Business Organizations Law Commons^™

"Quack Corporate Governance" As Traditional Chinese Medicine: The Securities Regulation Cannibalization Of China's Corporate Law And A State Regulator's Battle Against Party State Political Economic Power, Nicholas Calcina Howson

Seattle University Law Review

From the start of the People’s Republic of China’s (PRC) “corporatization” project in the late 1980s, a Chinese corporate governance regime subject to increasingly enabling legal norms has been determined by mandatory regulations imposed by the PRC securities regulator, the China Securities Regulatory Commission (CSRC). Indeed, the Chinese corporate law system has been cannibalized by all-encompassing securities regulation directed at corporate governance, at least for companies with listed stock. This Article traces the path of that sustained intervention and makes a case—wholly contrary to the “quack corporate governance” critique much aired in the United States—that for the PRC this phenomenon …

The Evolution Of Corporate Governance In Japan: The Continuing Relevance Of Berle And Means, Takaya Seki, Thomas Clarke

Seattle University Law Review

The evolution of corporate governance in Japan towards international standards continues, though at a gradual pace that often concerns outsiders. The substance of Japanese corporate governance is often questioned due to a lack of understanding of the unique elements of the Japanese institutional system. Japanese companies are under a sustained assault from overseas investors to introduce a greater number of independent directors on boards, improve accountability, and enhance transparency. The majority of Japanese companies have taken what they regard as significant steps in this direction of accountability. In Japan, however, there is a different conception of the role of the …

State Capital: Global And Australian Perspectives, George Gilligan, Megan Bowman

Seattle University Law Review

The activities of state-related pools of capital need to be understood within the context of an era of globalization, in which economic and political ties between many jurisdictions are deepening, A variety of modes of governance are emerging that have a capacity for impacts of broad international scope. The rising influence of more proactive state-led capitalism is one of the shaping variables in how the global economy has been changing swiftly in recent decades, and the effects of the Global Financial Crisis have arguably accelerated these structural shifts. This Article identifies three discrete phenomena in the state capital arena. First, …

What Is A Corporation? Liberal, Confucion, And Socialist Theories Of Enterprise Organization (And State, Family, And Personhood), Teemu Ruskola

Seattle University Law Review

What is a corporation? An easy, but not very informative, answer is that it is a legal person. More substantive answers suggest it is a moral person, a person/thing, a production team, a nexus of private agreements, a city, a semi-sovereign, or a (secular) God. Despite the economic, political, and social importance of the corporate form, we do not have a generally accepted legal theory of what a corporation is, apart from the law’s questionable assertion that it is a “person.” In this Article, the author places the idea, and law, of the corporation in a comparative context and suggests …

Corporate Governance Without Shareholders: A Cautionary Lesson From Non-Profit Organizations, George W. Dent

Faculty Publications

A debate about corporate governance has long raged over the allocation of power between shareholders and directors. Proponents of “shareholder primacy” believe that the corporate board should be chosen by and accountable to the stockholders rather than dominated by the CEO, as they believe is common now. Advocates of “director primacy” want to limit shareholder power because they believe that shareholders have conflicting objectives, are uninformed, and pressure the directors to sacrifice the long-term health of the company to short-term share price.

The governance of non-profit organizations (“NPOs”) offers an example that illuminates the corporate governance debate. Directors of NPOs …

A Conflict Primacy Model Of The Public Board, Usha Rodrigues

Scholarly Works

e board of directors is the theoretical fulcrum of the corporate form: Statutes task the board with managing the corporation. Yet in the twentieth century, CEOs and other executives came to dominate the real-world control of the corporation. In light of this transformation, in the 1970s Melvin E. Eisenberg proposed reconceiving the board as an independent monitor. Eisenberg’s monitoring board is now the dominant regulatory model of the board. Recently two different visions of the board of directors have emerged. Stephen Bainbridge’s “director primacy” model calls directors “Platonic guardians,” and Margaret Blair and Lynn Stout’s “team production model” characterizes them …

On The Rise Of Shareholder Primacy, Signs Of Its Fall, And The Return Of Managerialism (In The Closet), Lynn A. Stout

Seattle University Law Review

In their 1932 opus "The Modern Corporation and Public Property," Adolf Berle and Gardiner Means famously documented the evolution of a new economic entity—the public corporation. What made the public corporation “public,” of course, was that it had thousands or even hundreds of thousands of shareholders, none of whom owned more than a small fraction of outstanding shares. As a result, the public firm’s shareholders had little individual incentive to pay close attention to what was going on inside the firm, or even to vote. Dispersed shareholders were rationally apathetic. If they voted at all, they usually voted to approve …

Equity Derivatives And The Challenge For Berle’S Conception Of Corporate Accountability, Janis Sarra

Seattle University Law Review

With the proliferation of equity derivatives and related structured financial products, the North American conception of corporate governance faces a new and distinct challenge to its underlying premises.This Article analyzes these developments with a focus on the implications for director and officer accountability and corporate sustainability, using the occasion of the third symposium of the Adolf A. Berle, Jr. Center on Corporations, Law & Society to consider whether Berle’s analysis of corporate accountability offers any insights into how to address the uncoupling of economic interest and legal rights in corporate governance. Part II of this Article sets the context for …

Corporate Governance As A School Of Social Reform, Ciarán O’Kelly

Seattle University Law Review

In this paper, I present a vision of the corporation as a moral person. I point to “the separation of ownership and control” as a moment when the corporation broke away from the moral lives of ownermanagers. I then draw out the manner in which we can speak of the company as a moral person. Finally, through a discussion of social reporting in two British banks, I point to a shift in how this moral personhood is articulated, with the rise of corporate governance—or doing business well—as its own foundation of corporate responsibility. I propose a view of corporate responsibility …

Making Corporate Governance Codes More Effective: A Response To The European Commission's Action Plan Of December 2012, Peter Böckli, Paul L. Davies, Eilis Ferran, Guido Ferrarini, José M. Garrido Garcia, Klaus J. Hopt, Alain Pietrancosta, Katharina Pistor, Markus Roth, Rolf Skog, Stanislaw Soltysinski, Jaap W. Winter, Eddy Wymeersch

Faculty Scholarship

This paper contains the European Company Law Experts' response to one of the main issues raised in the European Commission’s Action Plan of 12 December 2012, namely how to make corporate governance codes more effective. The concept of “codes’ effectiveness” has two meanings: effectiveness of the comply-explain mechanism (disclosure effectiveness) and level of adoption of the codes’ recommendations themselves (substantive effectiveness). The ECLE believes that it is of crucial importance to keep the advantages of regulation by codes while finding adequate improvements of the quality of the reports and the explanations. The relationship between the content of corporate governance codes …

Corporate Governance: Some Unasked Questions A Personal Commentary, Henry Lesser

Pepperdine Law Review

No abstract provided.

Foreword, Marc I. Steinberg

Pepperdine Law Review

No abstract provided.

Striking The Wrong Balance: Constituency Statutes And Corporate Governance , Edward D. Rogers

Pepperdine Law Review

No abstract provided.

Rethinking The Nature Of The Firm: The Corporation As A Governance Object, Peer Zumbansen

Seattle University Law Review

This Article attempts to bridge two discourses—corporate governance and contract governance. Regarding the latter, a group of scholars has recently set out to develop a more comprehensive research agenda to explore the governance dimensions of contractual relations, highlighting the potential of contract theory to develop a more encompassing theory of social and economic transactions. While a renewed interest in the contribution of economic theory for a concept of contract governance drives one dimension of this research, another part of this undertaking has been to move contract theory closer to theories of social organization. Here, these scholars emphasize the “social” or …

Employees And The Boundaries Of The Corporation, Matthew T. Bodie

All Faculty Scholarship

Employees have no formal role in U.S. corporate law. According to most theories of the firm, however, employees play a critical role in differentiating firms from markets. This essay examines the disparity in treatment and seeks to understand the ramifications of the separation of employees from the corporation. After discussing the absence of employees from the corporate structure, the essay looks at the role of the employees in theories of the firm. In contrast to corporate law, these theories generally include employees within the core of the firm, and they often explain the nature and purpose of the firm in …

Corporate Governance In An Age Of Separation Of Ownership From Ownership, Usha Rodrigues

Scholarly Works

The shareholder empowerment provisions enacted as part of the recent bailout legislation are internally incoherent because they fail to address the short-termist realities of shareholder ownership today. Ownership has separated from ownership in modern corporate America: individual investors now largely hold stock through mutual funds, pension funds, and hedge funds. The incentives of these short-term financial intermediaries only imperfectly reflect the interests of their long-term holders - an imbalance only exacerbated by the bailout’s corporate governance legislation. The bailout’s focus on shareholder empowerment tactics - such as proxy access, say-on-pay, and increased disclosure - makes little sense if shareholders are …

The Corporation As Imperfect Society, Brian Mccall

Faculty Articles

Corporations are ubiquitous in modern society. They pervade every aspect of our life, consumer, professional, investment activity. Probably, people have more contact with corporations on a daily basis than any other institution, including government. From the South Sea Bubble to the Stock market Crash of 1929 to Enron to General Motors and Countrywide Mortgage, corporate scandals and controversies invite fundamental questions about corporate law. This article attempts to bring a fresh perspective to the question: “what is a corporation and how should the law treat it?” The article articulates a corporate metaphysics rooted in political philosophy. The dominant models of …

Promoting Employee Voice In The American Economy: A Call For Comprehensive Reform, Kenneth G. Dau-Schmidt

Articles by Maurer Faculty

It has become apparent that there are serious deficiencies in the American model of production. Our model of corporate governance has recently come under intense scrutiny in the academic literature and the popular press. There are increasing concerns that American corporations are too focused on short-run profits and stock prices, at the expense of long-term strategies and investments that would benefit the long-run value of the firm, employees, and the American economy at large. In the pursuit of short-run shareholder interests, American corporations have bestowed on senior executives enormous compensation packages that seem increasingly divorced from any notion of rationality, …

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 …

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 …

Bonding Limited Liability, Robert J. Rhee

William & Mary Law Review

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 marginalism …

Re-Enchanting The Corporation, Lyman P.Q. Johnson

William & Mary Business Law Review

No abstract provided.

Beyond Shareholder Value: Normative Standards For Sustainable Corporate Governance, Robert Sprague

William & Mary Business Law Review

This Article explores whether the modern corporate governance model is sustainable. For many corporations, particularly large ones, there is a separation between ownership and management, with a management emphasis on short-term gains at the expense of long-term sustainability. This Article explores the role of corporate directors, particularly vis-a-vis shareholders, from an interdisciplinary perspective, analyzing legal case law as well as legal, management, and finance literature. This Article explores emerging trends in expanding notions of corporate governance that incorporate concerns beyond just shareholders, recognizing the interrelationship between business and society. It is suggested that in order to remain viable and competitive, …

For Optional Federal Incorporation, George W. Dent

Faculty Publications

The American economy suffers from the domination of corporations by chief executive officers who exercise control for their own benefit, at considerable cost to shareholders and to efficiency. The costs of this defect are rising as capital flees the United States for a growing number of countries that treat investors better. America’s corporate governance problem began and persists because corporations are franchised by the states, and it is in the economic interest of the states (especially Delaware) to cater to CEOS because they control the choice of state of incorporation. To break this destructive arrangement I propose optional federal incorporation …

The Case For Employee Referenda On Transformative Transactions As Shareholder Proposals, Matthew T. Bodie

All Faculty Scholarship

This Comment describes and advocates for employee referenda as implemented through a SEC Rule 14a-8 shareholder proposal. The proposal provides for a nonbinding referendum amongst all employees whenever the corporation's shareholders must vote to approve a merger, acquisition, sale of substantially all assets, or other transformative transaction. The purpose of the referendum is to provide employees with a voice in the transaction and to provide shareholders with a mechanism for tapping into employee sentiment. Because the referendum would be nonbinding, it is best viewed as an informational tool for shareholders and employees to use in policing management's transactions. Given the …

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

All Faculty Scholarship

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 …

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

Faculty Journal Articles and Book Chapters

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 …

The Efficiency Of Friendliness: Japanese Corporate Governance Succeeds Again Without Hostile Takeovers, Dan W. Puchniak

Research Collection Yong Pung How School Of Law

It is widely assumed that hostile takeovers are a prerequisite for an efficient system of corporate governance. This assumption is false. Since the new millennium, Japan has transformed itself from being on the brink of one of the largest economic meltdowns in modern economic history to currently being in the midst of its longest period of postwar economic expansion (2002-2007). This astounding recovery was achieved without a single successful hostile takeover of a major Japanese company. True to its postwar tradition, corporate Japan has successfully restructured through government intervention, bank-driven reallocation of capital, and orchestrated and friendly mergers — the …

Individual Or Collective Liability For Corporate Directors?, Darian M. Ibrahim

Faculty Publications

Fiduciary duty is one of the most litigated areas in corporate law and the subject of much academic attention, yet one important question has been ignored: Should fiduciary liability be assessed individually, where directors are examined one-by-one for compliance, or collectively, where the board's compliance as a whole is all that matters? The choice between individual and collective assessment may be the difference between a director's liability and her exoneration, may affect how boards function, and informs the broader fiduciary duty literature in important ways. This Article is the first to explore the individual/collective question and suggest a systematic way …

Stakeholder Governance: A Bad Idea Getting Worse, George W. Dent

Faculty Publications

Calls for a stakeholder voice in corporate governance never end, as evidenced by the Symposium Corporations and Their Communities to which this paper is a contribution. The demise of labor unions and explosion of executive compensation while the income of most Americans has stagnated over the last several years has precipitated cries for remedial action, some of which include stakeholder governance. Although complaints about deepening inequality are just, other remedies should be pursued. The traditional objections to stakeholder governance remain valid: the interests of stakeholder groups clash not only with those of the shareholders but also with each other, and …