Business Organizations Law Commons^™

Learning To Be More Than A Lawyer, Carol Morgan

Scholarly Works

No abstract provided.

Asset Partitioning And Financial Innovation, Christopher Bruner

Scholarly Works

Review of the article by Ofer Eldar and Andrew Verstein titled “The Enduring Distinction between Business Entities and Security Interests”, 92 Southern California Law Review, no. 2 (2019).

There's A Problem With Buybacks, But It's Not What Senators Think, Daniel J. Hemel, Gregg D. Polsky

Scholarly Works

In a deeply divided Washington, one of the few issues on which leading lawmakers on both sides of the aisle appear to agree is that corporations should be discouraged from buying back their stock from shareholders. This short article argues that, while this anti-buyback sentiment is misguided, there nevertheless are good tax policy arguments for reforming the tax treatment of buybacks. The article recommends adoption of a 1969 proposal made by Professor Marvin Chirelstein that would recharacterize (for tax purposes) buybacks as a pro rata cash dividend, followed by sales of shares from the shareholders who participate in the buyback …

Do Conflicts Of Interest Require Outside Boards? Yes. Bsps? Maybe., Usha Rodrigues

Scholarly Works

From the Symposium: Outsourcing the Board: How Board Service Providers Can Improve Corporate Governance

Boards of directors are curious creatures. The law generally requires corporations to have them—indeed, they are the focus of the corporate law we teach in Business Associations in U.S. law schools. The corporation is managed by directors or under their direction; directors hire and fire officers; directors are necessary for fundamental transactions.

But the reason why corporations have directors is not entirely clear. In the prototypical privately held corporation, the family firm, the same individuals serve both as directors and officers. The CEO (better known as …

Corporate Governance Reform In Post-Crisis Financial Firms: Two Fundamental Tensions, Christopher Bruner

Scholarly Works

The manner in which financial firms are governed directly impacts the stability and sustainability of both the financial sector and the "real" economy, as the financial crisis and associated regulatory reform efforts have tragically demonstrated. However, two fundamental tensions continue to complicate efforts to reform corporate governance in post-crisis financial firms. The first relates to reliance on increased equity capital as a buffer against shocks and a means of limiting leverage. The tension here arises from the fact that no corporate constituency desires risk more than equity does, and that risk preference only tends to be stronger in banks, and …

Enhanced Scrutiny On The Buy-Side, Afra Afsharipour, J. T. Laster

Georgia Law Review

Empirical studies of acquisitions consistently find
that public company bidders often overpay for targets,
imposing significant losses on bidder shareholders.
Numerous studies have connected bidder overpayment
with managerial agency costs and behavioral biases that
reflect management self-interest. For purposes of
corporate law, these concerns implicate the behavior of
fiduciaries—the officers and directors of the acquiring
entity—and raise questions about whether those
fiduciaries are fulfilling their duty of loyalty. To address
comparable sell-side concerns, the Delaware courts
developed an intermediate standard of review known as
enhanced scrutiny. There has been little exploration,
however, of whether the rationales for applying
enhanced scrutiny …

What The Hack?! Reexamining The Duty Of Oversight In An Age Of Data Breaches, Amanda M. Payne

Georgia Law Review

Due to the proliferation of electronic data and
advancements in technology, data breaches have become
commonplace. Data breaches are a threat to
corporations of all sizes and can have devastating
impacts. Focusing solely on Delaware law, this Note
explores how doctrines such as the business judgment
rule, exculpation provisions, and heightened pleading
standards have left shareholders with limited recourse
in holding directors liable for the catastrophic
consequences of data breaches. Recognizing that
shareholders have been unsuccessful alleging
Caremark-type claims arising out of a data breach, this
Note argues that the expansion of bad faith in Walt
Disney provides alternative ground …

To Understand Us V. Microsoft, Consider 'Acme V. Shamrock', Peter B. Rutledge, Amanda W. Newton

Popular Media

The February 27, 2018, Supreme Court argument in United States v. Microsoft Corp. raises profound questions about issues of executive power, corporate governance, technology, judicial power and international affairs. At stake for the government is the scope of its investigative authority to obtain information located in a foreign country, irrespective of that country’s laws. At stake for Microsoft is its ability to organize its international corporate affairs and the predictability of the laws that will govern those affairs. This article analyzes the potential effects of this critical Supreme Court case.

Does Shareholder Voting Matter? Evidence From The Takeover Market, Paul Mason, Usha Rodrigues, Mike Stegemoller, Steven Utke

Scholarly Works

Voting rights are a basic shareholder-protection mechanism. Outside of the core voting requirements state law imposes (election of directors and votes on fundamental changes), federal law grants shareholders additional voting rights. But these rights introduce concomitant costs into corporate governance. Each grant of a voting right thus invites the question: is the benefit achieved worth the cost the vote imposes?

The question is not merely a theoretical one. Recently the SEC, concerned about Nasdaq’s potential weakening of shareholder voting protections, has lamented that little evidence exists on the value of the shareholder vote. This Article provides that evidence. It examines …

The Up-C Revolution, Gregg D. Polsky, Adam H. Rosenzweig

Scholarly Works

Over the past few years, a revolutionary new tax structure, known as the Up-C, has become increasingly popular, particularly in instances where an LLC is being taken public. In such an Up-C IPO, a newly formed C corporation is placed on top of the existing LLC, which continues to operate the business. Shares of the C corporation are sold to new investors, and the proceeds are used by the C corporation to buy an interest in the LLC. Meanwhile, the legacy owners of the LLC (typically, founders and private investment funds) retain their interests in the LLC, while receiving exchange …

The Long And The Short: Portfolio Turnover Ratios & Mutual Fund Investment Time Horizons, Anne M. Tucker

Scholarly Works

Mutual fund portfolio turnover ratios (PTR) are at the center of the short-termism debate, which criticizes corporate maneuvers taken to prop up near-term earnings at the expense of long-term, value focused investments and policies. Scholars and policymakers often rely on portfolio turnover ratios to argue that mutual fund short-termism, as measured by the PTR, is increasing and infecting operating company time horizons. This article answers two main questions central to discerning mutual funds' role in the short-termism debate. The first is, how long, on average do U.S. registered mutual funds hold onto their assets? The second is, how good of …

Tournament Of Managers: Lessons From The Academic Leadership Market, Usha Rodrigues

Scholarly Works

Why do firms usually make, not buy, their chief executive officers (CEOs)? Public corporations hire their CEOs from within the firm 78% of the time. They do so although earlier studies have found no clear evidence that internal hires perform better than external ones. So why do firms prefer them? Few scholars have focused on this simple question.

The reason why firms favor internal candidates matters not only in its own right, but also for an overlooked reason: it informs the controversial question of executive compensation. Currently board-compensation committees look to peer benchmarks to set executive pay. But, taking cues …

Will Swing Pricing Save Sedentary Shareholders?, Anne M. Tucker, Holly Van Den Toorn

Scholarly Works

This Article explains and explores new Securities Exchange Commission rules authorizing optional swing pricing for mutual funds. Swing pricing is an anti-dilution tool intended to protect sedentary investors who enter, and stay, in a fund. Workers setting aside money for retirement are often sedentary investors. Mutual funds are the mainstay vehicle for retirement investors, yet as sedentary shareholders they can experience significant asset dilution over their savings lifetime. Swing pricing—a mutual fund pricing mechanism that allocates transaction costs to the triggering shareholders—could save sedentary shareholders, collectively, billions of dollars. The mutual fund industry's operational complexities and competing regulatory obligations may …

20/20 Vision In The Long & Short-Termism Debate, Anne M. Tucker

Scholarly Works

What is an optimal investment time horizon—for institutions, individual shareholders and corporations? This question can evoke emotional, ideological, and theoretical responses. The answers usually deeply entrenched debates over the fundamental roles of markets versus regulation and between the appropriate loci of corporate power: the board of directors versus the shareholders. Too long-term and it is myopia; too near-term and is it short-termism. Neither label is inconsequential, so the debates are not tepid, academic, or marginal.

Corporate Governance Reform In Post-Crisis Financial Firms: Two Fundamental Tensions, Christopher Bruner

Scholarly Works

The manner in which financial firms are governed directly impacts the stability and sustainability of both the financial sector and the "real" economy, as the financial crisis and associated regulatory reform efforts have tragically demonstrated. However, two fundamental tensions continue to complicate efforts to reform corporate governance in post-crisis financial firms. The first relates to reliance on increased equity capital as a buffer against shocks and a means of limiting leverage. The tension here arises from the fact that no corporate constituency desires risk more than equity does, and that risk preference only tends to be stronger in banks, and …

Distributed Ledgers, Traceable Shares, And The Division Of Power In Corporate Law, Christopher M. Bruner

Scholarly Works

Review of Traceable Shares and Corporate Law, 113 Nw. U. L. Rev. __ by George S. Geis (forthcoming 2018)

Center-Left Politics And Corporate Governance: What Is The 'Progressive' Agenda?, Christopher Bruner

Scholarly Works

For as long as corporations have existed, debates have persisted among scholars, judges, and policymakers regarding how best to describe their form and function as a positive matter, and how best to organize relations among their various stakeholders as a normative matter. This is hardly surprising given the economic and political stakes involved with control over vast and growing "corporate" resources, and it has become commonplace to speak of various approaches to corporate law in decidedly political terms. In particular, on the fundamental normative issue of the aims to which corporate decision-making ought to be directed, shareholder-centric conceptions of the …

The Cost Of Appraisal Rights: How To Restore Certainty In Delaware Mergers, Matthew E. Miehl

Georgia Law Review

Delaware's legislature created appraisal rights to
ensure that minority shareholders received fair
compensation for shares that were involuntarily sold in
a merger. Modern securities practices blur the line
between a share's equity interest and its voting interest,
which enables appraisal arbitrage-individuals,
particularly hedge funds, petitioning for appraisal
rights over shares that another person has the voting
rights to. Instances of appraisalarbitragein Delaware
mergers are soaring and causing corporate buyers to be
uncertain about a merger's ultimate price. This Note
contends that Delaware's legislature can ameliorate
this problem by establishing a contemporaneous
ownership requirement and by initiating efforts to
centralize share …

The Power Few Of Corporate Compliance, Todd Haugh

Georgia Law Review

Corporate compliance in most companies is carried out under the assumption that unethical and illegal conduct occurs in a more or less predictable fashion. That is, although corporate leaders may not know precisely when, where, or how compliance failures will occur, they assume that unethical employee conduct will be sprinkled throughout the company in a roughly normal distribution, exposing the firm to compliance risk but in a controllable manner. This assumption underlies many of the common tools of compliance — standardized codes of conduct, firm-wide compliance trainings, and uniform audit and monitoring practices. Because regulators also operate under this assumption, …

Crowdfunding Signals, Darian M. Ibrahim

Georgia Law Review

Entrepreneurs can now “crowdfund,” or sell securities to unaccredited investors over the Internet, to raise capital. But will these companies be able to attract the follow-on investors (angels and venture capitalists) that are necessary for long-term success? Angels and VCs face extreme levels of information asymmetry when deciding whether to fund a company. Signals can reduce this asymmetry. Early commentary argues a company only crowdfunds as a last resort for fear of sending a negative signal about the company’s quality to follow-on investors. This Article argues the inverse. This Article argues a successful crowdfunding campaign can send a positive signal …

In Pursuit Of Good & Gold: Data Observations Of Employee Ownership & Impact Investment, Christopher Greczy, Jessica S. Jeffers, David K. Musto, Anne M. Tucker

Scholarly Works

A startup’s path to self-sustaining profitability is risky and hard, and most do not make it. Venture capital (VC) investors try to improve these odds with contractual terms that focus and sharpen employees’ incentives to pursue gold. If the employees and investors expect the startup to balance the goal of profitability with another goal—the goal of good—the risks are likely to both grow and multiply. They grow to the extent that profits are threatened, and they multiply to the extent that balancing competing goals adds a dimension to the incentive problem. In this Article, we explore contracting terms specific to …

The Fiduciary Enterprise Of Corporate Law, Christopher Bruner

Scholarly Works

No abstract provided.

Publicly Funded Private Security: A Critical Examination Of Georgia Law Pertaining To The Private Employment Of Off-Duty Police Officers, Ryan L. Giles

Georgia Law Review

Generally, employers of private security guards are
vicariously liable for the actions of their employees. This
incentivizes employers to protect against unnecessary risks
to the public and to internalize the social costs of their
business activities. In Georgia, however, this centuries-old

doctrine of respondeat superior does not apply when a
private business hires an off-duty police officer.
Several consequences arise from the current state of the
law: inconsistency in application, unfairness to victims
and imprudent taxpayer subsidization of private
businesses. This Note illustrates that the current law is
both unjust and unwise by contrasting business liability
for police torts with …

The Andean Foreign Investment Code: An Overview, Lloyd Pike

Georgia Journal of International & Comparative Law

No abstract provided.

Expropriation - Compensation - Agreement Reached Between The Government Of The United States Of America And The Government Of Peru On $76 Million As Compensation For Expropriated Properties Of United States Nationals, William M. Phillippe

Georgia Journal of International & Comparative Law

No abstract provided.

Foreign Nation Judgments - If State Law Provides For The Enforceability Of Foreign Judgments, The Judgment Is Enforceable Without Determination Of Whether The Arbitration Award On Which It Is Based Is Independently Enforceable Under The Convention On The Recognition And Enforcement Of Foreign Arbitral Awards, John W. Kindt

Georgia Journal of International & Comparative Law

No abstract provided.

Contracts - Arbitration Agreement - An Arbitration Agreement In An International Contract Is To Be Given Full Effect By Federal Courts Except Where Public Policy Or Equity Dictate Otherwise, James D. Dunham, J. S. Schuster

Georgia Journal of International & Comparative Law

No abstract provided.

Book Review: International Licensing Agreements. Edited By Gótz M. Pollzien And Eugen Langen. Indianapolis And New York: The Bobbs-Merrill Co., 2d Ed. 1971. Pp. Xlvi, 593. $35.00., William M. Poole

Georgia Journal of International & Comparative Law

No abstract provided.

Trading With Socialist Partners, Josef Rohlik

Georgia Journal of International & Comparative Law

No abstract provided.

Foreign Investment Protection And Icsid Arbitration, Charles Vuylsteke

Georgia Journal of International & Comparative Law

No abstract provided.