Business Organizations Law Commons^™

Entity Exit: Rights, Remedies, And Bounded Rationality, Mark Anderson

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No abstract provided.

The Business Of Treaties, Melissa J. Durkee

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Business entities play important and underappreciated roles in the production of international treaties. At the same time, international treaty law is hobbled by state-centric presumptions that render its response to business ad hoc and unprincipled.

This Article makes three principal contributions. First, it draws from case studies to demonstrate the significance of business participation in treaty production. The descriptive account invites a shift from attention to traditional lobbying at the domestic level and private standard-setting at the transnational level to the ways business entities have become autonomous international actors, using a panoply of means to transform their preferred policies into …

The Pendulum Swings: Reconsidering Corporate Criminal Prosecution, David M. Uhlmann

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Corporate crime continues to occur at an alarming rate, yet disagreement persists among scholars and practitioners about the role of corporate criminal prosecution. Some argue that corporations should face criminal prosecution for their misconduct, while others would reserve criminal prosecution for individual corporate officials. Perhaps as a result of this conflict, there has been a dramatic increase over the last decade in the use of deferred prosecution and non-prosecution agreements for some corporate crimes, even as the government continues to bring criminal charges for other corporate crimes. To move beyond our erratic approach to corporate crime, we need a better …

Provisions Denying A Deduction For Illegal Expenses And Expenses Of An Illegal Business Should Be Repealed, Douglas A. Kahn, Howard Bromberg

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Currently, the tax law denies a deduction for business expenses that violate a federal or state law (but only if the state law is generally enforced). In addition, losses, including business losses, cannot be deducted if they arise out of an illegal activity. For example, medical expenses are denied a deduction if they are illegal. Kickbacks, bribes, and rebates given in connection with the Medicaid or Medicare program are nondeductible. Any expenses, legal or not, incurred in connection with the conduct of a business of selling a controlled substance that is prohibited by federal law (or by the law of …

Back To 1913?: The Ryan Blueprint And Its Problems, Reuven S. Avi-Yonah

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From the Revolutionary War to the late 19th century, the federal government was financed primarily through regressive tariffs on imported goods. The exception was the income tax enacted during the national emergency of the Civil War, which was allowed to expire in 1872. The rise of an industrial economy in the post- Civil War era led to significant increases in inequality, which the tariffs exacerbated by falling primarily on the working class. ‘‘Robber barons’’ like J.P. Morgan, Andrew Carnegie, and John D. Rockefeller did not consume most of their income, and their intangible wealth avoided state-level personal property taxes as …

Full Circle? The Single Tax Principle, Beps, And The New Us Model, Reuven S. Avi-Yonah

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This paper will argue that while there is some innovation in BEPS, it is in fact more of a continuation that a sharp break with the past. Like Alexis de Tocqueville’s French Revolution, BEPS represents both continuity and change. In particular, the single tax principle has formed the theoretical basis of much of the international tax regime from the beginning. And it is in fact this continuity rather than any sharp change that gives the final BEPS package its promise to, as Secretary General Gurria also promised, “put an end to double non-taxation.”

Regulating Unicorns: Disclosure And The New Private Economy, Jennifer S. Fan

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“Unicorns” are private companies with valuations of a billion dollars or more. As their name indicates, unicorns were originally so rare as to be almost mythical. But Uber and other technology companies have ushered in a new era: we now have a blessing of unicorns, each one of which has the potential to transform financial and cultural norms.

Yet from a legal perspective, these behemoths are regulated just like their much smaller, non-mythical counterparts. Unicorns’ dizzying valuations have not been matched with any expansion or recalibration of regulation. As a result, vital information about these companies remains secret, perhaps for …

Corporate Intent And Corporate Crime: A Matter Of Inference, Caroline Bradley

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No abstract provided.

Cuba Conundrum: Corporate Governance And Compliance Challenges For U.S. Publicly-Traded Companies, Marcia Narine

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No abstract provided.

The Institutional Appetite For Quack Corporate Governance, Alicia J. Davis

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This Article offers evidence that higher quality internal corporate governance is associated with higher levels of ownership by institutional investors. This finding is consistent with the idea that institutions have greater reason than individual investors to prefer well-governed firms, but surprising given the substantial empirical evidence that casts doubt on the efficacy of internal governance mechanisms. The study described in this Article also finds that higher quality external governance is associated with lower proportions of ownership by certain types of institutional investors, also a somewhat surprising result given available empirical evidence on the positive relationship between external governance and firm …

Think Like A Businessperson: Using Business School Cases To Create Strategic Corporate Lawyers​., Alicia J. Davis

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For the past twenty-five years, my academic and professional pursuits have straddled the line between business and law. I majored in business administration in college and then worked as an analyst in the Corporate Finance department at a bulge bracket Wall Street firm. After completing a JD/MBA, I returned to investment banking with a focus on middle-market mergers and acquisitions (M&A) and subsequently practiced law with a focus on private equity and M&A. Finally, in 2004, I found my current home as a corporate law professor. In my courses, which include Mergers & Acquisitions, Enterprise Organization, and Investor Protection, I …

Corporate Social Responsibility Versus Business And Human Rights: Bridging The Gap Between Responsibility And Accountability, Anita Ramasastry

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This article explores the evolution of business and human rights (BHR) from a lawyer’s perspective and examines how it is contextually and conceptually different from corporate social responsibility (CSR) in its aims and ambitions. While CSR emphasizes responsible behavior, BHR focuses on a more delineated commitment in the area of human rights. BHR is, in part, a response to CSR and its perceived failure. This has led to a gap with two disciplines or strands of discourse that are diverging rather than converging. This article explores how the quest for accountability shapes a very different narrative for BHR, which takes …

White Paper: Options For A Treaty On Business And Human Rights, Anita Ramasastry, Douglass Cassell

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The United Nations Human Rights Council decided in June 2014 to establish an Intergovernmental Working Group to “elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises.” The first meeting of the Working Group took take place in Geneva in July 2015. The Council did not further specify what sort of instrument should be drafted. The Center for Human Rights of the American Bar Association and the Law Society of England and Wales asked the present authors to prepare a “White Paper” on possible options for a treaty …

Shareholder Primacy And Corporate Compliance, Judd F. Sneirson

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Corporations, like the rest of us, must comply with environmental and other laws or suffer the consequences. Unfortunately, these consequences can pale in comparison to the gains to be made from non-compliance. Law-and-economics scholarship recognizes this and, by treating many laws as mere costs of doing business, encourages a certain amount of deliberate non-compliance. According to this view, corporate compliance should turn on profitability or whether compliance would otherwise benefit the firm. This Article argues that the law-and-economics scholarship is wrong on the law, wrong as a matter of economics, and does not reflect how most firms in fact behave. …

Cancellation Of Debt And Related Transactions, Douglas A. Kahn, Jeffrey H. Kahn

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If a taxpayer borrows money, the borrowed funds are not included in the taxpayer's gross income. That treatment is proper even though the taxpayer has increased his assets by the amount he borrowed because he also has created a corresponding liability to pay back the loan. The taxpayer's net: wealth has not increased. 'The more difficult and interesting questions arise when the taxpayer fails to repay the loan. At first blush, it would appear that upon cancellation of a loan, the taxpayer should have income for the amount that was cancelled. However, the current tax treatment is not that simple. …

企業の社会的責任と戦略的租税行動 [Corporate Social Responsibility And Strategic Tax Behavior], Reuven S. Avi-Yonah, Keisaku Koga Translator

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This paper addresses two questions. First, from the perspective of the corporation, should the corporation cooperate and pay the corporate tax, or should it engage in "strategic" tax behavior designed to minimize or eliminate its corporate tax burden? Second, from the perspective of the state, should the state use the corporate tax just to raise revenue, or should it also try to use it as a regulatory tool to steer corporate behavior in directions that it deems beneficial to society? The paper argues that whatever our view of the nature of the corporation and of the legitimacy of corporate social …

Distinguishing Deductible Repairs From Capitalized Improvements: An Expectations Approach To The New Repair Regulations, George Mundstock, Thomas J. Korge

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No abstract provided.

Disclosing Disclosure's Defects: Addressing Corporate Irresponsibility For Human Rights Impacts, Marcia Narine

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Although many people believe that the role of business is to maximize shareholder value, corporate executives and board members can no longer ignore their companies' human rights impacts on other stakeholders. Over the past four years, the role and responsibility of non-state actors such as multinationals has come under increased scrutiny. In 2011, the United Nations Human Rights Council unanimously endorsed the "UN Guiding Principles on Business and Human Rights," which outline the State duty to protect human rights, the corporate responsibility to respect human rights, and both the State and corporations' duties to provide remedies to parties. The Guiding …

Reflections On The 'New Wave' Inversions And Notice 2014-52, Reuven S. Avi-Yonah

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On September 22 the Treasury Department issued Notice 2014-52, 2014-42 IRB 1. The notice was intended to fulfill President Obama’s pledge to use executive actions to the extent possible to block the new wave of corporate inversions. To what extent can the notice succeed? This article argues that while the notice is a useful first step, it is unlikely to stem the tide of inversion transactions. To do that, legislative action is needed in the short term. In the longer term, the only solution to inversions is coordination with other OECD countries in the context of the base erosion and …

Reverse Cross-Listings - The Coming Race To List In Emerging Markets And An Enhanced Understanding Of Classical Bonding, Nicholas C. Howson, Vikramaditya Khanna

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Studies have found that when a U.S. issuer lists abroad on a foreign exchange, its shares exhibit negative abnormal returns. This negative movement may be because the market expects that the foreign listing will facilitate undetectable insider trading on the foreign exchange or other conduct impermissible in the United States.

The Devil In The Details: Reflections On The Camp Draft, Reuven S. Avi-Yonah

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The discussion draft of the Tax Reform Act of 2014 (TRA 14) released by House Ways and Means Committee Chair Dave Camp, R-Mich., on February 26 represents a major effort for fundamental and far-reaching reform of U.S. tax law. Unfortunately, while many parts of the proposal seem sensible as an effort to bring back the spirit of 1986, the international tax reform proposals are deeply flawed and based on obsolete assumptions of the world that faces U.S. multinationals in 2014.

The 1 Percent Solution: Corporate Tax Returns Should Be Public (And How To Get There), Reuven S. Avi-Yonah, Ariel Siman

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The justification for publishing corporate tax returns is that corporations are given immense benefits by the state that bestows upon them unlimited life and limited liability, and therefore they owe the public the information of how they treat the state that created them. Tax returns, like the financial disclosures that publicly traded corporations must file with the SEC, also provide useful information to shareholders, creditors, and the investing public.

Back From The Dead: Reviving Transfer Pricing Enforcement, Reuven S. Avi-Yonah

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The OECD has recently come to recognize that the transfer pricing system does not work as intended. In its report on base erosion and profit shifting 2013 WTD 140-17: Other Administrative Documents, the OECD recognizes that BEPS results in revenue losses that affect all states, especially poorer ones; that systematic tax avoidance by the richest and most powerful companies in the world undermines the general legitimacy of taxation; that it gives MNEs significant competitive advantages over purely domestic firms, resulting in inefficient allocations of investment and major distortions to economic activity; and that it skews the decisions of the MNEs …

How Serious Is The Problem Of Base Erosion And Profit Shifting?, James R. Hines Jr.

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In recent years, the problem of base erosion and profit shifting (BEPS) by multinational corporations has entered the public consciousness as a potentially important impediment to tax collections. The purpose of this article is to identify the nature of BEPS, consider empirical evidence of its magnitude, and evaluate proposed policy responses. There is considerable evidence that multinational firms arrange their affairs in a tax-sensitive manner, from which it is easy—indeed, perhaps a little too easy—to infer that beps is a serious problem. There are journalistic accounts of apparently spectacular international tax-avoidance schemes used by multinational corporations, though these stories commonly …

Corporate Taxation And Corporate Social Responsibility, Reuven S. Avi-Yonah

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This Article will address the question of whether publicly traded U.S. corporations owe a duty to their shareholders to minimize their corporate tax burden through any legal means, or if instead, strategic behaviors like aggressive tax-motivated transactions are inconsistent with corporate social responsibility (“CSR”). I believe the latter holds true, regardless of one’s view of the corporation. Under the “artificial entity” view, such behavior undermines the constitutive relationship between the corporation and the state. Under the “real view,” such behavior runs contrary to the normal obligation of citizens to comply with the law (even absent effective enforcement). And under the …

Hobby Lobby And The Pathology Of Citizens United, Ellen D. Katz

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Four years ago, Citizens United v. Federal Election Commission held that for-profit corporations possess a First Amendment right to make independent campaign expenditures. In so doing, the United States Supreme Court invited speculation that such corporations might possess other First Amendment rights as well. The petitioners in Conestoga Wood Specialties Corp. v. Sebelius are now arguing that for-profit corporations are among the intended beneficiaries of the Free Exercise Clause and, along with the respondents in Sebelius v. Hobby Lobby Stores, that they also qualify as “persons” under the Religious Freedom Restoration Act (RFRA). Neither suggestion follows inexorably from Citizens United, …

'Quack Corporate Governance' As Traditional Chinese Medicine – The Securities Regulation Cannibalization Of China's Corporate Law And A State Regulator's Battle Against Party State Political Economic Power, Nicholas C. Howson

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From the start of the People’s Republic of China’s (PRC) “corporatization ” project in the late 1980s, a Chinese corporate governance regime subject to increasingly enabling legal norms has been determined by mandatory regulations imposed by the PRC securities regulator, the China Securities Regulatory Commission (CSRC). Indeed, the Chinese corporate law system has been cannibalized by all - encompassing securities regulation directed at corporate governance, at least for companies with listed stock. This Article traces the path of that sustained intervention and makes a case — wholly contrary to the “quack corporate governance” critique much aired in the United States …

Concentrated Ownership And Corporate Control: Wallenberg Sphere And Samsung Group, Hwa-Jin Kim

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Samsung Group’s success cannot be attributed to its corporate governance structure, at least thus far. The corporate governance of Samsung has been rather controversial. As the group faces the succession issue the corporate governance has become as crucial as their new products and services. Samsung has discovered a role model on the other side of the planet, Wallenberg Sphere in Sweden. Much effort has been made to learn about Wallenberg’s arrangements and key to its success. However, a fundamental difference between the institutions in Sweden and Korea has made the corporate structures of the two groups radically different. Wallenberg uses …

Creating A Culture Of Compliance: Why Departmentalization May Not Be The Answer, Michele M. Destefano

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Over the past few decades, as corporate criminal liability rules, sentencing guidelines, and settlement incentives have changed, therehas been increased emphasis on and resources devoted to thecompliance function at large publicly held companies. In this article, Professor DeStefano traces the development of the compliance function at large corporations and questions the recent mandate by certain governmental entities that malfeasant corporations designate a chief compliance officer and separate the compliance gatekeeping function from the legal department so that this chief compliance officer does not report to the general counsel. She categorizes the types of arguments made for and against departmentalization and …

Claim Funders And Commercial Claim Holders: A Common Interest Or A Common Problem?, Michele M. Destefano

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Commercial claim funding, where funders invest in business disputes in exchange for a percentage of any eventual settlement or judgment, is a growing industry in the United States. Funders may request confidential information about the claim and litigation strategy both before deciding to invest (to analyze the strength of the claim) and during the course of the financial relationship (to manage the investment). Further, these funders may work and communicate with claim holders and lawyers about the claim. However, there has been little caselaw and little in-depth analysis on whether--and in what circumstances-the attorney--client privilege and work-product doctrine can be …