Business Organizations Law Commons^™

Outsourcing, Modularity, And The Theory Of The Firm Margaret M. Blair, Erin O’Hara O’Connor, And Gregg Kirchhoefer, Margaret M. Blair, Erin R O’Hara O’Conno, Gregg Kirchhoefer

BYU Law Review

No abstract provided.

Separation Of Bank And State: Consolidating Bailed-Out Companies Into The U.S. Debt Ceiling And Government Financial Statements, J. W. Verret

BYU Law Review

No abstract provided.

To Incorporate Or Not To Incorporate - That Is The Question: How State V. Custard Clarified Corporate Governance In North Carolina, Lauren J. Allen

North Carolina Central Law Review

No abstract provided.

Interstate Comparison - Use Of Contribution Margin In Determination Of Price Fixing, Tsui Tat Chee

Pace International Law Review Online Companion

For over a century, anti-trust law has been used to maintain an open and fair market economy by preventing monopolies.  However, anti-trust law has never precisely defined the term “monopoly”, which makes evaluating the interactions between the prohibition of monopoly and encouraging competition increasingly challenging.

In 2006, the Hong Kong Government appointed Arculli & Associates Solicitor Firm to study issues relating to competition in the auto-fuel retail market in Hong Kong. A test based on contribution margins was recommended, leading to the conclusion that price fixing is not a crime in the industry.

This article examines the problems related …

Citizens United And Forced Speech: Why Protecting The Dissenting Shareholder Necessitates Disclosure Of Corporate Political Expenditures After Citizens United V. Fec, Sabina Bunt Thaler

Washington and Lee Journal of Civil Rights and Social Justice

No abstract provided.

Holman V. Commissioner: A Death Knell For The Tax Value Of Transfer Restrictions In Family Limited Partnerships?, Brent B. Nicholson

William & Mary Business Law Review

This Article examines a recent United States court of appeals case concerning section 2703, Holman v. Commissioner,7 and some earlier cases, including a few under the 1958 regulation, that are relevant to Holman. The purpose of this Article is to explain the current state of the law with respect to buy-sell type agreements and their influence on setting the transfer tax value. The Article begins with a discussion of the relevant Code and Regulations, focusing on section 2703 and its legislative history. The Article then follows with a look at some of the relevant case law and an in-depth look …

The Uncorporation And The Unraveling Of 'Nexus Of Contracts' Theory, Grant M. Hayden, Matthew T. Bodie

Michigan Law Review

A corporation is not a contract. It is a state-created entity. It has legal personhood with the right to form contracts, suffer liability for torts, and (as the Supreme Court recently decided) make campaign contributions. However, many corporate law scholars have remained wedded to the conception-metaphor, model, paradigm, what have you-of the corporation as a contract or "nexus" of contracts. The nexus of contracts theory is meant to point up the voluntary, market-oriented nature of the firm and to dismiss the notion that the corporation owes anything to the state. It is also used as a justification for preserving the …

Derivatives And The Legal Origin Of The 2008 Credit Crisis, Lynn A. Stout

Cornell Law Faculty Publications

Experts still debate what caused the credit crisis of 2008. This Article argues that dubious honor belongs, first and foremost, to a little-known statute called the Commodities Futures Modernization Act of 2000 (CFMA). Put simply, the credit crisis was not primarily due to changes in the markets; it was due to changes in the law. In particular, the crisis was the direct and foreseeable (and in fact foreseen by the author and others) consequence of the CFMA’s sudden and wholesale removal of centuries-old legal constraints on speculative trading in over-the-counter (OTC) derivatives.

Derivative contracts are probabilistic bets on future events. …

At The Intersection Of Corporate Governance And Environmental Sustainability, Jayne W. Barnard

William & Mary Business Law Review

Most boards of public companies have learned to live comfortably with audit committees, nominating committees, and compensation committees. An increasing number of companies are now also creating risk-management committees. This Essay explores the early stages of development of yet another board-level committee: the sustainability committee. The Essay posits several advantages to having a board-level sustainability committee and identifies possible sources of pressure for the creation of more such committees. It also suggests some of the disadvantages of sustainability committees and cautions against cosmetic governance reform. By examining what we know today (and can imagine tomorrow) about sustainability committees, this Essay …

Naming, Identity, And Trademark Law, Laura A. Heymann

Faculty Publications

As the process of creation in the age of digital media becomes more fluid, one pervasive theme has been the desire for attribution: from the creator’s perspective, to receive credit for what one does (and to have credit not falsely attributed) and from the audience’s perspective, to understand the source of material with which one engages. But our norms of attribution reflect some inconsistencies in defining the relationship among name, identity, and authenticity. A blog post by a writer identified only by a pseudonym may prove to be very influential in the court of public opinion, while the use of …

Contracts As Organizations, D. Gordon Smith, Brayden G. King

Faculty Scholarship

Empirical studies of contracts have become more common over the past decade, but the range of questions addressed by these studies is narrow, inspired primarily by economic theories that focus on the role of contracts in mitigating ex post opportunism. We contend that these economic theories do not adequately explain many commonly observed features of contracts, and we offer four organizational theories to supplement-and in some instances, perhaps, challenge-the dominant economic accounts. The purpose of this Article is threefold: first, to describe how theoretical perspectives on contracting have motivated empirical work on contracts; second, to highlight the dominant role of …

Economics, Politics, And The International Principles For Sound Compensation Practices: An Analysis Of Executive Pay At European Banks, Guido Ferrarini, Maria C. Ungureanu

Vanderbilt Law Review

In this Article, we submit that the compensation structures at banks before the financial crisis were not necessarily flawed and that recent reforms in this area largely reflect already existing best practices. In Part I we review recent empirical studies on corporate governance and executive pay at banks and suggest that there is no strong support for regulating bankers' compensation structures. We also argue that detailed regulation of incentives would subtract essential decisionmaking powers from boards of directors and make compensation structures too rigid.

In Part II we note that political support for regulating bankers' pay has been strong and …

Justifying Board Diversity, James A. Fanto, Lawrence M. Solan, John M. Darley

Faculty Scholarship

No abstract provided.

Comparing Ceo Employment Contract Provisions: Differences Between Australia And The United States, Jennifer G. Hill, Ronald W. Masulis, Randall S. Thomas

Vanderbilt Law Review

This study compares CEO employment contracts across two common law countries: the United States and Australia. Although the regulatory regimes of these jurisdictions enjoy many comparable features, there are also some important institutional differences in terms of capital market, tax, and regulatory structures, which are discussed here. Debate has raged in the United States on the issue of whether executive compensation is efficient and determined at arm's length, or skewed by a power imbalance between managers and shareholders. A comparative analysis of the kind undertaken in our study provides an additional perspective on the optimal contracting and managerial power models …

Insider Trading And Ceo Pay, M. Todd Henderson

Vanderbilt Law Review

This Article presents evidence showing that boards of directors "bargain" with executives about the profits they expect to make from trades in firm stock. The evidence suggests that executives whose trading freedom increased using Rule 10b5-1 trading plans experienced reductions in other forms of pay to offset the potential gains from trading. There are two potential benefits from trading-portfolio optimization and informed trading profits- and this Article allows us to isolate them. The data show that boards pay executives in a way that reflects the profits they are expected to earn from informed trades. It also casts some doubt on …

Evolving Executive Equity Compensation And The Limits Of Optimal Contracting, David I. Walker

Vanderbilt Law Review

Executive equity compensation in the United States is evolving. At the turn of the millennium, stock options dominated the equity pay landscape, accounting for over half of the aggregate ex ante value of senior executive pay at large public companies, while restricted stock and similar compensation accounted for only about ten percent. Beginning in 2006, stock grants have displaced options as the single largest component of senior executive compensation at these firms. Accompanying this shift has been increased variation among companies in their relative emphasis on stock and options in equity pay packages. Both phenomena provide an opportunity for a …

Executive Compensation Consultants And Ceo Pay, Martin J. Conyon

Vanderbilt Law Review

This Article surveys recent empirical studies on the relation between compensation consultants and CEO pay. The economic rationale for using executive compensation consultants is that they supply valuable data, information, and professional expertise to client firms. However, critics argue that the consultant's independence might be compromised because of conflicts of interest arising from the cross selling of business services or because of the consultant's desire to obtain repeat business. The emergent empirical evidence suggests that pay consultants are important in explaining executive compensation, although the findings are sometimes mixed and the precise effects of consultants on pay are yet to …

Paying For Advice: The Role Of The Remuneration Consultant In U.K. Listed Companies, Ruth Bender

Vanderbilt Law Review

Compensation consultants are an integral part of the process of determining executive pay in large listed companies. This study reports interview-based research with protagonists in setting executive compensation in twelve FTSE 350 companies and addresses why the consultants are used, what they do, and how they are perceived.

Consultants have several important roles. Firstly, they act as experts, providing market data and advising on plan design and implementation. Because of this role, they not only guide their clients as to the requirements of the market, they also help create those selfsame market practices and norms. They also have a role …

Symposium On Executive Compensation Keynote Address, Kenneth R. Feinberg

Vanderbilt Law Review

I want to thank Richard Nagareda for inviting me to Vanderbilt; he's an old friend. I am very honored to return to Vanderbilt. I taught a course at Vanderbilt, and I loved teaching here. I loved going to the Country Music Hall of Fame and learning more about Patsy Cline and Johnny Cash. Really, it was great. I've already received an invitation from Dean Jim Bradford to come back to the business school and the law school and to participate in an interdisciplinary look at executive compensation. I hope to return. But when I saw that the Vanderbilt Law Review …

Executive Compensation In The Courts: Board Capture, Optimal Contracting, And Officers' Fiduciary Duties, Randall Thomas, Harwell Wells

Vanderbilt Law School Faculty Publications

This Article proposes a new approach to monitoring executive compensation. While the public seems convinced that executives at public corporations are paid too much, so far attempts to rein in executive compensation have met with little success. Several approaches have been tried - requiring large pay packages to consist predominantly of incentive pay, new procedures for approving pay, mobilization of public outrage at giant compensation packages. None, however, has stemmed the growth of executive compensation, or convinced opponents of large pay packages that such pay is either fair or deserved. Here we suggest a new approach, one that turns to …

A Test Case In International Bankruptcy Protocols: The Lehman Brothers Insolvency, Jamie Altman

San Diego International Law Journal

Part II of this Article, explains the competing theories underlying bankruptcy systems: universalism and territorialism. Part III details various statutory solutions to international bankruptcy problems. Next, Part IV analyzes the provisions of the Lehman Protocol in depth. Part V then examines the precedent upon which the Lehman Protocol relies. Part VI assesses potential threats to the Protocol?s success. This leads to Part VII, which contains suggestions for future protocols. Finally, Part VIII concludes.

Overseeing Controlling Shareholders: Do Independent Directors Constrain Tunneling In Taiwan?, Yu-Hsin Lin

San Diego International Law Journal

This Article intends to explore the extent to which independent directors constrain tunneling by controlling shareholders in Taiwan. Taiwan serves as an appropriate jurisdiction for research since the private benefits agency problem is prevalent among Taiwanese public companies. A further twist in Taiwan?s case is that independent directors were newly introduced to Taiwan?s corporate boards, which follow dual-board system where the traditional monitoring function is served by statutory supervisors, instead of board committees, which adds to the complexity in analyzing the effectiveness of independent directors in constraining tunneling activities. Part II reviews relevant literature and lays the foundation for this …

Will Cutting The Payroll Tax Increase Jobs In The U.S.? Empirical Evidence From The Eu Vat, Richard Thompson Ainsworth

Faculty Scholarship

Red Ink Rising, the Peterson–Pew Commission on Budget Reform’s report presents the country with a fiscal/employment dilemma – Congress must act immediately to stem the federal debt, but it must move carefully lest it harm employment in the fragile economy. In short, we must act fast and slow – we must decrease the debt and increase employment. This is a difficult task.

The Peterson-Pew dilemma (notably its jobs-creation aspect) was taken to heart by both of the reform commissions that issued reports soon thereafter (National Commission on Fiscal Responsibility and Reform, The Moment of Truth and The Debt Reduction Task …

The Modern American Entrepreneur: Characteristics, Formative Legislation, And Modern Education, Jeremy S. Office

Graduate Student Dissertations, Theses, Capstones, and Portfolios

This research began by exploring traits and characteristics of the American entrepreneur. It continued by offering a history of these individuals, focusing primarily on the history of laws and regulations which have both positively and adversely affected the practice of entrepreneurialism in the United States. Current laws that affect entrepreneurship, along with the current state of entrepreneurial education in business schools, are explored in depth. This study concludes that the current system of business regulations and entrepreneurial education are flawed and that their failings have produced generations of business students who are unable to reach their full potential. A brief …

Virginia Is For Lovers And Directors: Important Differences Between Fiduciary Duties In Virginia And Delaware, Laurence V. Parker Jr.

William & Mary Business Law Review

Virginia and Delaware have different approaches to a director’s fiduciary duties. The Virginia Stock Corporation Act imposes a deferential subjective standard of conduct that allows the more-frequent application of its business judgment rule. Virginia courts have followed the Virginia Stock Corporation Act and have shown even more deference to the decisions of directors than the Virginia Stock Corporation Act may require. In addition, Virginia courts have been reluctant to hold that additional constituencies, beyond the corporation and shareholders as a class, are owed fiduciary duties. Finally, Virginia courts have not imposed “enhanced scrutiny” on the decisions of directors involving hostile …

Chairmanship: The Effective Chair-Ceo Relationship: Insight From The Boardroom, Elise Walton

Ira M. Millstein Center for Global Markets and Corporate Ownership

This paper examines the role of the corporate Chair in the context of one of the most important relationships the Chair has – his or her relationship with the company’sCEO. To approach the topic, the Chairmen’s Forum sponsored a research effort to interview experienced Chairs,CEOs and stakeholders. After the Forum agreed on the project, a research plan was designed and approved by the sponsors. Key interview questions and interview candidates were reviewed and approved. The main areas of the interview included: background experience with the two roles; successful situations and what worked; challenges and what didn’t work; how a relationship …

Vat Fraud: The Tradable Services Problem, Richard Thompson Ainsworth

Faculty Scholarship

Tradable services – VoIP termination services, mobile minutes, software as a service (SaaS), or almost any service bought or sold in the “cloud” – are a distinct class of taxable supplies. These service-based supplies both resemble and differ fundamentally from goods. They also differ from services that are consumed-on-purchase (consumed services).

Tradable services are designed from the beginning for re-sale. They are hybrid supplies that behave commercially like goods, but have functional attributes that make them hard to distinguish from services generally. When determining the place of supply/ place of taxation for these kinds of supplies, their hybrid character presents …

Good Faith In Revlon-Land, Christopher M. Bruner

Scholarly Works

The Delaware Supreme Court has set a very high hurdle for plaintiffs challenging directors' good faith in the sale of a company. In Lyondell Chemical Company v. Ryan, the court held that unconflicted directors could be found to have breached the good faith component of their duty of loyalty in the transactional context only if they "knowingly and completely failed to undertake," and "utterly failed to attempt" to discharge their duties.

In this essay I argue that the Lyondell standard effectively imports into the transactional context the exacting standard previously applied in the oversight context — a move clearly aimed …

Reality Check On Officer Liability, Lyman P.Q. Johnson

Scholarly Articles

This article addresses the fiduciary duties of corporate officers. Responding to a critique that recent scholarly analyses of officers depart from reality, it argues that, on a variety of grounds, those analyses are more realistic than the critique and provide doctrinal coherence and advance the goal of meaningful executive accountability. The divergent governance functions of directing versus managing are described and it is argued that those disparate roles should matter for fiduciary duty analysis. No great outbreak of litigation should be expected if officers are held to a stricter duty of care than directors because boards of directors, not courts, …

Innovative Transactional Pedagogies, Joan Macleod Heminway, Michael A. Woronoff, Lyman P.Q. Johnson

Scholarly Articles

Our law schools are embracing in a more powerful way innovative transactional pedagogies that address not only theory, policy, and doctrine, but also legal skills. This transcribed panel discussion explores three of these pedagogies – teaching corporate finance as advanced contract drafting, teaching numeracy, and teaching substance and skill in contract drafting through the use of in-office meetings and analytical memos – and describes how they are being implemented in law teaching. The panel was part of the “Transactional Education: What’s Next?” conference hosted by the Emory University School of Law’s Center for Transactional Law and Practice on June 4-5, …