Business Organizations Law Commons^™

Copyright, Consumerism, And The Cloud: Proposing Standards-Essential Technology To Support First Sale In Digital Copyright, Marco Puccia

Seattle University Law Review

America’s entertainment industry, and the creative talent that drives it, is a national treasure. Equally valuable, however, is America’s drive and commitment toward technological innovation. These two sectors have been in tension since at least 1908, when the U.S. Supreme Court was asked to determine whether the makers of piano rolls for automatically playing pianos had to pay royalties to the composers. Since that time, the entertainment industry has continued to use copyright law to resist advances in technological innovation that it views as a threat to its existing business models. This Note seeks to provide the necessary context and …

Shareholder Wealth Maximization As Means To An End, Robert P. Bartlett, Iii

Seattle University Law Review

In several recent cases, the Delaware Chancery Court has emphasized that where a conflict of interest exists between holders of a company’s common stock and holders of its preferred stock, the standard of conduct for directors requires that they strive to maximize the value of the corporation for the benefit of its common stockholders rather than for its preferred stockholders. This article interrogates this view of directors’ fiduciary duties from the perspective of incomplete contracting theory. Building on the seminal work of Sanford Grossman and Oliver Hart, incomplete contracting theory examines the critical role of corporate control rights for addressing …

Lobbying, Pandering, And Information In The Firm, Adam B. Badawi

Seattle University Law Review

In their classic and insightful article on team production in corporate law, Margaret Blair and Lynn Stout identify the minimization of rent-seeking as one of the chief benefits of vesting ultimate authority over a firm with the board of directors. In their analysis, this problematic rent-seeking arises when parties need to divide the gains from production after the fact. The squabbling that is likely to ensue may threaten to eat away most, or all, of the gains that come from productive activity. If parties know that this sort of rent-seeking will occur, they may not engage in productive activity in …

The History Of Team Production Theory, Ron Harris

Seattle University Law Review

In this short Essay, the author consider the team production theory developed by Margaret Blair and Lynn Stout1 from a historical perspective, in three senses. First, does the theory fit the historical use of the corporate form? Second, can it explain the development of corporation law doctrines? And third, can we place the development of the theory as such into the intellectual history of corporation theories at large? The author will state my bottom line up front: while the Article finds the team production theory insightful and useful for my historical research, for teaching corporation law, and for thinking about …

Choosing The Partnership: English Business Organization Law During The Industrial Revolution, Ryan Bubb

Seattle University Law Review

For most of the period associated with the Industrial Revolution in Britain, English law restricted access to incorporation and the Bubble Act explicitly outlawed the formation of unincorporated joint stock companies with transferable shares. Furthermore, firms in the manufacturing industries most closely associated with the Industrial Revolution were overwhelmingly partnerships. These two facts have led some scholars to posit that the antiquated business organization law was a constraint on the structural transformation and growth that characterized the British economy during the period. Importantly, however, the vast majority of manufacturing firms in the modern sector were partnerships. An easy explanation for …

Ceo Retention, Lee Harris

Florida Law Review

Again and again, economists, corporate law scholars, and Congress have turned to reforms, such as executive compensation reforms, as a solution to executive misbehavior. The root of the evil, they muse, is sky-high pay with only a flimsy connection to managerial performance. If CEO pay can only be rejiggered on the front end and tied to performance, the argument goes, executives can be expected to pursue shareholder interests and put aside egos, and firms will prosper. This Article argues that such reforms are, despite the best of intention, fool’s gold. The fallacy is not in thinking that CEOs and other …

The Economics And Regulation Of Network Branded Prepaid Cards, Todd J. Zywicki

Florida Law Review

One of the fastest growing sectors of the consumer payments marketplace is the general-purpose reloadable prepaid card sector. Their importance accelerated as a consequence of new regulations enacted in the wake of the 2008 financial crisis. This increased use of prepaid cards also increased angst among regulators, especially regarding the number and size of fees on prepaid cards. State and federal regulators as well as Congress are interested in imposing new regulations on prepaid cards. These calls for regulation, however, proceed in a largely fact-free environment. This Article describes the current economic and regulatory landscape for prepaid cards. The market …

Shareholders On Shaky Ground: Section 271'S Remaining Loophole, Alex Righi

Northwestern University Law Review

No abstract provided.

The Future Direction Of Delaware Law (Including A Brief Exegesis On Fee Shifting Bylaws), J. Robert Brown Jr.

Sturm College of Law: Faculty Scholarship

Delaware sets the governance standards for most public companies. The ability to attract corporations could not be explained solely by the existence of a favorable statutory regime. Delaware was not invariably the first or the only state to implement management friendly provisions. Given the interpretive gaps in the statute and the critical importance of the common law in the governance process, courts played an outsized role in setting legal standards. The management friendly nature of the Delaware courts contributed significantly to the state’s attraction to public corporations.

A current example of a management friendly trend in the case law had …

Majority Control And Minority Protection, Zohar Goshen, Assaf Hamdani

Faculty Scholarship

This chapter examines legal issues concerning majority control and minority protection in firms with concentrated ownership governance structures, with particular emphasis on the tradeoff between the goals of protecting minority shareholders and allowing controllers to pursue their vision and how corporate law should balance these conflicting goals. Focusing primarily on Delaware corporate law, it suggests that holding a control block allows majority shareholders to pursue their idiosyncratic vision in the manner they see fit, even against minority investors’ objections. Idiosyncratic vision refers to the subjective value that entrepreneurs attach to their business idea or vision, and this chapter considers its …

Convergence And Persistence In Corporate Law And Governance, Jeffrey N. Gordon

Faculty Scholarship

This chapter discusses the question of “convergence or persistence” in corporate law and governance. It first considers efforts to measure convergence directly by focusing on the evolution of law-on-the-books governance provisions before analyzing capital market evidence on convergence, with particular emphasis on capital market indicators such as the decline in “cross-listings” onto US stock exchanges by firms from jurisdictions with weaker investor protection and the increase in initial public offerings (IPOs) on emerging market stock markets. The chapter proceeds by reviewing evidence of divergence, especially “divergence within convergence,” and the failure of the European Union to produce more convergent corporate …

Tax And Corporate Governance: The Influence Of Tax On Managerial Agency Costs, David M. Schizer

Faculty Scholarship

This chapter examines the influence of tax on managerial agency costs, with particular emphasis on public companies in the United States. Focusing on “C-corporations,” this chapter first considers why tax is an imperfect vehicle for mitigating managerial agency costs. It then discusses how tax influences the compensation of managers, both in ways policy makers intended, and in ways they did not. The chapter also considers how tax affects management decisions about capital structure, hedging, and acquisitions. In addition, this chapter explores the tax system’s influence on the ability and incentives of shareholders to monitor management. This chapter then concludes with …

The Interface Between Arbitration And The Brussels Regulation, Filip De Ly

American University Business Law Review

No abstract provided.

The Macroprudential Turn: From Institutional 'Safety And Soundness' To Systematic 'Financial Stability' In Financial Supervision, Robert C. Hockett

Cornell Law Faculty Publications

Since the global financial dramas of 2008-09, authorities on financial regulation have come increasingly to counsel the inclusion of macroprudential policy instruments in the standard ‘toolkit’ of finance-regulatory measures employed by financial supervisors. The hallmark of this perspective is its focus not simply on the safety and soundness of individual financial institutions, as is characteristic of the traditional ‘microprudential’ perspective, but also on certain structural features of financial systems that can imperil such systems as wholes. Systemic ‘financial stability’ thus comes to supplement, though not to supplant, institutional ‘safety and soundness’ as a regulatory desideratum.

The move from primarily micro- …

Liquidity, Systemic Risk, And The Bankruptcy Treatment Of Financial Contracts, Rizwaan J. Mokal

Brooklyn Journal of Corporate, Financial & Commercial Law

No abstract provided.

Summary Of In Re: Cay Clubs, 130 Nev., 130 Nev. Adv. Op. 92, Adam Wynott

Nevada Supreme Court Summaries

The Court concluded that NRS 87.160(1) may impose partnership liability on a joint venture based on the partnership-by-estoppel doctrine and that the statute may apply to any claim that relies on the doctrine’s element of reasonable reliance. The Court clarified the statute’s meaning, stating that a partnership by estoppel requires (1) consent, manifested expressly or impliedly from the liable party’s conduct; (2) credit, not limited to financial credit, given by one party to the other; (3) and reasonable reliance by one party on the other party’s representation of a partnership or joint venture.

Corporate Claims Against Director For Paying Bribes On Company's Behalf: Ho Kang Peng V Scintronix (Formerly Ttl Holdings), Wai Yee Wan

Research Collection Yong Pung How School Of Law

Can a company recover the value of the bribe from a director who has paid the bribe, on behalf of the company, to a third party to secure certain benefits for the company, and where it is not alleged that the director had personally benefitted from the bribe? This question raises several complex issues relating to directors’ standard of care, corporate authorisation and corporate illegality, which were considered by the recent decision of the Singapore Court of Appeal in Ho Kang Peng v Scintronix Corp (formerly known as TTL Holdings).

The New Professional Plaintiffs In Shareholder Litigation, Jessica Erickson

Florida Law Review

In 1995, Congress solved the problem of professional plaintiffs in shareholder litigation—or so it thought. The Private Securities Litigation Reform Act (PSLRA) was designed to end the influence of shareholder plaintiffs who had little or no connection to the underlying suit. Yet it may have failed to accomplish its goal. In the wake of the PSLRA, many professional plaintiffs simply moved into other types of corporate lawsuits. In shareholder derivative suits and acquisition class actions across the country, professional plaintiffs are back. They are repeat filers involved in dozens of lawsuits. They are the attorneys’ spouses, parents, and children. They …

E-Books, Collusion, And Antitrust Policy: Protecting A Dominant Firm At The Cost Of Innovation, Nicholas Timchalk

Seattle University Law Review

Amazon’s main rival, Apple, went to great lengths and took major risks to enter the e-book market. Why did Apple simply choose not to compete on the merits of its product and brand equity (the iPad and iBookstore) as it does with its other products? Why did Apple decide not to continue to rely on its earlier success of situating its products differently in the market than other electronics and working hard to be different and cutting-edge with its e-book delivery? This Note argues that the combination of Amazon’s 90% market share, network externalities, and an innovative technology market creates …

Trouble Abroad: Microsoft's Antitrust Problems Under The Law Of The European Union, Justin O'Dell

Georgia Journal of International & Comparative Law

No abstract provided.

Greasing The Wheels: British Deficiencies In Relation To American Clarity In International Anti-Corruption Law, Todd Swanson

Georgia Journal of International & Comparative Law

No abstract provided.

Breaching The Accountability Firewall: Market Norms And The Reasonable Director, Joan Loughrey

Seattle University Law Review

This Article examines and evaluates the role of market norms in determining whether directors have acted reasonably and the appropriateness of setting a standard of reasonableness that reflects market norms. It argues that although there are situations in which a standard that reflects market norms may not be appropriate for determining the reasonableness of a director’s conduct, it is the best standard more often than not. While this Article focuses on the U.K. director’s duty of care, the question of whether compliance with market norms should be exculpatory arises every time legal or regulatory enforcement depends upon establishing that a …

Shareholder Voting In An Age Of Intermediary Capitalism, Paul H. Edelman, Randall S. Thomas, Robert B. Thompson

Vanderbilt Law School Faculty Publications

Shareholder voting is a key part of contemporary American corporate governance. As numerous contemporary battles between corporate management and shareholders illustrate, voting has never been more important. Yet, traditional theory about shareholder voting, rooted in concepts of residual ownership and a principal/agent relationship, does not reflect recent fundamental changes as to who shareholders are and their incentives to vote (or not vote). In the first section of the article, we address this deficiency directly by developing a new theory of corporate voting that offers three strong and complementary reasons for shareholder voting. In the middle section, we apply our theory …

New York Stock Exchange, Bert Chapman

Libraries Faculty and Staff Scholarship and Research

Provides a historical overview of the origins and early development of the New York Stock Exchange.

Fulton County Business Court: A Specialized Solution For The Modern Business Community, Megan K. Johnson

Georgia State University Law Review

Business courts or complex commercial divisions are growing in popularity as an effective tool to channel the most complex civil cases into one place before experienced judges with the background and training necessary to resolve the sophisticated issues often presented in those cases. According to North Carolina Business Court Judge Ben F. Tennille, one of the first judicial advocates of the business court model, the evolution of specialty business courts is a necessary response to “‘the rapidly increasing complexity, rate of change and globalization of business.’”

In 2005, Fulton County Superior Court launched a Business Case Division (“Fulton Business Court”) …

Financial Innovation In East Asia, Ross P. Buckley, Douglas W. Arner, Michael Panton

Seattle University Law Review

Finance is important for development. However, the Asian financial crisis of 1997–1998 and the global financial crisis of 2008 highlighted the serious risks associated with financial liberalization and excessive innovation. East Asia’s strong focus on economic growth has necessitated a careful balancing of the benefits of financial liberalization and innovation against the very real risks inherent in financial sector development. This Article examines the role of regulatory, legal, and institutional infrastructure in supporting both financial development and limiting the risk of financial crises. The Article then addresses a series of issues with particular developmental significance in the region: trade finance, …

Evaluating The Performance And Accountability Of Regulators, Colin Scott

Seattle University Law Review

The global financial crisis came in the wake of significant reforms to the structures, processes, powers, and rules of the regulatory regimes for financial markets in many of the countries adversely affected by the crash. The global financial crisis came in the wake of significant reforms to the structures, processes, powers, and rules of the regulatory regimes for financial markets in many of the countries adversely affected by the crash. In this Article, I follow the logic of an argument that regulation necessarily has political dimensions, even where it may appear technical. I am asking questions about how we might …

The Timing And Source Of Regulation, Frank Partnoy

Seattle University Law Review

The distinction between specific concrete rules and general abstract principles has engaged legal theorists for decades. This rules–principles distinction has also become increasingly important in corporate and securities law, as well as financial market regulation. This Article adds two important variables to the rules–principles debate: timing and source. Although these two variables are relevant to legal theory generally, the specific goal here is not to address and engage the rules versus principles literature directly. Rather, the goal here is to ask whether the debate about financial market regulation might benefit from a more transparent analysis of temporal and legal source …

Culture Wars: Rate Manipulation, Institutional Corruption, And The Lost Normative Foundations Of Market Conduct Regulation, Justin O'Brien

Seattle University Law Review

The global investigations into the manipulation of the London Interbank Offered Rate (Libor) have raised significant questions about how conflicts of interest are managed for regulated entities contributing to benchmarks. An alternative framework, which brings the management of the rate process under direct regulatory supervision, is under consideration, coordinated by the International Organization of Securities Commissions taskforce. The articulation of global principles builds on a review commissioned by the British government that suggests rates calculated by submission can be reformed. This paper argues that this approach is predestined to fail, precisely because it ignores the lessons of history. In revisiting …

Australia’S Experience With Foreign Direct Investment By State Controlled Entities: A Move Towards Xenophobia Or Greater Openness?, Greg Golding

Seattle University Law Review

Over the last few years, there has been considerable debate in Australia as to the appropriate regulation of foreign direct investment by entities affiliated with foreign governments. During that time, Australia has been a significant beneficiary of investment by sovereign wealth funds from many foreign jurisdictions, particularly by Chinese state owned enterprises. The Australian government, similar to governments of many developed Western countries, has struggled to properly calibrate its policy settings for regulating this type of investment activity. This Article considers the Australian regulatory regime and assesses Australia’s experience in regulating those investment flows during this period.