Business Organizations Law Commons^™

Coming Disruptions In Corporate Law, Douglas Sarro, Edward J. Waitzer

All Papers

Corporate law’s dynamism precludes bold predictions about its future. Instead, we set out to highlight principles relevant to its trajectory and frame looming, unresolved issues. In that vein, artificial intelligence and other digital technologies raise considerable new opportunities for directors to enhance their oversight and for shareholders to be better informed and make more meaningful use of their governance rights. At the same time, the potential for wide-scale automation of corporate activities via these technologies amplifies corporate power and resulting risks of harm, adding new urgency to past prescriptions for rethinking the relationship between corporate and other areas of law …

Charting New Frontiers: A Legal Literature Review Of Social Entrepreneurship And Impact Investing 2018–2023, Anne M. Tucker

Scholarly Works

This Article surveys 177 articles published in U.S. law reviews and journals between 2018–2023 that contribute to the fields of social enterprise, social finance and impact investing. The Article extends our earlier legal literature review of the same fields from 2007-2017.Our collective 17-year review of this span of legal literature documents the legal issues examined by scholars with respect to the development of sophisticated alternative business forms, like the Delaware Public Benefit Corporation; the growth in impact investing; the enduring academic interest in corporate purpose; and the effects that developments related to ESG and corporate sustainability are having on the …

How A “Superstar” Ceo Exposes The Necessity For Third Party D&O Insurance, Angela N. Aneiros, Karen Woody

Scholarly Articles

he influence that “superstar” CEOs have over a company’s board of directors can be alarming. Among other things, Elon’s ability to skirt personal liability for seemingly obvious breaches of duty has raised concerns within the realm of corporate governance and corporate regulation. While much has been written on Elon’s influence on Tesla’s board of directors, one area of the law that often gets overlooked that has exacerbated Elon’s corporate governance issues, is that of directors and officers (D&O) liability insurance. While personally insuring board members seems like a very "Elon" move, it could have broader implications beyond Elon. Are “superstar” …

Beyond Profit Motives, William J. Moon

Faculty Scholarship

Why do corporations exist? Generations of legal scholars have debated both the origins of business corporations and their purpose.1 Professor Stephen Bainbridge’s new book The Profit Motive: Defending Shareholder Value Maximization is a substantial contribution to this literature and an essential read for anyone who wishes to better understand a controversy that has an immense impact on how movers and shakers of today’s largest corporations make decisions.

Corporate Resiliency And Relevancy In The Private Ordering Era, Megan Wischmeier Shaner

Faculty Articles

Firm-specific private ordering has flourished in the twenty-first century. Public companies are seeing more and more governance contracting in traditional venues such as the bylaws and charter, as well as in less conventional places like shareholder agreements and dual-class-like contracts. Decisions legitimizing private ordering in the corporate setting contain strong contractarian language and rely heavily on contract – and not corporate – principles to justify their holdings. In addition, recent statutory amendments have chipped away at traditionally mandatory features of the corporation, thereby reinforcing the contractual view of the corporate form and fueling the private ordering movement. All told, the …

Combatting Wage Theft In Global Supply Chains: A Proposal For Transnational Wage Lien Laws, Nabila N. Khan

LL.M. Essays & Theses

When the world went into lockdown due to the COVID-19 pandemic, major fashion brands attempted to protect their profits by refusing to pay overseas suppliers for over $16 billion USD of goods between April and June 2020. These decisions had a devastating impact on garment workers who toil at the bottom of the supply chain; thousands of garment workers and their families faced wage theft, dealing with months of unpaid wages, benefits and/or severance pay. In the absence of a regulatory framework to hold corporations responsible, workers, unions, and NGOs resorted to naming and shaming brands into taking action. However, …

Asset Managers As Regulators, Dorothy S. Lund

Faculty Scholarship

The conventional view of regulation is that it exists to constrain corporate activity that harms the public. But amid perceptions of government failure, many now call on corporations to tackle social problems themselves. And in this moment of dissatisfaction with government, powerful asset managers have stepped in to serve as regulators of last resort, adopting rules that bind corporate America on issues of great social importance, including climate change and workplace diversity. This Article describes this dynamic — where shareholders have become regulators — which has been made possible by the rise of institutional shareholding (and index investing in particular) …

Shareholder Wealth Maximization: A Schelling Point, Martin Edwards

St. John's Law Review

(Excerpt)

Imagine a reality television game show where two contestants begin the game in two different places in New York City. The object of the game is for the two contestants to find each other, but they do not know anything about each other and they have no way of communicating. If they succeed, both contestants win a prize. If they fail, they get nothing. With no ability to explicitly bargain over the meeting, the parties have to make an educated guess about what the other person is most likely to do. Most people, confronted with this sort of tacit …

Corporate Finance For Social Good, Dorothy S. Lund

Faculty Scholarship

Corporations are under pressure to use their outsized power to benefit society, but this advocacy is unlikely to result in meaningful change because corporate law’s incentive structure rewards fiduciaries who maximize shareholder wealth. Therefore, this Essay proposes a way forward that works within the wealth-maximization framework and yet could result in dramatic social change. The idea is simple: Use private debt markets to provide incentives for public-interested corporate action. Specifically, individuals who value prosocial corporate decisions could finance them by contributing to corporate social responsibility (CSR) bonds that would offset the corporation’s implementation costs. To provide an incentive to depart …

The Corporate Governance Machine, Dorothy S. Lund, Elizabeth Pollman

Faculty Scholarship

The conventional view of corporate governance is that it is a neutral set of processes and practices that govern how a company is managed. We demonstrate that this view is profoundly mistaken: For public companies in the United States, corporate governance has become a “system” composed of an array of institutional players, with a powerful shareholderist orientation. Our original account of this “corporate governance machine” generates insights about the past, present, and future of corporate governance. As for the past, we show how the concept of corporate governance developed alongside the shareholder primacy movement. This relationship is reflected in the …

Covid-19 And Corporate Social Responsibility: Business Responses To The Pandemic In The Inland Northwest, Jacob H. Rooksby

Law Faculty Publications

The novel coronavirus upended the world beginning in early spring of 2020. As travel ground to a halt, and governments issued stay-at-home orders, the impact on commerce was immediate and has proven to be lasting. Employees accustomed to working in offices and job sites were told to stay home. Certain industries received permission to have so-called “essential” personnel continue their labor in person, but for many employers the reality they faced was not so simple: learn to adapt to the new environment or succumb to the new environment. ...

Business Law–Corporate Purpose And Benefit Corporations–Making Benefit Corporation Legislation Work For Socially Minded Investors, Cody Mckinney

The Arkansas Journal of Social Change and Public Service

No abstract provided.

Can Soft Words Lead To Strong Deeds? A Comparative Analysis Of Corporate Human Rights Commitments’ Enforcement, Adeline Michoud

Seattle Journal for Social Justice

No abstract provided.

The Global Sustainability Footprint Of Sovereign Wealth Funds, Hao Liang, Luc Renneboog

Research Collection Lee Kong Chian School Of Business

With the emergence of sovereign wealth funds (SWFs) around the world managing equity of over $8 trillion, their impact on the corporate landscape and social welfare is being scrutinized. This study investigates whether and how SWFs incorporate environmental, social, and governance (ESG) considerations in their investment decisions in publicly listed corporations, as well as the subsequent evolution of target firms' ESG performance. We find that SWF funds do consider the level of past ESG performance as well as recent ESG score improvement when taking ownership stakes in listed companies. These results are driven by the SWF funds that do have …

Holding Oregon Benefit Companies Accountable For Greenwashing And Faux Csr, Sophia Von Bergen

Lewis & Clark Law Review

The notion of corporate social responsibility (CSR) has gained popularity in recent years with both consumers and businesses, leading to Oregon and currently 35 other states adopting benefit company statutes that allow companies to elect status as a benefit corporation. CSR, however, can be marred by what is known as “greenwashing” and “faux CSR,” which occur when a company falsely claims that it engages in environmentally friendly or socially responsible practices to boost sales or improve its brand. Oregon’s benefit company statute contains features designed to protect against greenwashing and faux CSR, but the statute’s accountability mechanisms are lackluster. Enforcement …

Corporate Social Responsibility Versus Shareholder Value Maximization: Through The Lens Of Hard And Soft Law, Min Yan

Northwestern Journal of International Law & Business

Even with a significant increase in the number of firms around the world engaging in corporate social responsibility (“CSR”), many people still perceive CSR as a voluntary commitment and shareholder value maximization (“SVM”) as a mandatory requirement. This paper borrows the concept of hard law and soft law in terms of coerciveness and overturns the stereotype that SVM is a hard-law constraint and CSR a soft-law constraint. The paper first demonstrates that directors of the board are not obliged to maximize shareholder value even in the Anglo-American jurisdictions where shareholder primacy culture is more dominant. Next, the paper critically discusses …

Western Corporate Fiscal Citizenship In The 21st Century, Alex Freund

Northwestern Journal of International Law & Business

For the Western world, the challenges of the 21st Century are numerous, from climate change’s effects on food production and coastal cities to underfunded social safety nets to automation’s impact on the middle class. To handle such costly problems, government intervention will be required. Government intervention, however, always comes at a cost to either individuals or corporations. To determine who should bear these costs, scholars and experts should turn to notions of fiscal citizenship – the social contract between the state and private parties through taxation and the provision of goods and services. By applying principles of individual fiscal citizenship …

Mandatory Corporate Social Responsibility? Legislative Innovation And Judicial Application In China, Li-Wen Lin

All Faculty Publications

Corporate social responsibility (CSR) is often understood as voluntary corporate behavior beyond legal compliance. The recent emergence of CSR legislation is challenging this typical understanding. A number of countries including China, Indonesia and India have expressly stated in corporate law that companies shall undertake CSR. The CSR law is controversial. Critics of CSR see the law as an unwise effort to challenge profit maximization as the only social responsibility of the corporation. Even CSR advocates welcome the CSR law with great caution. Given the vague statutory language of CSR, the practical application of the law places high demands on the …

Say On Purpose: Lessons From Chinese Corporate Charters, Li-Wen Lin

All Faculty Publications

No abstract provided.

The Corporation Reborn: From Shareholder Primacy To Shared Governance, Grant M. Hayden, Matthew T. Bodie

All Faculty Scholarship

The consensus around shareholder primacy is crumbling. Investors, long assumed to be uncomplicated profit-maximizers, are looking for ways to express a wider range of values in allocating their funds. Workers are agitating for greater voice at their workplaces. And prominent legislators have recently proposed corporate law reforms that would put a sizable number of employee representatives on the boards of directors of large public companies. These rumblings of public discontent are echoed in recent corporate law scholarship, which has cataloged the costs of shareholder control, touted the advantages of nonvoting stock, and questioned whether activist holders of various stripes are …

Reconstructing The Corporation: A Mutual-Control Model Of Corporate Governance, Grant M. Hayden, Matthew T. Bodie

All Faculty Scholarship

The consensus around shareholder primacy is crumbling. Investors, long assumed to be uncomplicated profit-maximizers, are looking for ways to express a wider range of values in allocating their funds. Workers are agitating for greater voice at their workplaces. And prominent legislators have recently proposed corporate law reforms that would put a sizable number of employee representatives on the boards of directors of large public companies. These rumblings of public discontent are echoed in recent corporate law scholarship, which has cataloged the costs of shareholder control, touted the advantages of nonvoting stock, and questioned whether activist holders of various stripes are …

Evolving Norms Of Corporate Social Responsibility: Lessons Learned From The European Union Directive On Non-Financial Reporting, Constance Z. Wagner

All Faculty Scholarship

This article examines an important development in the field of corporate social responsibility, namely theadoption of a 2014 European Union Directive (“2014 EU Directive”) mandating non-financial reporting by certain large companies. Such disclosure has traditionally been provided by businesses on a voluntary basis, but the 2014 EU Directive reflects an emerging global trends toward mandatory reporting. Such trend emerged in response to the perceived low quantity and poor quality of information disclosed voluntarily onsocial and environmental topics of importance to corporate stakeholders. The author analyzes the history and development of policy and legislation on this issue both at the European …

Climate Change, Corporate Social Responsibility, And The Extractive Industries, Sara Seck

Articles, Book Chapters, & Popular Press

During the negotiation of the Paris Agreement, many argued that the final text should integrate a human rights approach so as to better align climate governance under the UNFCCC with climate justice. Reference to human rights ultimately appeared only in the Preamble, despite submissions from the UN High Commissioner for Human Rights that urgent and ambitious State action to combat climate change is an existing duty of international human rights law. Another submission highlighted the role of businesses as duty-bearers who must contribute to climate mitigation and be accountable for climate impacts. This article will consider an unexplored avenue through …

The Shrinking Scope Of Csr In Uk Corporate Law, Andrew Johnston

Washington and Lee Law Review

Through a historical analysis of corporate law reforms in the United Kingdom (UK) during the twentieth and early twenty-first centuries, this paper traces the shrinking scope for corporations to take socially responsible decisions. It offers a detailed examination of the rationales and drivers of the reforms, and shows that, by focusing exclusively on the question of accountability of directors to shareholders, wider social concerns were “bracketed” after 1948, leading to a permanent state of “crisis,” which constantly threatens the legitimacy of the corporate law system. Following the Brexit vote, there are signs that the UK Government is willing to reconsider …

Effective Compliance With Antidiscrimination Law: Corporate Personhood, Purpose And Social Responsibility, Cheryl L. Wade

Washington and Lee Law Review

No abstract provided.

Governance Interactions In Sustainable Supply Chain Management, Errol Meidinger

Transnational Business Governance Interactions Working Papers

“Supply chains” are a major site of transnational business governance, and yet their dynamics and effectiveness are usually more assumed than interrogated in regulatory governance discourse. The very term “chain” implies a more determinist and simplistic understanding of supply relationships than is empirically supportable. Supply chains in practice are complex, dynamic, and highly variable networks. Based on peer-group presentations by over 60 supply chain professionals, this paper analyzes sustainable supply chain management practices in terms of the interactions conceptions of the Transnational Business Governance Interactions framework. It discusses possible refinements of the framework and suggests that sustainable supply chain management …

Twenty-Ninth Annual Corporate Law Center Symposium: Corporate Social Responsibility And The Modern Enterprise: Foreword, Felix B. Chang

Faculty Articles and Other Publications

In December 2015, Facebook founder Mark Zuckerberg and his wife, Priscilla Chan, publicly pledged to give ninety-nine percent of their Facebook shares, then worth over $45 billion, to charitable purposes. As the receptacle for their philanthropy, the couple created a limited liability company. This touched off a flurry of commentary over the merits of limited liability companies (LLCs) versus nonprofit organizations and for-profit social enterprises such as benefit corporations. Anticipating the debates to follow, the Corporate Law Center at the University of Cincinnati College of Law (UC) held its 29th Annual Symposium (the Symposium) on corporate social responsibility and the …

Using Proactive Legal Strategies For Corporate Environmental Sustainability, Gerlinde Berger-Walliser, Paul Shrivastava, Adam Sulkowski

Michigan Journal of Environmental & Administrative Law

We argue that proactive law can help organizations be more sustainable. Toward that end, this Article first summarizes proactive law literature as it pertains to corporate sustainability. Next, it examines a series of cases on the pivotal nexus between proactive law and corporate sustainability. It then advances novel propositions that connect proactive law to central organizational design elements. The discussion traces further implications and suggests fruitful avenues for research and ways of using proactive law for firms to become more sustainable.

Preserving The Corporate Superego In A Time Of Activism: An Essay On Ethics And Economics, John C. Coffee Jr.

Faculty Scholarship

This essay focuses on the impact of recent changes in corporate governance on ethical behavior within the public corporation. It argues that a style of corporate behavior – one characterized by a risk tolerant, even reckless, pursuit of short-term profits and a disregard for the interests of non-shareholder constituencies – is attributable in significant part to recent changes in corporate governance, including the rise of hedge fund activism, greater use of incentive compensation, and the appearance of blockholder directors. It then surveys feasible responses intended to strengthen the role of the boards as the corporation’s conscience and superego. Given the …

Balance And Team Production, Kelli A. Alces

Scholarly Publications

No abstract provided.