Business Organizations Law Commons^™

The Challenges For Directors In Piloting Through State And Federal Standards In The Maelstrom Of Risk Management, Chief Justice E. Norman Veasey

Seattle University Law Review

In the 2010 Berle Center Directors’ Academy Keynote Address, Chief Justice Veasey addresses “the federal and state contexts relating to the corporate-governance focus on business risk and the expectations laid at the doorstep of directors and officers of U.S. public companies.” Specifically, Chief Justice Veasey looks “at the governance landscape through both a federal regulatory lens and a state judicial lens as it relates to risk assessment and risk management.”

Carpe Crisis: Capitalizing On The Breakdown Of Capitalism To Consider The Creation Of Social Businesses, Celia R. Taylor

Sturm College of Law: Faculty Scholarship

The recent meltdown of the world’s financial systems presents a unique opportunity to examine the very nature of the corporate form and to consider whether other models of business operation are needed. This article explains the idea of “social businesses” – profit-making, but not profit-maximizing entities that operate to further social good instead of exclusively generating returns for their shareholders. The article then explores the current legal regime for both profit and non-profit businesses under United States law, and suggests there is no ideal business structure currently available under which to operate a social business. In light of the increasing …

Transfer Pricing In Business Restructurings – Reasoning From Implausible Assumptions Issue Note 2 – (Oecd, Discussion Draft), Richard Thompson Ainsworth, Andrew Shact

Faculty Scholarship

The OECD’s Center for Tax Policy and Administration roundtable on business restructurings in January 2005 led to a Joint Working Group project later that year on permanent establishments and business restructurings. One of the results was the Discussion Draft on Transfer Pricing Aspects of Business Restructurings that was available for public comment between September 19, 2008 and February 19, 2009.

This paper concerns Issue Note No. 2 in the Discussion Draft – Arm’s Length Compensation for the Restructuring Itself.

Issue Note No. 2 is deeply flawed. It relies on an unproved correlation between structure and performance (profit/loss potential). The Discussion …

Revisiting Berle And Rethinking The Corporate Structure, Kelli A. Alces

Scholarly Publications

No abstract provided.

Financing The Next Silicon Valley, Darian M. Ibrahim

Faculty Publications

Silicon Valley’s success has led other regions to attempt their own high-tech transformations, yet most imitators have failed. Entrepreneurs may be in short supply in these “non-tech” regions, but some non-tech regions are home to high-quality entrepreneurs who relocate to Silicon Valley due to a lack of local financing for their start-ups. Non-tech regions must provide local finance to prevent entrepreneurial relocation and reap spillover benefits for their communities. This Article compares three possible sources of entrepreneurial finance—private venture capital, state-sponsored venture capital, and angel investor groups—and finds that angel groups have distinct advantages when it comes to funding innovation …

The Redemption Puzzle, Reuven S. Avi-Yonah

Law & Economics Working Papers

Following the adoption of partial integration in 2003, there was only a modest increase in dividends during the period 2004-7, from about 300 to about 500 (if 1987 levels are set at 100). Redemptions, however, showed a remarkable increase, jumping from about the same as dividends (300) to 1,800. This, therefore, leads to a new puzzle: Why the sudden sharp increase in redemptions following 2003?

Like the dividend puzzle, the redemption puzzle is susceptible to several explanations. For example, Bratton and Wachter note that managers who hold stock options tend to favor redemptions over dividends. But in this case, I …

Mediating Rights And Responsibilities In Control Transactions, Sean Vanderpol, Edward J. Waitzer

Osgoode Hall Law Journal

There is a growing debate as to the relative merits and consequences of a shift to a more shareholder-centric corporate governance framework. How much "direct democracy" makes sense in corporate decision making? If power is to be transferred to shareholders, should responsibilities be imposed (and, if so, how)? These issues have long been addressed by courts and regulators in the context of unsolicited control transactions. In its recent Air Products & Chemicals v. Airgas decision, the Delaware Chancery Court canvassed the evolution of its law on this point and concluded that implicit in the power (and responsibility) of the board …

Turning A Short-Term Fling Into A Long-Term Commitment: Board Duties In A New Era, Nadelle Grossman

University of Michigan Journal of Law Reform

Corporate boards face significant pressure to make decisions that maximize profits in the short run. That pressure comes in part from executives who are financially rewarded for short-term profits despite the long-term risks associated with those profit-making activities. The current financial crisis, where executives at AIG and numerous other institutions ignored the long-term risks associated with their mortgage backed securities investments, arose largely because those executives were compensated for the short-term profits generated by those investments despite their longer-term risks. Pressure on boards for short-term profits also comes from activist investors who seek to make quick money off of trading …

See No Evil - Revisiting Early Visions Of The Social Responsibility Of Business: Adolf A. Berle's Contribution To Contemporary Conversations, Erika George

Faculty Scholarship

This Article situates Adolf A. Berle's contribution to the field of corporate law in the context of current debates over the alleged complicity of multinational corporations in international human rights violations. Specifically, this Article revisits some central insights offered by Berle and Gardiner C. Means in The Modern Corporation and Private Property and reconsiders what conducting business consciously across borders requires in the context of a governance gap generated by economic globalization. Further, this Article considers how both ownership and control are well situated to ensure that business conduct becomes better aligned with a growing consciousness that business organizations must …

The New Financial Assets: Separating Ownership From Control, Tamar Frankel

Faculty Scholarship

This Article is organized in three parts. Part One examines the nature of financial assets and their transition by market transactions from contracts to property. The discussion highlights the gray areas which financial assets occupy in decoupling, falling within both contract and property law.

Part Two describes four types of decoupled financial assets. The first type separates into two financial assets: ownership benefits and ownership risks. The presumed reduction of owners' risks prompted some academics to justify reducing the owners' protection. I suggest that attempts to protect owners from ownership risk have failed. Therefore, the suggestion was ill-conceived. The second …

The Blameless Corporation, Larry D. Thompson

Scholarly Works

This article is a clarification and expansion of the author's previous oral statements published in The American Criminal Law Review 46-4--a Symposium Issue on "Achieving the Right Balance: The Role of Corporate Criminal Law in Ensuring Corporate Compliance."

The Italian Job — Voice Over Internet Protocol Mtic Fraud In Italy, Richard Thompson Ainsworth

Faculty Scholarship

On February 8, 2010 a speculative paper on the likelihood that fraudsters proficient in missing trader intra-community (MTIC) fraud might move into voice over internet protocol (VoIP) was submitted to the Boston University School of Law Working Paper Series.

Prior to that paper there was very little (if any) public discussion of VoIP MTIC. There were no assessments, no arrests, and not a hint of litigation. Fifteen days later, and before final publication the financial press exploded with coverage of a massive VoIP MTIC fraud (the Operazione “phuncards-broker” investigation). The Wall Street Journal reported: An [Italian] judge…ordered the arrest of …

Predation Analysis And The Ftc’S Case Against Intel, Daniel A. Crane

Law & Economics Working Papers

The Federal Trade Commission's pending antitrust case against Intel challenges a number of Intel's discounting and rebating practices. The Commission appears poised to apply a cost-price test to the challenged practices, but proposes to include "fixed sunk costs" in the appropriate measure of cost. This paper explains the importance of using cost-price screens to assess unilaterally imposed prices and analyzes the futility of including sunk costs in the relevant cost measure.

Shareholder Democracy And The Curious Turn Towards Board Primacy, Grant Hayden, Matthew T. Bodie

William & Mary Law Review

Corporate law is consumed with a debate over shareholder democracy. The conventional wisdom counsels that shareholders should have more voice in corporate governance, in order to reduce agency costs and provide democratic legitimacy. A second set of theorists, described as “board primacists,” advocates against greater shareholder democracy and in favor of increased board discretion. These theorists argue that shareholders need to delegate their authority in order to provide the board with the proper authority to manage the enterprise and avoid short-term decision making. In the last few years, the classical economic underpinnings of corporate law have been destabilized by a …

"If You Poison Us Do We Not Die?" - A Critical Analysis Of The Legality Of Poison Puts In The Wake Of San Antonio Fire And Police Pension Fund V. Amylin, Inc., Marcus Kai Hintze

BYU Law Review

No abstract provided.

The Effect Of Economic Integration With China On The Future Of American Corporate Law, Joseph Vining

Law & Economics Working Papers

China's development into a world economic power and its continuing integration with the United States economy raise the question whether China's own history and the socialist context of its domestic corporate law may affect the meaning of business terms in use both internationally and in American domestic corporate law. Of particular interest is the question whether China's entry and impact may blunt the late-twentieth century effort in the United States to change the legal sense of the purpose of an American business corporation.

Celebrity Ceos: Disclosure At The Intersection Of Privacy And Securities Law, Ann M. Olazábal, Patricia Sánchez Abril

Business Law Articles and Papers

An abstract for this item is not available.

Power And Purpose In The "Anglo-American" Corporation, Christopher M. Bruner

Scholarly Articles

The article discusses the impact of a shareholder-centric and market-oriented approach to corporate governance among public business firms in the U.S. and Great Britain. It mentions that both countries have more common similarities in terms of corporate governance systems and business cultures. It affirms that despite such similarities, both countries' corporate governance system differs on how they relate to external regulations that can affect their relationships among stakeholders.

Governing And Financing Blended Enterprise, Dana Brakman Reiser

Chicago-Kent Law Review

The image of nonprofit and for-profit as dual and exclusive categories is misleadingly simple. This blurring of the boundary between for-profit and nonprofit has gone on for years and appears only to be gaining steam. Yet, traditionally, the law has put to organizations a choice of either the nonprofit or for-profit form of organization. In the first decade of this century, organizational law is beginning to catch up with the boundary-blurring trend. In the United States and abroad, legislatures are creating new forms for blended enterprise, including several U.S. states' low-profit limited liability company (the "L3C") and the community interest …

The Relation Between Firm-Level Corporate Governance And Market Value: A Study Of India, Bala Balasubramanian, Bernard S. Black, Vikramaditya Khanna

Law & Economics Working Papers

Relatively little is known about the corporate governance practice of firms in emerging markets. We provide a detailed overview of the practices of publicly traded firms in India, and identify areas where governance practices are relatively strong or weak, relative to developed countries. We also examine whether there is a cross-sectional relationship between measures of governance and measures of firm performance and find evidence of a positive relationship for an overall governance index and for an index covering shareholder rights. The association is stronger for more profitable firms and firms with stronger growth opportunities.

Enabling Investments In Environmental Sustainability, Heather Hughes

Indiana Law Journal

No abstract provided.

Confident Uncertainty, Excessive Compensation & The Obama Plan, Michael B. Dorff

Indiana Law Journal

Public outrage at the enormous bonuses TARP recipients paid to senior executives recently prompted the Obama administration to impose sweeping new curbs on executive compensation. Shortly thereafter, Senator Dodd added restrictions on executive bonuses to the stimulus bill President Obama subsequently signed. These are understandable political reactions, but will they achieve the twin goals of reducing executive compensation in recipients of federal assistance while spurring better corporate performance? To examine this question, I analyze excessive compensation as the product of "confident uncertainty, "the tendency of even the most sophisticated actors to place unwarranted confidence in their ability to predict the …

Free Enterprise And The Rule Of Law: The Political Economy Of Executive Discretion (Efficiency Implications Of Regulatory Enforcement Strategies), Kevin S. Marshall

William & Mary Business Law Review

Economic theory teaches that if all of the operational conditions of the perfectly competitive model hold, then certain efficiencies may be achieved to the favor of a wealth-seeking society, ceteris paribus (assuming all other things remain equal and/or the absence of all other disturbing influences). This Article observes the asymmetrical enforcement of relevant governing laws, regulations and rules eliminates any possibility that all other influences with respect to the performance values of the perfectly competitive model have been neutralized. Under such regulatory enforcement conditions, there can be no wealth-creation expectations.

Corporate Governance In The Courtroom: An Empirical Analysis, Jessica Erickson

William & Mary Law Review

Conventional wisdom is that shareholder derivative suits are dead. Yet this death knell is decidedly premature. The current conception of shareholder derivative suits is based on an empirical record limited to suits filed in Delaware or on behalf of Delaware corporations, leaving suits outside this sphere in the shadows of corporate law scholarship. This Article aims to fill this gap by presenting the first empirical examination of shareholder derivative suits in the federal courts. Using an original, hand-collected data set, my study reveals that shareholder derivative suits are far from dead. Shareholders file more shareholder derivative suits than securities class …

The Validity Of Deal Protection Devices In Negotiatiated Acquisition Or Merger Transactions Under Anglo-American Law, Wai Yee Wan

Research Collection Yong Pung How School Of Law

This paper analyses deal protection devices, specifically termination fees and lockup agreements, that are entered into by publicly listed target companies in favour of the preferred bidders, under Anglo-American law. US (specifically Delaware) and UK law and regulation differ markedly in the regulation of these devices. Delaware law generally gives more leeway for the target board to enter into deal protection devices. The UK regime is much more shareholder-centric and severely restricts most types of deal protections. This paper explains the differences and argues that the UK regime is the result of the strong influence of institutional share ownership. In …

Corporate Governance In The Courtroom: An Empirical Analysis, Jessica M. Erickson

Law Faculty Publications

Conventional wisdom is that shareholder derivative suits are dead. Yet this death knell is decidedly premature. The current conception of shareholder derivative suits is based on an empirical record limited to suits filed in Delaware or on behalf of Delaware corporations, leaving suits outside this sphere in the shadows of corporate law scholarship. This Article aims to fill this gap by presenting the first empirical examination of shareholder derivative suits in the federal courts. Using an original, hand-collected data set, my study reveals that shareholder derivative suits are far from dead. Shareholders file more shareholder derivative suits than securities class …

Voip Mtic — Vat Fraud In Voice Over Internet Protocol, Richard Thompson Ainsworth

Faculty Scholarship

In the beginning, the VAT fraud known as missing trader intra-community (MTIC) fraud appeared to be a UK problem concentrated in the cell phone and computer chip markets. MTIC has mutated (to other commodities) and migrated (to other Member States). This paper describes how this fraud operates in the VoIP market, and how in this mutation it is no longer confined to the EU, but can infiltrate any VAT/GST anywhere.

Canada, Botswana, Japan, Iceland and Jamaica (to mention a few jurisdictions) have consumption taxes that are just as vulnerable as is the EU VAT to VoIP missing trader fraud. It …

Virtual Intermediaries In The Lodging Industry: Consumption Tax Problems In The U.S. And Japan, Richard Thompson Ainsworth

Faculty Scholarship

Marketplace technology is (inadvertently) chipping away at the effectiveness of consumption taxes – the Japanese Consumption Tax (CT), the European value added tax (VAT), and the American sales tax (ST) are all affected. Frequently a technology-patch or a law change can repair the tax-damage, but sometimes even though a patch or a change is known the design of the levy (or the politics behind the design) impedes application. This paper assesses these consumption taxes by considering the impact that virtual travel agents have had on revenue yields. The paper draws specific conclusions for the Japanese CT, because this consumption tax …

Bond Limited Liability, Robert J. Rhee

UF Law Faculty Publications

Limited liability is considered a “birthright” of corporations. The concept is entrenched in legal theory, and it is a fixed reality of the political economy. But it remains controversial. Scholarly debate has been engaged in absolute terms of defending the rule or advocating its abrogation. Though compelling, these polar positions, often expressed in abstract arguments, are associated with disquieting effects. Without limited liability, efficiency may be severely compromised. With it, involuntary tort creditors bear some of the cost of an enterprise. Most other proposals for reforming limited liability have been incremental, such as modifying veil piercing. However, neither absolutism nor …

Teaching Specialized Legal Research: Business Associations, Kris Helge, Terri Lynn Helge

Faculty Scholarship

Business associations are a complex substantive topic that can be included in an advanced legal research course that teaches students sophisticated research, writing, and citation skills. This article presents the basic substantive law regarding business associations necessary to deliver instruction about advanced legal research, writing, and citation. This article also offers a model syllabus with suggested sources and assignments for students. These research assignments require students to perform tasks such as citing primary and secondary sources, learning advanced research skills using loose-leaf materials, assimilating information from multiple sources into cogent narratives, locating information using various electronic resources, digests, and other …