Legal Doctrines?, Daniel S. Kleinberger

Faculty Scholarship

In a children' book published in 1946, Ben Ross Berenberg described an imaginary amalgam called the churkendoose - "part chicken, turkey, duck and goose." In 1977, Wyoming invented a business law churkendoose: the limited liability company - part corporation, part general partnership, part limited partnership. That churkendoose has revolutionized the law of business organizations, becoming the vehicle of choice for tens of thousands of ventures every month and causing the IRS to radically overhaul its approach to taxing business entities. This article explores how preexisting regulatory and common law apply to LLCs and the related organizations known as limited liability …

Improving Charitable Accountability, James J. Fishman

Elisabeth Haub School of Law Faculty Publications

This Article focuses upon a persistent problem of the nonprofit sector--its lack of accountability to the public. Director, officer, and organizational responsibilities will be analyzed. Past and current approaches to secure accountability of charitable assets will be discussed, and a proposal for improving charitable accountability will be suggested through the creation of public-private charity commissions at the state level under the aegis of the attorney general.

Is There A Role For Lawyers In Preventing Future Enrons?, Jill E. Fisch, Kenneth M. Rosen

All Faculty Scholarship

Following the collapse of the Enron Corporation, the ethical obligations of corporate attorneys have received increased scrutiny. The Sarbanes-Oxley Act of 2002, enacted in response to calls for corporate reform, specifically requires the Securities and Exchange Commission to address the lawyer’s role by requiring covered attorneys to “report up” evidence of corporate wrongdoing to key corporate officers, and, in some circumstances, to the board of directors. Failure to “report up” subjects a lawyer to liability under federal law.

This Article argues that the reporting up requirement reflects a second-best approach to corporate governance reform. Rather than focusing on the actors …

The Qualified Legal Compliance Committee: Using The Attorney Conduct Rules To Restructure The Board Of Directors, Jill E. Fisch, Caroline M. Gentile

All Faculty Scholarship

The Securities and Exchange Commission introduced a new corporate governance structure, the qualified legal compliance committee, as part of the professional standards of conduct for attorneys mandated by the Sarbanes-Oxley Act of 2002. QLCCs are consistent with the Commission’s general approach to improving corporate governance through specialized committees of independent directors. This Article suggests, however, that assessing the benefits and costs of creating QLCCs may be more complex than is initially apparent. Importantly, QLCCs are unlikely to be effective in the absence of incentives for active director monitoring. This Article concludes by considering three ways of increasing these incentives.

How To Fix Wall Street: A Voucher Financing Proposal For Securities Intermediaries, Stephen Choi, Jill E. Fisch

All Faculty Scholarship

No abstract provided.

Shareholder Value And Auditor Independence, William W. Bratton

All Faculty Scholarship

This Article questions the practice of framing problems concerning auditors’ professional responsibility inside a principal-agent paradigm. If professional independence is to be achieved, auditors cannot be enmeshed in agency relationships with the shareholders of their audit clients. As agents, the auditors by definition become subject to the principal’s control and cannot act independently. For the same reason, auditors’ duties should be neither articulated in the framework of corporate law fiduciary duty, nor conceived relationally at all. These assertions follow from an inquiry into the operative notion of the shareholder-beneficiary. The Article unpacks the notion of the shareholder and tells a …

Too Busy To Mind The Business? Monitoring By Directors With Multiple Board Appointments, Stephen P. Ferris, Murali Jagannathan, Adam C. Pritchard

Articles

We examine the number of external appointments held by corporate directors. Directors who serve larger firms and sit on larger boards are more likely to attract directorships. Consistent with Fama and Jensen (1983), we find that firm performance has a positive effect on the number of appointments held by a director. We find no evidence that multiple directors shirk their responsibilities to serve on board committees. We do not find that multiple directors are associated with a greater likelihood of securities fraud litigation. We conclude that the evidence does not support calls for limits on directorships held by an individual.

Questions To Ask Before You Join A Club, Laura N. Beny, Paul S. Bird, Franci J. Blassberg, Michael P. Harrell

Articles

Despite the recent flurry of large transactions in which a consortium of private equity firms have teamed up to make joint bids and acquisitions, “club deals” themselves are not breaking news. In fact, they have been a staple of small- and middle-sized private equity M&A transactions for years. Recently, however, there has been a growing trend toward large club deals with enterprise values over $1 billion.1 Due to their size, complexity and, often, international dimension, these transactions have generated considerable attention in the business press and have prompted much discussion among private equity professionals and the limited partners whose money …

Adr Without Borders, Theodore J. St. Antoine

Articles

My task is to assess the ways in which alternative dispute resolution procedures may be adapted to deal with international labor disputes. ADR refers to various methods by which neutral third parties assist persons engaged in a conflict to settle their differences without involving the decision-making power of the state or other sanction-imposing body. Both mediation and arbitration are included. In mediation the neutral seeks to get the parties to agree on a mutually acceptable solution. In arbitration the neutral imposes a solution after presentations by the contending parties. A third term, conciliation, is sometimes used and generally connotes a …

Should Congress Repeal Securities Class Action Reform?, Adam C. Pritchard

Other Publications

The Private Securities Litigation Reform Act of 1995 was designed to curtail class action lawsuits by the plaintiffs’ bar. In particular, the high-technology industry, accountants, and investment bankers thought that they had been unjustly victimized by class action lawsuits based on little more than declines in a company’s stock price. Prior to 1995, the plaintiffs’ bar had free rein to use the discovery process to troll for evidence to support its claims. Moreover, the high costs of litigation were a powerful weapon with which to coerce companies to settle claims. The plaintiffs’ bar and its allies in Congress have called …

Patents, Product Exclusivity, And Information Dissemination: How Law Directs Biopharmaceutical Research And Development, Rebecca S. Eisenberg

Other Publications

It's a great honor for me to be invited to deliver the Levine Distinguished Lecture at Fordham, and a great opportunity to try out some new ideas before this audience. As some of you know, I've been studying the role of patents in biomedical research and product development ("R&D") for close to twenty years now, with a particular focus on how patents work in "upstream" research in universities and biotechnology companies that are working on research problems that arise prior to "downstream" product development. But, of course, the patent strategies of these institutions are designed around the profits that everyone …

Competition, Corporate Responsibility, And The China Question, Jospeh Vining

Other Publications

"Corporate responsibility" is not a peripheral matter. It is at the core of all decision-making on behalf of business corporations under American law. This paper examines the effort to add an exemption for "business" in corporate form to the exemptions from ordinary responsibility that are seen in other areas of activity - e.g., for the military, for lawyers in adversarial litigation, or for investigators in scientific research. It looks at a number of well known cases and points to the often neglected relevance of both the criminal law applicable to corporations as such, and the evolving professional responsibility of corporate …

Beyond The Business Judgment Rule: Protecting Bidder Firm Shareholders From Value-Reducing Acquisitions, Ryan Houseal

University of Michigan Journal of Law Reform

During the takeover transactions of the 1980s, bidder firms paid target firm shareholders average premiums of approximately 50% for their shares. Did the sizable premiums paid to target firm shareholders during the 1980s reflect post-takeover improvement in the target's performance? Or were the premiums a result of the mismanagement of the bidder firms' assets?

The answer will help determine whether additional legal mechanisms should be established to protect bidder firm shareholders from the threat of management's consummation of value reducing acquisitions. Accordingly, this Note examines various studies which attempt to identify the source of the premiums paid to target firm …

Protection Against Unwarranted Searches And Seizures Of Corporate Premises Under Article 8 Of The European Convention On Human Rights: The Colas Est Sa V. France Approach, Marius Emberland

Michigan Journal of International Law

In this Article, the author considers the judgment delivered April 16, 2002, by the European Court of Human Rights in the case of Colas Est SA v. France. The judgment concerned the interpretation of Article 8 of the European Convention on Human Rights (ECHR), which provides: (1) Everyone has the right to respect for his private and family life, his home and his correspondence. (2) There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests …

Introduction: The Yahoo! Case And Conflict Of Laws In The Cyberage, Mathias Reimann

Michigan Journal of International Law

Three years ago, two French public interest groups, La Ligue Contre le Racisme et L'Antisemitisme (LICRA) and LUnion des Etudiants Juifs De France (UEJF), sued Yahoo! Inc., a Delaware corporation headquartered near Santa Barbara, California, in the Tribunal de Grande Instance in Paris. The undisputed facts underlying the complaint were that: Yahoo! Inc. operated, inter alia, an auction website on which various Nazi memorabilia (such as flags, stamps, and military souvenirs) were offered for sale; the respective Yahoo! Inc. website was accessible in France; and the display of the Nazi memorabilia was illegal under French law. The French plaintiffs sought …