Business Organizations Law Commons^™

The (Not So) Puzzling Behavior Of Angel Investors, Darian M. Ibrahim

Faculty Publications

No abstract provided.

Getting The Roberts Court Right: A Response To Chemerinsky, Jonathan H. Adler

Faculty Publications

Dean Erwin Chemerinsky makes a substantial contribution to the narrative of conservative ascendance [within the Roberts Court] in The Roberts Court at Age Three. Chief Justice Roberts and Justice Alito “have been everything that conservatives could have dreamed of and liberals could have feared,” he writes. The two newest justices are forging “a solid conservative voting majority" on the Court. The result is a Court that is “notably more conservative” than its predecessors on most contentious questions. It is, Dean Chemerinsky claims, “the most conservative Court since the mid-1930s.”

To say Dean Chemerinsky overstates his case is an understatement. …

Entrepreneurs On Horseback: Reflections On The Organization Of Law, Darian M. Ibrahim, D. Gordon Smith

Faculty Publications

“Law and entrepreneurship” is an emerging field of study. Skeptics might wonder whether law and entrepreneurship is a variant of that old canard, the Law of the Horse. In this Essay, we defend law and entrepreneurship against that charge and urge legal scholars to become even more engaged in the wide-ranging scholarly discourse regarding entrepreneurship. In making our case, we argue that research at the intersection of entrepreneurship and law is distinctive. In some instances, legal rules and practices are tailored to the entrepreneurial context, and in other instances, general rules of law find novel expression in the entrepreneurial context. …

Individual Or Collective Liability For Corporate Directors?, Darian M. Ibrahim

Faculty Publications

Fiduciary duty is one of the most litigated areas in corporate law and the subject of much academic attention, yet one important question has been ignored: Should fiduciary liability be assessed individually, where directors are examined one-by-one for compliance, or collectively, where the board's compliance as a whole is all that matters? The choice between individual and collective assessment may be the difference between a director's liability and her exoneration, may affect how boards function, and informs the broader fiduciary duty literature in important ways. This Article is the first to explore the individual/collective question and suggest a systematic way …

Introduction: Corporations And Their Communities, Robert N. Strassfeld

Faculty Publications

No abstract provided.

Stakeholder Governance: A Bad Idea Getting Worse, George W. Dent

Faculty Publications

Calls for a stakeholder voice in corporate governance never end, as evidenced by the Symposium Corporations and Their Communities to which this paper is a contribution. The demise of labor unions and explosion of executive compensation while the income of most Americans has stagnated over the last several years has precipitated cries for remedial action, some of which include stakeholder governance. Although complaints about deepening inequality are just, other remedies should be pursued. The traditional objections to stakeholder governance remain valid: the interests of stakeholder groups clash not only with those of the shareholders but also with each other, and …

Academics In Wonderland: The Team Production And Director Primacy Models Of Corporate Governance, George W. Dent

Faculty Publications

This paper examines the Team Production and Director Primacy Models of corporate governance, finds them wanting, and explains why corporate governance is moving toward shareholder primacy and why this will benefit not only investors but the whole American economy.

The director primacy model posits that shareholders are so ill-informed and so divided in their interests that they would self-destruct if they controlled the firm. Accordingly they tie their own hands by ceding control to a board of independent directors. Advocates of the team production theory often agree with the foregoing but stress the importance to the firm of other constituencies, …

Corporate Therapeutics At The Securities And Exchange Commission, Jayne W. Barnard

Faculty Publications

No abstract provided.

Sentencing High-Loss Corporate Insider Frauds After Booker, Frank O. Bowman Iii

Faculty Publications

The Federal Sentencing Guidelines have for some years prescribed substantial sentences for high-level corporate officials convicted of large frauds. Guidelines sentences for offenders of this type moved higher in 2001 with the passage of the Economic Crime Package amendments to the Guidelines, and higher still in the wake of the Sarbanes-Oxley Act of 2002. Today, any corporate insider convicted of even a moderately high-loss fraud is facing a guideline range measured in decades, or perhaps even mandatory life imprisonment. Successful sentencing advocacy on behalf of such defendants requires convincing the court to impose a sentence outside (in many cases, far …

The Sarbanes-Oxley Act And Ethical Corporate Climates: What The Media Reports; What The General Public Knows, Cheryl L. Wade

Faculty Publications

(Excerpt)

The question for participants in the Securities Regulation Section’s program at the 2008 AALS Annual Meeting was whether recent securities regulation reforms hit their mark. I focus in this essay on The Sarbanes-Oxley Act of 2002 (SOX or the Act), the most important legislative reform of securities markets in recent decades. Enacted to assuage public outrage about corporate greed and malfeasance ignited by media reports describing debacles at Enron, WorldCom, Adelphia, Tyco and other companies in 2001 and 2002 (the Corporate Scandals), SOX represented a legislative and political response to public resentment of what some considered a morally impaired …

Narcissism, Over-Optimism, Fear, Anger, And Depression: The Interior Lives Of Corporate Leaders, Jayne W. Barnard

Faculty Publications

No abstract provided.

Loving Gender Balance: Reframing Identity-Based Inequality Remedies, Darren Rosenblum

Faculty Publications

(Excerpt)

The egalitarian voice of the U.S. Supreme Court resonates forty years after it abolished antimiscegenation laws in Loving v. Virginia. While Loving's vigor influences contemporary debates on sex-related marriage restrictions, its impact extends to the hopes and tensions that undergird and unite equality movements. Half a world away, Norway's Corporate Board Quota (CBQ), recently began enforcing a forty percent floor for both sexes on publicly traded companies' boards of directors.

At first glance, Loving's affirmation of an interracial marriage in the face of the state's opprobrium seems impossibly divergent from the CBQ. Loving concerned de jure …

Sarbanes-Oxley Five Years Later: Will Criticism Of Sox Undermine Its Benefits?, Cheryl L. Wade

Faculty Publications

(Excerpt)

In 2002, the Sarbanes-Oxley Act1 ("SOX" or the "Act") not only changed the details relating to financial reporting, internal controls, and corporate governance in general, but also changed the discussion about corporate climates and cultures, at least temporarily. The political discourse leading up to SOX's enactment in the aftermath of the accounting debacles of 2001 and 2002 was replete with discussions about more ethical and responsible corporate governance. The Act's passage, accompanied by the get-tough-on-Corporate-America speeches made by President George W. Bush and others changed the way corporate actors discuss their ethical obligations. The Act's strict requirements regarding financial …

Contractual Valuation Mechanisms And Corporate Law, Keith Sharfman

Faculty Publications

(Excerpt)

Legal valuation—the resolution of disputes over the value of legal entitlements—is an inevitable aspect of any legal system. Across time and place and doctrinal boundaries, the problem is the same: each side seeks to have a self-servingly high or low figure assigned to the entitlement in question, and a mechanism is needed to choose a conclusive value from a range of plausible outcomes. Usually the mechanism involves litigation of some sort, such as a trial before a judge, jury, or hearing officer. But not always.

This Article analyzes a transactional alternative to valuation litigation that has become increasingly popular: …

A Uniform Domestic Partnership Act: Marrying Business Partnership And Family Law, Jennifer Ann Drobac, Antony Page

Faculty Publications

For decades, Americans have argued about who may marry and what marriage actually means in legal, religious, and philosophical terms. For almost as long, two problems - the rising divorce rate and the poverty of some "divorced" children and their custodians - have fed concerns about the viability of marriage as an institution that promotes domestic stability and economic security. This Article explores the notion that domestic partnership based upon business partnership law would better serve more couples, their families, and society as a whole. It proposes a Uniform Domestic Partnership Act, loosely modeled after the UPA, as a substitute …

Introduction: Capitalizing On The Success Of Entrepreneurship: Ipos, Private Sales, Tax Aspects, Residual Interest Of Entrepreneurs After Sales Of Ipos, Richard K. Gordon

Faculty Publications

Panel discussion on "Capitalizing on the Success of Entrepreneurship: IPOS, Private Sales, Tax Aspects, Residual Interest of Entrepreneurs after Sales of IPOS" from the "The Canada-United States Law Institute Conference on Comparative Legal Aspects of Entrepreneurship in Canada and the United States" - Cleveland, Ohio April 13-14, 2007.

The Model Federal Sentencing Guidelines Project: Adjustments For Guilty Pleas And Cooperation With The Government, Model Sentencing Guidelines §3.7 - 3.8, Frank O. Bowman Iii

Faculty Publications

This Article is the tenth of twelve parts of a set of Model Federal Sentencing Guidelines designed to illustrate the feasibility and advantages of a simplified approach to federal sentencing proposed by the Constitution Project Sentencing Initiative. The Model Sentencing Guidelines and the Constitution Project report are all to be published in Volume 18, Number 5 of the Federal Sentencing Reporter. The project is described in an essay titled 'Tis a Gift To Be Simple: A Model Reform of the Federal Sentencing Guidelines, available on SSRN at http://ssrn.com/abstract=927929. This segment of the project contains rules addressing cases in which the …

Financial Moral Panic! Sarbanes-Oxley, Financier Folk Devils, And Off-Balance Sheet Arrangement, Jose M. Gabilondo

Faculty Publications

No abstract provided.

Transforming Discriminatory Corporate Cultures: This Is Not Just Women's Work, Cheryl L. Wade

Faculty Publications

(Excerpt)

The Symposium on Women and the "New" Corporate Governance began with an opening address by Sheila Wellington, the President of Catalyst. "Don't change women," she said, "change corporations." I agree with Ms. Wellington, but I would go one step further by observing that companies will change only if men change. The overwhelming majority of the directors and officers who manage and govern large public companies in the United States are white men. Public companies will enjoy healthy relationships with their women employees only to the extent encouraged and facilitated by the men who control these corporations. But how does …

The Ducks Stop Here? The Environmental Challenge To Federalism, Jonathan H. Adler

Faculty Publications

PIn Solid Waste Association of Northern Cook County v. U.S. Army Corps of Engineers ("SWANCC"), the Supreme Court considered whether federal regulatory authority reaches isolated wetlands and ponds due to the potential presence of migratory birds. In rejecting such an expansive view of federal authority, the Court's majority underlined its devotion to the federalism principles enunciated in Lopez and other recent cases. The federalist majority further reiterated its support for a canon of statutory construction which holds that federal statutes will not be interpreted to intrude into state matters, such as local land-use control, absent a clear statement by Congress. …

Decentering The Firm: The Limited Liability Company And Low-Wage Immigrant Women Workers, Miriam A. Cherry

Faculty Publications

(Excerpt)

Imagine the following scenario: a group of immigrant women clean houses and offices in the suburbs of a large northeastern city. These workers speak languages other than English. Therefore they depend on an intermediary, another immigrant who has been in the United States for a longer period of time, to solicit jobs, negotiate schedules, and communicate with customers. Although this “intermediary” does not actually perform any of the cleaning work, the intermediary’s “cut,” or share of the income generated, is substantial. The immigrant workers are typically paid a low wage, often averaging below the minimum wage set by the …

At The Top Of The Pyramid: Lessons From The Alpha Women And The Elite Eight, Jayne W. Barnard

Faculty Publications

No abstract provided.

What Independent Directors Should Expect From Inside Directors: Smith V. Van Gorkom As A Guide To Intra-Firm Governance, Cheryl L. Wade

Faculty Publications

(Excerpt)

Smith v. Van Gorkom is the watershed case in which the board of a public company was held liable for breach of its fiduciary duty of care. The board of Trans Union Corporation (Trans Union) approved the company's sale to Jay Pritzker after a twenty-minute oral presentation by Chief Executive Officer Jerome Van Gorkom. The board spent only two hours considering Pritzker's offer before approving it. The directors received no notice or information before the meeting that its purpose was to approve the company's sale to Pritzker, nor did they receive anything in writing describing the proposed deal. No …

The Descendants Of Fassihi: A Comparative Analysis Of Recent Cases Addressing The Fiduciary Claims Of Disgruntled Constituents Against Attorneys Representing Closely-Held Entities, Matthew Rossman

Faculty Publications

Accordingly, this Article will examine three recent cases closely and then make observations about what these "descendants of Fassihi" say about the state of the law and how they should impact attorney behavior. To provide proper context for this discussion, a short summary of Fassihi and other contemporary responses to the issues raised in Fassihi follows.

Comment: The Case For Real Shareholder Democracy, George W. Dent

Faculty Publications

Comment on presentations at The Georege A. Leet Business Law Symposium: Corporate Governance: Directors v. Shapreholders, Cleveland, Ohio, 2005.

The George A. Leet Business Law Symposium: Corporate Governance: Directors Vs. Shareholders? - Introduction, George W. Dent

Faculty Publications

Introducation to The George A. Leet Business Law Symposium: Corporate Governance: Directors vs. Shareholders?, Cleveland, Ohio.

Corporate Governance: Still Broke, No Fix In Sight, George W. Dent

Faculty Publications

Dissatisfaction with the governance of public companies is as old as the public company itself, but public concern about corporate governance is spasmodic. Prior reforms did not cure the ills of corporate governance, and there is little reason to think that the recent spate of reforms will be any more effective. The fundamental problem of corporate governance remains what it has always been: the separation of ownership and control. No reform can succeed unless it overcomes this contradiction. Corporate executives determined to preserve their privileges and a number of scholars deny this claim; in effect, these Panglosses consider the status …

The Unique Benefits Of Treating Personal Goodwill As Property In Corporate Acquisitions, Darian M. Ibrahim

Faculty Publications

Corporate acquisition talks may not get far if buyer and seller disagree over transaction structure, which can have significant after-tax effects. But the parties may have overlooked an item that, due to its potential tax treatment, could be the key to facilitating the acquisition. That item is the selling shareholder's "personal goodwill."

Personal goodwill exists when the shareholder's reputation, expertise, or contacts gives the corporation its intrinsic value. It is most likely to be found in closely held businesses, especially those that are technical, specialized, orprofessional in nature or have few customers and suppliers. If personal goodwill is treated as …

Historical Quirks, Political Opportunism, And The Anti-Loan Provision Of The Sarbanes-Oxley Act, Jayne W. Barnard

Faculty Publications

No abstract provided.

Rule 10b-5 And The "Unfitness" Question, Jayne W. Barnard

Faculty Publications

No abstract provided.