Business Organizations Law Commons^™

Corporate Prophet: An Introduction To Susan Stabile's A Catholic Vision Of The Corporation, Kellye Y. Testy

Articles

Public trust in business has waned as large-scale failures of corporate accountability and governance have rocked domestic and international marketplaces in the past several years. Efforts to bolster trust and improve corporate governance have received substantial public attention and have stemmed from many sources, including new regulatory initiatives and enhanced attention to governance by both public and private corporations in an attempt to stave off further regulation. At the same time, corporate law scholars have seized upon this milieu in order to reinvigorate scholarly debates about the roles and purposes of corporations in society.

Professor Susan Stabile, a scholar of …

Investment Banks As Fiduciaries: Implications For Conflicts Of Interest, Andrew F. Tuch

Scholarship@WashULaw

Investment banks play an intermediary role in the financial system that is integral to its efficient operation. A core, and highly visible, part of their work involves providing financial advisory services to institutional clients on transactions that have strategic importance, such as mergers and acquisitions. As these services are but one aspect of the broad and diverse range of financial services that investment banks typically provide, challenges such as conflicts of interest inevitably arise. Somewhat anomalously, the question of whether these firms owe fiduciary duties to their clients when providing financial advisory services has received little regulatory, judicial or scholarly …

Beyond The Alien Tort Claims Act: Alternative Approaches To Attributing Liability To Corporations For Extraterritorial Abuses, Barnali Choudhury

Northwestern Journal of International Law & Business

At one time, the only social responsibility of a business was to increase its profits. During this period, businesses prized dictatorships for their ability to provide stable environments and consumers were not concerned with either where or by whom the shoes they wore were made. However, the increase in globalization changed perceptions. Multinational corporations ("MNCs") began to benefit immensely from globalization and those outside of the MNC environment started to realize that an MNC's profit gains brought about a corresponding responsibility to manage any adverse effects of producing those gains . Suddenly, a company's success was measured by factors other …

Shock Therapy' For Aktiengesellschaften: Can The Sarbanes-Oxley Certification Requirements Transform German Corporate Culture, Practice And Prospects?, Hudson T. Hollister

Northwestern Journal of International Law & Business

The Sarbanes-Oxley Act (Act) of 20021 was the U.S. Congress's hasty response to the wave of corporate scandals that had begun to devastate U.S. investor confidence during the previous year. Its sixty-six pages contain a wide range of measures designed to enhance the quality and independence of corporate audits and disclosure under the U.S. securities-regulation regime. The Act applies to public corporations-corporations that are required to file regular financial reports under the Securities Exchange Act of 1934 (Exchange Act). Objections from German corporations and observers were particularly vigorous. At least one German foreign private issuer registered with the SEC has …

Separation And The Function Of Corporation Law, Ronald J. Gilson

Faculty Scholarship

I am delighted to participate in taking up Professor William Klein's suggestion that we could learn something by attempting a functional typology of corporation law. As a starting point, any typology must be animated by an underlying theory whose terms dictate the lines the typology draws. I want to focus my contribution at the level of the theory that might animate the architecture of this grid. To see what I mean by this, think of the Sesame Street version of Edward Levi's classic, An Introduction to Legal Reasoning. The character points at a board on which there are pictures …

A Theory Of Corporate Scandals: Why The U.S. And Europe Differ, John C. Coffee Jr.

Faculty Scholarship

A wave of financial irregularity broke out in the United States in 2001-2002, culminating in the Sarbanes-Oxley Act of 2002. A worldwide stock market bubble burst over this same period, with the actual market decline on a percentage basis being somewhat more severe in Europe. Yet, no corresponding wave of financial scandals involving a similar level of companies broke out in Europe. Indeed, those scandals that did arise in Europe often had American roots (e.g., Vivendi, Ahold, Adecco, etc.). Given the higher level of public and private enforcement in the United States for securities fraud, this contrast seems perplexing.

What …

Structure Of Regulatory Competition In European Corporate Law, The , Martin Gelter

Faculty Scholarship

In its opinions in the cases Centros, Uberseering and Inspire Art, the ECJ has begun to open European corporate law for regulaton of competition, as it has been discussed in the US for several ldecades. This article analyses the stuictual conditions of competition on the supply and demand sides of the market for corporate law, and the impact of supranational influence. In doing so, it identifies several factors that have received little attention in the incipient European debate. The supply-side analysis shows that a European Delaware is implausible because of the interdependence of competitive advantages and the incentives to compete. …

Playing Peekaboo With Constitutional Law: The Pcaob And Its Public/Private Status, Donna M. Nagy

Articles by Maurer Faculty

This Article is the first to consider the constitutional status of the Public Company Accounting Oversight Board (PCAOB - pronounced by some as peekaboo). Congress created the PCAOB in 2002 to regulate the accounting profession in response to scandals at Enron, WorldCom, and other public companies. The Article argues that notwithstanding the PCAOB's congressional designation as a nonprofit corporation in the private sector, its governmental creation, governmental objectives, governmental powers, and governmentally appointed board members render it a public (or state) actor for purposes of constitutional law. The Article also analyzes the PCAOB from a policy perspective, and argues that …

The Unocal Settlement: Implications For The Developing Law On Corporate Complicity In Human Rights Abuses, Rachel Chambers

Human Rights Brief

No abstract provided.

New Business Entities In Evolutionary Perspective, Henry Hansmann, Reiner Kraakman, Richard Squire

Faculty Scholarship

The new types of business forms that have developed over the past thirty years all combine the freedom of contracting that is traditional to the partnership with the pattern of creditors' rights that is traditional to the business corporation. Legal scholars differ on the issue of whether these new business forms are more partnership-like or corporation-like. Those taking the partnership-like view argue that the degree of freedom of contract is the essential difference between the traditional corporation and partnership forms, while those adhering to the corporation-like view argue that the pattern of creditors' rights is the essential difference. The authors …

Law And The Rise Of The Firm , Henry Hansmann, Reiner Kraakman, Richard Squire

Faculty Scholarship

Organizational law empowers firms to hold assets and enter contracts as entities that are legally distinct from their owners and managers. Legal scholars and economists have commented extensively on one form of this partitioning between firms and owners: namely, the rule of limited liability that insulates firm owners from business debts. But a less-noticed form of legal partitioning, which we call "entity shielding," is both economically and historically more significant than limited liability. While limited liability shields owners' personal assets from a firm's creditors, entity shielding protects firm assets from the owners' personal creditors (and from creditors of other business …

Teaching Enron, Milton C. Regan

Georgetown Law Faculty Publications and Other Works

What follows is a discussion of several transactions that the Examiner analyzed for the Enron bankruptcy court. These represent only a portion of the many transactions that the Examiner analyzed, but constitute a large number of the transactions with respect to which he focused on the conduct of attorneys. In most of these cases, the Examiner found that Enron's lawyers potentially could be liable to the company under various causes of action. In some instances, the Examiner did not find potential liability. These transactions are included in my discussion, however, because they can be used to explore certain ethical issues …

Welfare, Dialectic, And Mediation In Corporate Law, William W. Bratton

Georgetown Law Faculty Publications and Other Works

Bill Klein extends an idealistic and progressive invitation with the Criteria for Good Laws of Business Association (the Criteria). The structure of our debates, he says, prevents us from joining the issue. The discourse will move forward if we can isolate core components on which we agree and disagree. The invitation, thus directed, is well-constructed. To facilitate engagement, each criterion is set out as pari passu with each other. And there is a good reason for the inclusion of each listed criterion. Each has an established place in public and private law jurisprudence. Each has influenced results, coming forth as …

Private Litigation To Enforce Fiduciary Duties In Mutual Funds: Derivative Suits, Disinterested Directors And The Ideology Of Investor Sovereignty, Donald C. Langevoort

Georgetown Law Faculty Publications and Other Works

This article focuses on independent directors and the processes of mutual fund corporate governance. To be clear, I believe (and research shows) that disinterested directors do add value as a form of shareholder protection, and this fact justifies the SEC's efforts to strengthen their role. But they are far from a panacea. While that point alone is almost trite, exploring some of the unique features of mutual fund governance shows why judges and policymakers should not even try to reason by analogy to governance in other kinds of corporations. Yet that is exactly what Burks and its progeny have done. …

Corporate Fiduciary Duties In Kentucky, Rutheford B. Campbell Jr.

Kentucky Law Journal

No abstract provided.

The Lost Distinction Between Agency And Decisional Authority: Unfortunate Consequences Of The Member-Managed Versus Manager-Managed Distinction In The Limited Liability Company, Thomas E. Rutledge

Kentucky Law Journal

No abstract provided.

The Economics Of Limited Liability: An Empirical Study Of New York Law Firms, Kimberly D. Krawiec, Scott Baker

Faculty Scholarship

Since the rapid rise in organizational forms for business associations, academics and practitioners have sought to explain the choice of form rationale. Each form contains its own set of default rules that inevitably get factored into this decision, including the extent to which each individual firm owner will be held personally liable for the collective debts and obligations of the firm. The significance of the differences in these default rules continues to be debated. Many commentators have advanced theories, most notably those based on unlimited liability, profit-sharing, and illiquidity, asserting that the partnership form provides efficiency benefits that outweigh any …

Good Faith Business Judgment: A Theory Of Rhetoric In Corporate Law Jurisprudence, Sean J. Griffith

Faculty Scholarship

This Article develops a theory of rhetoric in corporate law jurisprudence. It begins by examining a recent innovation in Delaware case law: the emerging principle of “good faith.” Good faith is an old notion in law generally, but it offers to bring significant change to corporate law, including realignment of the business judgment rule and a shift in the traditional balance between the authority of boards and the accountability of boards to courts. This Article argues, however, that good faith functions as a rhetorical device rather than a substantive standard. That is, it operates as a speech act, a performance, …

Daedalean Tinkering, Sean J. Griffith

Faculty Scholarship

This Review describes David Skeel's account of corporate scandal and evaluates his policy recommendations in his recent book, Icarus in the Boardroom. It argues that although the book provides a compelling history of corporate scandal, its focus on federal responses to scandal--from the enactment of the Interstate Commerce Act to the Sarbanes-Oxley Act--misses an important part of the story. As corporate law scholars have long pointed out, corporations exist within a network of constraints, based in part on law and in part on markets, norms, and other non-legal sanctions. Because it omits any sustained discussion of the reaction of these …

Uncovering A Gatekeeper: Why The Sec Should Mandate Disclosure Of Details Concerning Directors' And Officers' Liability Insurance Policies, Sean J. Griffith

Faculty Scholarship

This Article explores the connection between corporate governance and directors’ and officers’ (D&O) insurance. It argues that D&O insurers act as gatekeepers and guarantors of corporate governance, screening and pricing corporate governance risks to maintain the profitability of their risk pools. As a result, in a well-working insurance market, D&O insurance premiums would convey the insurer's assessment of a firm's governance quality. Simply stated, firms with better corporate governance would pay relatively low D&O premiums, while firms with worse corporate governance would pay more. This simple relationship could signal important information to investors and other capital market participants. Unfortunately, the …

Judicial Federalism In The Ecj's Berlusconi Case: Toward More Credible Corporate Governance And Financial Reporting Recent Development, Martin Gelter, Mathias M. Siems

Faculty Scholarship

In recent years, the general public in many countries has become increasingly aware of issues concerning business accounting and financial reporting. Americans hardly need to be reminded of the Enron debacle, where members of the company's senior management engaged in fraudulent off-balance sheet transactions to disguise the true state of the company's financial condition, a scheme that auditors failed to uncover until the company's implosion. This and other major corporate governance cases involving questionable or fraudulent accounting practices led to the Sarbanes-Oxley Act of 2002. This law was an unprecedented Congressional intervention into corporate governance, an arena that had previously …

The Supreme Court, Rule 10b-5, And The Federalization Of Corporate Law, Mark J. Loewenstein

Publications

This Article examines Supreme Court jurisprudence since 1997 under the federal securities laws in light of the Court's earlier securities law decisions and in light of its recent decisions construing the Constitution and federal statutes as they relate to the regulation of business. These post-1977 cases strongly suggest that the much-heralded new federalism philosophy of the Supreme Court is not a factor in securities law cases or in business cases generally. Indeed, the opposite seems to be the case. In this context, new federalism cases appear to be an anomaly, with the reality being that the Court is still as …