Business Organizations Law Commons^™

Ceo Stock Ownership Policies: Rhetoric And Reality, Nitzan Shilon

Indiana Law Journal

This Article is the first academic endeavor to analyze the efficacy and transparency of stock ownership policies (SOPs) in U.S. public firms. SOPs generally require managers to hold some of their firms’ stock for the long term. Following the 2008 financial crisis, firms universally adopted these policies and cited them more than any other policy as a key element in their mitigation of risk. However, my analysis of the recent SOPs of S&P 500 CEOs disputes what firms claim about these policies. First, I find that SOPs are extremely ineffectual in making CEOs hold on to their firm’s stock; this …

Toward A Critical Corporate Law Pedagogy And Scholarship, André Douglas Pond Cummings, Steven A. Ramirez, Cheryl L. Wade

Law Faculty Scholarship

In recent years, the publicly held corporation has assumed a central position in both the economic and political spheres of American life. Economically, the public corporation has long acted as the key institution within American capitalism. Politically, the public corporation now can use its economic might to sway electoral outcomes as never before. Indeed, individuals who control public firms wield more economic might and political power today than ever before. These truths profoundly shape American society. The power, control, and role of the public corporation under law and regulation, therefore, hold more importance than at any other time period.

Even …

Condemning A Residential Mortgage Loan: Is It An Extraterritorial Taking?, Michael M. Sandez

American University Business Law Review

No abstract provided.

The Interface Between Arbitration And The Brussels Regulation, Filip De Ly

American University Business Law Review

No abstract provided.

Capital Accounts In Llcs And In Partnerships: Powerful Default Rules And Potential Tax Significance, Donald J. Weidner

Scholarly Publications

Balance sheets for limited liability companies and for partnerships differ from corporate balance sheets in one important respect. Accounting for these alternative forms traditionally includes a separate equity account, or “capital account,” for each owner. Accounting practice and caselaw suggest that, at least as a default rule or norm, these accounts guide distributions on liquidation or buyout, and, if negative, may also reflect debts to the firm. Indeed, the statutory default rule of partnership law in most states requires that individual capital accounts be maintained and given economic significance on liquidation or buyout. Although the statutory law of LLCs does …

The Role Of The Profit Imperative In Risk Management, Christopher French

Faculty Scholarship

Risks in the world abound. Every day there is a chance that each of us could be in a car accident. Or, one of us could be the victim of a tornado, flood or earthquake. Every day someone becomes deathly ill from an insidious disease. Our properties are in constant peril—one’s house could catch fire at any time or a tree could fall on it during a storm. Any one of these events could have devastating financial consequences, and they are just a few of the many risks that impact our daily lives. One of the principal ways we manage …

Ex Ante Choice Of Jury Waiver Clauses In Mergers, Darius Palia, Robert E. Scott

Faculty Scholarship

This paper examines empirically why sophisticated parties in some merger and acquisition deals choose to waive their right to jury trials and some do not. We examine merger agreements for a large sample of 276 deals for the 11-year period 2001 to 2011. We exclude private company deals and those where the choice of forum and law is Delaware. First, we find that 48.2% of the deals have jury waiver clauses. Second, we find that deals in which New York is chosen as the governing law and forum state are more likely to include a jury waiver clause. No other …

Stock-Market Law And The Accuracy Of Public Companies’ Stock Prices, Kevin S. Haeberle

Faculty Publications

The social benefits of more accurate stock prices—that is, stock-market prices that more accurately reflect the future cash flows that companies are likely to produce—are well established. But it is also thought that market forces alone will lead to only a sub-optimal level of stock-price accuracy—a level that fails to obtain the maximum net social benefits, or wealth, that would result from a higher level. One of the principal aims of federal securities law has therefore been to increase the extent to which the stock prices of the most important companies in our economy (public companies) contain information about firms’ …

Cancellation Of Debt And Related Transactions, Douglas A. Kahn, Jeffrey H. Kahn

Articles

If a taxpayer borrows money, the borrowed funds are not included in the taxpayer's gross income. That treatment is proper even though the taxpayer has increased his assets by the amount he borrowed because he also has created a corresponding liability to pay back the loan. The taxpayer's net: wealth has not increased. 'The more difficult and interesting questions arise when the taxpayer fails to repay the loan. At first blush, it would appear that upon cancellation of a loan, the taxpayer should have income for the amount that was cancelled. However, the current tax treatment is not that simple. …

企業の社会的責任と戦略的租税行動 [Corporate Social Responsibility And Strategic Tax Behavior], Reuven S. Avi-Yonah, Keisaku Koga Translator

Articles

This paper addresses two questions. First, from the perspective of the corporation, should the corporation cooperate and pay the corporate tax, or should it engage in "strategic" tax behavior designed to minimize or eliminate its corporate tax burden? Second, from the perspective of the state, should the state use the corporate tax just to raise revenue, or should it also try to use it as a regulatory tool to steer corporate behavior in directions that it deems beneficial to society? The paper argues that whatever our view of the nature of the corporation and of the legitimacy of corporate social …

The Corporation As A Time Machine: Intergenerational Equity, Intergenerational Efficiency, And The Corporate Form, Lynn A. Stout

Cornell Law Faculty Publications

This Symposium Article argues that the board-controlled corporation can be understood as a legal innovation that historically has functioned as a means of transferring wealth forward and sometimes backward through time, for the benefit of present and future generations. In this fashion the board-controlled corporation promotes both intergenerational equity and intergenerational efficiency. Logic and evidence each suggest, however, that the modern embrace of "shareholder value" as the only corporate objective and "shareholder democracy" as the ideal of corporate governance is damaging the corporate form's ability to serve this economically and ethically important function.

The Macroprudential Turn: From Institutional 'Safety And Soundness' To Systematic 'Financial Stability' In Financial Supervision, Robert C. Hockett

Cornell Law Faculty Publications

Since the global financial dramas of 2008-09, authorities on financial regulation have come increasingly to counsel the inclusion of macroprudential policy instruments in the standard ‘toolkit’ of finance-regulatory measures employed by financial supervisors. The hallmark of this perspective is its focus not simply on the safety and soundness of individual financial institutions, as is characteristic of the traditional ‘microprudential’ perspective, but also on certain structural features of financial systems that can imperil such systems as wholes. Systemic ‘financial stability’ thus comes to supplement, though not to supplant, institutional ‘safety and soundness’ as a regulatory desideratum.

The move from primarily micro- …

The Outer Limits Of Realization: Weiss V. Stearn And Corporate Dilution, Jeffrey L. Kwall, Katherine K. Wilbur

Faculty Publications & Other Works

The United States Supreme Court's 1924 Weiss v. Stearn decision involved a classic case of corporate dilution. In that case, a corporation ("Oldco') transferred its business to a new corporation ("Newco ') in a transaction in which the Oldco shareholders surrendered all their stock for 50 percent of the stock of Newco (and cash). The transaction diluted the proprietary interest of the Oldco shareholders from 100 percent to 50 percent. Because the Oldco shareholders surrendered control of the enterprise, the 50 percent interest they received in Newco was fundamentally different from the 100 percent interest they had owned in Oldco. …

Political Uncertainty And The Market For Ipos, Jay B. Kesten, Murat C. Mungan

Scholarly Publications

No abstract provided.

Enduring Design For Business Entities, William E. Foster

Utah Law Review

The success or failure of an institution may hinge on some of the earliest decisions of its founders. In constitutional design literature, endurance is a widely accepted drafting objective. Indeed, constitutional endurance is positively associated with prosperous and stable societies. Like drafters of constitutions, business organizers have almost innumerable objectives for their enterprises, and attorneys drafting organizational documents must take into account these myriad goals. Oftentimes the drafting process fails to fully address some of the most important of these aims and results in suboptimal structures that lack predictability and reliability.

This article looks specifically at small business organizations and …

More Than A Woman: Insights Into Corporate Governance After The French Sex Quota, Darren Rosenblum, Daria Roithmayr

Faculty Publications

In 2011, France enacted a Corporate Board Quota to establish a forty percent floor for either sex on corporate boards. Existing literature presumes that women will change the way firms function and that their presence in upper management will improve both governance and financial returns. To assess the potential impact of the quota, we interviewed twenty-four current and former corporate board members. Our analysis of these interviews generates two findings. First, our results indicate that, at least in the view of board members, the sex quota has had an impact on the process of board decision-making, but adding women has …

Training The Transactional Business Lawyer: Using The Business Associations Course As A Platform To Teach Practical Skills, Constance Z. Wagner

All Faculty Scholarship

Drawing on her own practice background as a business lawyer and her law school teaching experience, theauthor argues for the importance of introducing transactional lawyering skills into the law school course on business associations. She notes that business law practice is transactional in nature, but that the traditional method of teaching business associations centers on case law analysis. This litigation-focused approach misleads students about the nature of business law practice, which requires lawyers to act as problem solvers and planners and to engage in preventative lawyering. To bolster her argument, the author draws on some of the recent literature on …

The Benefits Of Integrating Entrepreneurship Into Business Associations, Ann M. Scarlett

All Faculty Scholarship

Integrating entrepreneurship into Business Associations through an emphasis on start-up and small businesses is worth sacrificing some coverage of public corporations. Attorneys are much more likely to work with clients who are self-employed or own small businesses, and thus the legal principles covered in a Business Associations course have more relevance to students when focused on these likely clients. Students are also able to more easily understand the legal concepts presented when focused on start-up and small businesses. Incorporating entrepreneurship also has the advantage of introducing law students to the cross-curricular nature of this practice area and at a time …

What Kind Of Corporation Tax Regime?, Sijbren Cnossen

Osgoode Hall Law Journal

This article explores the taxation of corporations in the wider context of capital income taxation. The article discusses pros and cons of various income-based and cash-flow forms of corporation tax (CT) and concludes that the dual income tax (DIT), which taxes all capital income at the proportional CT rate, is to be preferred over other forms of taxing capital income. The DIT is best attuned to the reality of capital mobility and is not held hostage by the higher tax on labour income. Levied at a uniform flat rate, the DIT minimizes opportunities for tax arbitrage.

Innovation And The Role Of Public-Private Collaboration In Contract Governance: Governing Global Finance: Towards Contractual Governance, Katharina Pistor

Faculty Scholarship

The global financial crisis demonstrated the vulnerability, if not failure, of existing governance structures for financial markets. Even if it is true that financial crises cannot be avoided, there may be room for improving existing structures. This chapter suggests that such an improvement might lie in switching from exclusive, hierarchical, and coercive forms of governance to inclusive, horizontal, cooperative ones—and uses the shorthand ‘contractual governance’ for the latter. Starting from the presumption that new forms of governance are frequently born in crisis, the chapter analyses several responses to the crisis and asks whether they display features of alternative forms of …

Do Corporations Have Religious Beliefs?, Jason Iuliano

Indiana Law Journal

Despite two hundred years of jurisprudence on the topic of corporate personhood, the Supreme Court has failed to endorse a philosophically defensible theory of the corporation. In this Article, I attempt to fill that void. Drawing upon the extensive philosophical literature on personhood and group agency, I argue that corporations qualify as persons in their own right. This leads me to answer the titular question with an emphatic yes. Contrary to how it first seems, that conclusion does not warrant granting expansive constitutional rights to corporations. It actually suggests the opposite. Using the Affordable Care Act’s contraception mandate as a …

"Was The Deal Worth It?": The Dilemma Of States With Ineffective Economic Incentives Programs, Randle B. Pollard

UC Law Business Journal

Federal subsidies to state and local governments have been substantially reduced due to public opinion prioritizing the reduction of the federal deficit, the recent "fiscal cliff" legislation, and the federal budget "sequester cuts." In addition, in many states, revenue collection from individual and corporate income tax is below prerecession levels. To address the reduction in federal funding and reduced revenue collections, state and local governments will increasingly rely on economic incentive programs to grow their economies through increased job creation and private capital investment within their jurisdictions. These economic incentive programs are no longer comprised of simple tax reductions for …

Corporate Governance In Japanese Law: Recent Trends And Issues, Hideki Kanda

UC Law Business Journal

This article discusses recent trends and issues concerning corporate governance in Japanese law. The purpose of this article is to offer brief overviews on selected topics, including empirical studies, recent scandals, board structure, rule making by the stock exchange, disclosure rules under Japanese securities regulation, and the forthcoming reform of Japanese corporate law.

Japanese Corporate Governance Reform: A Comparative Perspective, Bruce E. Aronson

UC Law Business Journal

Japan has been widely criticized as being slow to reform a corporate governance system that seemingly remains fixed on the interests of employees over shareholdersand unresponsive to recent global trends such as the spreadof fidependent directors.This article seeks to present a more nuancedand balanced view of the ongoing evolution of Japanese corporate governance.

This article discusses how analysis of Japanese corporate governance is hamperedby the lackofboth anagreed-uponstandard for evaluating change in Japan and data concerning important governancepractices,such as the actualrole of company auditors (kansayaku). The main focus, however, is on describing and evaluating experimentation at leading individual Japanese companies that …

The Long Tail And Demand Creation In The Legal Marketplace, Kristen E. Killian

UC Law Business Journal

This note examines new legal technology companies that are innovating transactional legal products, but not legal services. Legal Tech Innovation Companies (LTICs) represent an innovative leap in how companies that are not law firms provide legal products directly to a consumer. Although these companies are not yet disrupting the core of the legal marketplace, they are meaningfully lowering cost and increasing efficiency through both simplification and speed.

This note describes the type of legal consumers for whom LTICs are creating demand for their legal products and discusses several LTICs in greater detail. It further addresses policy considerations for the transactional …

A Software Patent War: The Effects Of Patent Trolls On Startup Companies, Innovation, And Entrepreneurship, Sonia Karakashian

UC Law Business Journal

This note analyzes the effects of patent trolls on startup companies and the issues that software patentability under 35 U.S.C. § 101 impose on this highly controversial area of intellectual property. This note elaborates on the current patent reforms as well as the common law struggles addressed in Supreme Court decisions. Further, it discusses the software patent war and the controversial issues raised in § 101 of the patent system followed by the issues of patentability and its effects on startup companies. Lastly, this note discusses short-term and long-term progress in the patent system, as well as address the current …

Goodwill And The Excesses Of Corporate Political Spending, David Rosenberg

UC Law Business Journal

This article argues that legislation that provide "special rules" is not necessary because the business judgment rule should not be interpreted to protect corporate directors' decisions to donate to political campaigns in the same way that it protects ordinary corporate charitable contributions or decisions based on CSR. The rule protects donations in the public interest even if they are profit- sacrificing because courts are not in a position to judge whether or not a particular act of giving is designed to maximize profits or is simply an acceptable act of charity with no obvious financial benefit to the corporation itself. …

Privacy: An Issue Of Priority, Stephanie Segovia

UC Law Business Journal

This note highlights the competing stakes in the online privacy debate. It provides an overview of the U.S. business model of companies that participate in data gathering and analysis, and why they do so (namely because of the emergence of Big Data technologies), and discusses examples of how online privacy has eroded in recent years, in turn highlighting the need for federal action. This note also discusses the current status quo of online privacy in America, and why current legislation is inadequate to address online privacy issues. It further includes a discussion of why the U.S. should let the new …

Too Many Cooks In The Kitchen: Battling Corporate Corruption In Brazil And The Problems With A Decentralized Enforcement Model, Michelle A. Winters

Richmond Journal of Global Law & Business

No abstract provided.

Fiduciary Duties Of Llc Managers: Are They Subject To Prospective Waiver Under The New York Llc Statute?, Jack Graves, Yelena Davydan

Touro Law Review

No abstract provided.