Business Organizations Law Commons^™

Price Theory, Competition, And The Rule Of Reason, Alan J. Meese

Faculty Publications

Challenging traditional antitrust jurisprudence, Professor Alan J. Meese argues that the present structure of Rule of Reason analysis, applied pursuant to Standard Oil v. United States, has become outdated. The Rule of Reason as currently applied by the courts rests upon neoclassical price theory, an economic paradigm that assumes that legitimate competition consists of unbridled technological rivalry, unconstrained by nonstandard contracts. Recently, however, the Supreme Court has begun to apply a competing paradigm- Transaction Cost Economics-when determining whether a contract is unreasonable "per se" or instead deserving of Rule of Reason scrutiny. Professor Meese argues that Transaction Cost Economics more …

Raising Rivals' Costs: Can The Agencies Do More Good Than Harm?, Alan J. Meese

Faculty Publications

No abstract provided.

Proportionate Liability Under The Cbca In The Context Of Recent Corporate Governance Reform: Canadian Auditors In The Wrong Place At The Wrong Time?, Poonam Puri, Stephanie Ben-Ishai

Articles & Book Chapters

In the recent Canada Business Corporations Act amendments implementing a proportionate liability scheme, auditors appear to be winners. This is consistent with the trend in the past several years as a result of which Canadian auditors have been successful in narrowing the scope of their liability both through legislation and through common law. Going forward, however, it is fair to say that auditors will be losers unless the accounting profession re-evaluates its role and responsibilities to its stakeholders. Given the accounting and corporate governance scandals North America has witnessed in the past few years, as well as the actual and …

A Taxing Settlement, Hanoch Dagan, James J. White

Articles

The following essay is based on the talk "Government, Citizens, and Injurious Industries: A Case Study of the Tobacco Litigation," delivered by Hanoch Dagan last May to the Detroit Chapter of the International Association of Jewish Lawyers and Jurists, and on the article "Governments, Citizens, and Injurious Industries," by Dagan and James J. White, '62, which appeared in 75.2 New York University Law Review 254-428 (May 2000). The authors hold conflicting view on the underlying issue of this topic: tobacco company product liability. Professor Dagan holds the position that tobacco companies are liable for harm done by their products; Professor …

Allocation And Reallocation In Accordance With The Partners' Interests In The Partnership, Stephen Utz

Faculty Articles and Papers

If a partnership agreement either fails to allocate an item of partnership income, gain, deduction, credit, or loss, or does so invalidly, section 704(b) requires the item to be allocated in accordance with the partners' interests in the partnership (PIP). A brief portion of the section 704(b) regulations interpret this reallocation standard, providing guidelines of varying specificity. Commentators agree that the guidelines are vague and puzzling. The courts have not often had to apply this portion of the regulation. However, in the event that the courts do employ section 704(b), they have assigned an implicit priority to the different guidelines, …

The Case For Retaining The Corporate Amt, Reuven S. Avi-Yonah

Articles

PROFESSORS Chorvat and Knoll present us with a strong argument for repealing the corporate alternative minimum tax (AMT). In 2001, repeal was recommended by the Joint Committee on Taxation as part of their simplification study, endorsed by the ABA/AICPA/TEI tax simplification project, and included in a bill passed by the House of Representatives. Since this issue is likely to arise again, it seems worthwhile to review the arguments raised by Chorvat and Knoll. Upon review, none of these arguments seem particularly persuasive; at best, they make a case for reforming the corporate AMT, not for repealing it. On the other …

National Regulation Of Multinational Enterprises: An Essay On Comity, Extraterritoriality, And Harmonization, Reuven S. Avi-Yonah

Articles

Despite the economic importance of multinational enterprises ("MNEs"), there is a surprising paucity of law governing foreign direct investment ("FDI"), especially in comparison with the abundance of law governing trade. There is no multilateral legal arrangement governing FDI that is similar to the General Agreement on Tariffs and Trade ("GATT"), no organization similar to the World Trade Organization, and almost no courses in law schools on FDI law. The goal of this Article is to begin to remedy this state of affairs by proposing a conceptual model for analyzing the application of the national laws of home and host countries …

Self-Regulation And Securities Markets, Adam C. Pritchard

Articles

Enron, Arthur Andersen, Tyco, ImClone, WorldCom, Adelphia - as American investors reel from accounting scandals and self-dealing by corporate insiders, the question of trust in the securities markets has taken on a new urgency. Securities markets cannot operate without trust. Markets known for fraud, insider trading, and manipulation risk a downward spiral as investors depart in search of safer investments. Today, many investors are rethinking the wisdom of entrusting their financial futures to the stock market. Absent trust in the integrity of the securities markets, individuals will hoard their money under the proverbial mattress.

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 …

Unregulable Defenses And The Perils Of Shareholder Choice, Jennifer Arlen, Eric L. Talley

Faculty Scholarship

A significant debate rages within corporate law scholarship as to whether shareholders or managers should be granted authority over the tender offer process once a bid is imminent. Both sides generally agree that the issue depends on whether shareholders are capable of exercising informed choice over takeover bids. Supporters of managerial veto power contend that the arguments favoring professional management of publicly held firms carry over into the tender offer context. Proponents of shareholder choice, on the other hand, argue that shareholders can act on their own behalf in the special circumstances surrounding contests for corporate control.

This Article challenges …

Controlling Controlling Shareholders, Ronald J. Gilson, Jeffrey N. Gordon

Faculty Scholarship

The rules governing controlling shareholders sit at the intersection of the two facets of the agency problem at the core of public corporations law. The first is the familiar principal-agency problem that arises from the separation of ownership and control. With only this facet in mind, a large shareholder may better police management than the standard panoply of market-oriented techniques. The second is the agency problem that arises between controlling and non-controlling shareholders, which produces the potential for private benefits of control. There is, however, a point of tangency between these facets. Because there are costs associated with holding a …

Local Institutions, Foreign Investment And Alternative Strategies Of Development: Some Views From Practice, Tamara Lothian, Katharina Pistor

Faculty Scholarship

This Essay summarizes the major insights gained from a panel discussion with legal practitioners about the relevance of local institutions to foreign direct investors. The Essay offers a critique of policy conclusions drawn from empirical studies that suggest a positive correlation between legal institutions and foreign investment flows. It points out that the data used in these studies are far too general to allow policy conclusions and that neither the data nor the policy conclusions are sufficiently attuned to the challenges or opportunities that foreign direct investment projects face on the ground. According to the results of the panel discussion, …

On Virtue And Peace: Creating A Workplace Where People Can Flourish, Caryn L. Beck-Dudley, Steven H. Hanks

Vanderbilt Journal of Transnational Law

In this Article, Professors Beck-Dudley and Hanks explore the virtues necessary for individuals to flourish within a business organization. Through this exploration, they conclude that modern discussions of business ethics fail to account for the value and virtue of peaceableness. Then, focusing on the freedom from conflict aspect of peaceableness, they use Champion Paper Products, Sartell Minnesota Paper Mill, as a case study in the significant improvements in human flourishing and organizational performance that can occur when management and labor choose peaceable solutions to labor conflicts.

Risk Management And Organizational Governance: The Case Of Enron, Robert Eli Rosen

Articles

No abstract provided.

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

Faculty Publications

(Excerpt)

This Article follows in the spirit of Karl Llewellyn and his fellow drafters of the Uniform Commercial Code who sought to transform merchant norms into law. The merchant norms discussed here are the procedures that sophisticated firms contract for to resolve anticipated valuation disputes. The law proposed is a new procedure for resolving valuation disputes based on commercial valuation norms. More specifically, this Article proposes a new default valuation procedure, modeled on the algorithmic valuation clauses commonly used in the contracts of sophisticated firms, that would encourage parties to valuation disputes to introduce more plausible valuations into evidence and …

Did The Private Securities Litigation Reform Act Work?, Michael A. Perino

Faculty Publications

In 1995 Congress passed the Private Securities Litigation Reform Act (the PSLRA or the Act) to address abuses in securities fraud class actions. In the wake of Enron, WorldCom, Adelphia, and other high profile securities frauds, critics suggest that the law made it too easy to escape liability for securities fraud and thus created a climate in which frauds are more likely to occur. Others claim that the Act has largely failed because it did little to deter plaintiffs' lawyers from filing nonmeritorious cases. This article employs a database of the 1449 class actions filed from 1996 through 2001 to …

Foreword: Revisiting Gilson And Kraakman’S Efficiency Story, Donald C. Langevoort

Georgetown Law Faculty Publications and Other Works

Gilson and Kraakman's ‘Mechanisms of Market Efficiency’ is part of the canon of modem corporate law scholarship, one of a handful of articles that has profoundly influenced the way we think about the field. It is also enigmatic, warranting a fresh look by those who think they know what it says from some long-ago reading or second-hand references by other authors.

When The Endowment Tanks, Jeffrey J. Haas

Articles & Chapters

No abstract provided.

The Costs And Benefits Of Precommitment: An Appraisal Of Omnicare V. Ncs Healthcare, Sean J. Griffith

Faculty Scholarship

The Decision of the Delaware Supreme Court in Omnicare v. NCS Healthcare raises concerns regarding the efficiency of Delaware law from the perspective of shareholder welfare maximization and engages the emerging literature on corporate precommitments. The clash between the majority and dissenting opinions offers competing visions of the basic corporate law separation of powers issue--that is, board versus shareholder primacy. This Article engages in a close analysis of the Omnicare opinion, focusing on its doctrinal foundations as well as its policy implications. After this introduction, Part II provides a brief overview of the relevant factual and legal background. Part III …

Clicks And Mortar: Taxing Multinational Business Profits In The Digital Age, Aldo Forgione

Seattle University Law Review

This Article argues that governments should abandon the treaty concept of permanent establishment and adopt international tax reforms that restore the primacy of "market country taxation of multi-national business profits promoted by domestic tax laws. Part I explores several emerging e-commerce issues that demonstrate the tension of introducing traditional tax norms to a digital environment. Part II reviews historical and recent developments in the international taxation of business profits and looks at the underlying trends and sentiments for reform of the existing system of global taxation of business income. Part III canvasses several prominent international tax reform alternatives proposed by …

Summary Of Nittinger V. Holman, Cami Perkins

Nevada Supreme Court Summaries

Respondents, Dedric Holman and Christina Edwards, were gambling at the Gold Coast Hotel when a physical confrontation arose between John Nittinger, a security guard, and Holman. When Holman tried to run, security officers pursued him and held him to the ground. According to Holman’s testimony, the guards made racial slurs, punched, kicked and beat him. The security shift supervisor was present during part of the incident. The district court instructed the jury that it could find the Gold Coast liable for punitive damages if a “managerial agent” authorized or ratified the guards’ conduct. The jury awarded respondents $198,000 in compensatory …

On The Proper Motives Of Corporate Directors (Or, Why You Don't Want To Invite Homo Economicus To Join Your Board), Lynn A. Stout

Cornell Law Faculty Publications

One of the most important questions in corporate governance is how directors of public corporations can be motivated to serve the interests of the firm. Directors frequently hold only small stakes in the companies they manage. Moreover, a variety of legal rules and contractual arrangements insulate them from liability for business failures. Why then should we expect them to do a good job?

Conventional corporate scholarship has great difficulty wrestling with this question, in large part because conventional scholarship usually adopts the economist's assumption that directors are rational actors motivated purely by self-interest. This homo economicus model of behavior may …

Pragmatic Reform: Lessons From The South African Experiment, J. William Callison

Kentucky Law Journal

No abstract provided.

Why We Need The Independent Sector: The Behavior, Law, And Ethics Of Not-For-Profit Hospitals, Jill R. Horwitz

Articles

Among the major forms of corporate ownership, the not-for-profit ownership form is distinct in its behavior, legal constraints, and moral obligations. A new empirical analysis of the American hospital industry, using eleven years of data for all urban general hospitals in the country, shows that corporate form accounts for large differences in the provision of specific medical services. Not-for-profit hospitals systematically provide both private and public goods that are in the public interest, and that other forms fail to provide. Two hypotheses are proposed to account for the findings, one legal and one moral. While no causal claims are made, …

Healthy Organizations And The Link To Peaceful Societies: Strategies For Implementing Organizational Change, Jeannette Jackson, Maria Coolican

Vanderbilt Journal of Transnational Law

This Article focuses on the impact that the organizational structure of a corporation can have on fostering a peaceful outside world. In this Article, the Authors argue that if an organization is structured to meet the needs of its employees and also cares about its employees and their needs, then the employees will behave civilly and respectfully. Furthermore, the Authors argue that the organization structured in such fashion will then be conducive for healthy organizational growth and positive conflict resolution. The Article posits that families, schools, religious organizations, social groups, and business organizations all have the potential of contributing to …

Making Sense Of Successor Liability, Marie T. Reilly

Faculty Scholarship

A firm that buys assets from another firm ordinarily does not acquire liability to the seller's creditors simply by buying its assets. This ordinary rule is subject to important exceptions. The buyer's consent triggers an exception. If a buyer agrees to assume the seller's liability to third parties, it is for that reason liable. This article considers a more controversial exception - successor liability. When a court decides that an asset acquirer should be treated as a "successor" to the transferor, it is liable for the transferor's debts as though it were the transferor.

Just Do It: An Antidote To The Poison Pill, Julian Velasco

Journal Articles

The poison pill is the most powerful defense against hostile takeovers. It can render a company takeover-proof, or nearly so. Efforts at developing an antidote have focused largely on shareholder-adopted bylaws, but the legality of such proposals has been questioned by many. In any event, shareholder-adopted bylaws have not been very successful in eliminating poison pills thus far. In order to effect takeovers, hostile bidders cannot rely on the courts or the target company's shareholders; they can rely only on themselves. In this article, I propose a strategy for hostile bidders to counteract the poison pill and to consummate hostile …

Locking In Capital: What Corporate Law Achieved For Business Organizers In The Nineteenth Century, Margaret M. Blair

Vanderbilt Law School Faculty Publications

This Article argues that corporate status became popular in the nineteenth century as a way to organize production because of the unique manner in which incorporation permitted organizers to lock in financial capital. Unlike participants in a partnership, shareholders in an incorporated enterprise could not extract capital from the firm without explicit approval of a board of directors charged with representing the interests of the incorporated entity, even when that interest might sometimes conflict with the interests of individual shareholders. While this ability to lock in capital has occasionally led to abuses, the ability to commit capital generally helped promote …

Robust Public Debate: Realizing Free Speech In Workplace Representation Elections, Kate Andrias

Faculty Scholarship

The First Amendment stands as a guarantor of political freedom and as the “guardian of our democracy.” It seeks to expand the vitality of public discourse in order to enable Americans to become aware of the issues before them and to pursue their ends fully and freely. As the Supreme Court wrote in the canonical case of New York Times Co. v . Sullivan, the First Amendment’s function is to create the “uninhibited, robust and wide-open” public debate necessary for the exercise of self-governance.

The Amendment plays a prominent role in the regulation of workplace representation elections, the process …