Organizations Law Commons^™

Data Advantage And Merger Review: Can Entrenchment Theory Reform Antitrust Enforcement?, Shin-Ru Cheng

Seattle University Law Review

A merger involving giant digital companies is likely to dampen competition, as it allows those companies to combine and control data access, enabling them to entrench their dominant positions in relevant markets and extend those positions into related markets. While competition law in many jurisdictions aims to prohibit mergers that may substantially lessen competition or create a monopoly, arguably the review of digital mergers is failing because antitrust agencies lack an effective approach to identify data-generated anticompetitive harms. This Article demonstrates that entrenchment theory, recently reintroduced in the 2023 U.S. Merger Guidelines, would help reform the process of antitrust enforcement. …

The Federal Option: Delaware As A De Facto Agency, Omari Scott Simmons

Washington Law Review

Despite over 200 years of deliberation and debate, the United States has not adopted a federal corporate chartering law. Instead, Delaware is the “Federal Option” for corporate law and adjudication. The contemporary federal corporate chartering debate is, in part, a referendum on its role. Although the federal government has regulated other aspects of interstate commerce and has the power to charter corporations and preempt Delaware pursuant to its Commerce Clause power, it has not done so. Despite the rich and robust scholarly discussion of Delaware’s jurisdictional dominance, its role as a de facto national regulator remains underdeveloped. This Article addresses …

Merrick Dodd And The Great Depression: A Few Historical Corrections, Charles R. T. O'Kelley

Seattle University Law Review

Merrick Dodd is remembered primarily for his role as coprotagonist, with Adolf Berle, in the famous Berle–Dodd debate. Dodd’s contribution to that debate—For Whom are Corporate Managers Trustees?—has generally been interpreted as the inspiration for modern stakeholder theory. Berle’s contribution has generally been viewed as the foundation on which shareholder primacy rests. Both of these views have been clarified by the nuanced work of Bratton and Wachter. Oddly, while scholars have devoted a great deal of attention to Berle’s actual life story, there is almost no scholarship that sheds light on Merrick Dodd, the historical person.

Dr. Tele-Corporation: Bridging The Access-To-Care Gap, Nader Amer

Dickinson Law Review (2017-Present)

The United States is currently confronting an access-to-healthcare crisis, which rural regions are experiencing at a disproportionate rate. Many commentators have touted telemedicine as a solution for the access-to-care issue. Telemedicine uses video and telecommunication technology to allow physicians to treat patients from distant locations and thus facilitates a more equal distribution of physicians throughout the United States.

Although the telemedicine industry is quickly growing, the corporate practice of medicine doctrine impedes the industry’s expansion and consequently obstructs a viable solution to the access-to-care crisis. Generally, the corporate practice of medicine doctrine prohibits corporations and limited liability companies from employing …

Situating The Corporation Within The Vulnerability Paradigm: What Impact Does Corporate Personhood Have On Vulnerability, Dependency, And Resilience, Heather Kolinsky

UF Law Faculty Publications

As a result of Hobby Lobby, and the seemingly expanding notion of the corporation as a person within the traditional autonomous rights paradigm, a tension has developed between corporation as subject and corporation as institution. This evolution of corporation as person also highlights the problem of providing resilience to vulnerable subjects whose competing vulnerabilities are situated in the same corporate environment. Addressing this issue is of critical importance where employment has become the conduit for the responsive state to provide resilience to so many subjects, as well as the site of social institution building because the nature of our workplace …

The Proxy Rules And Restrictions On Sharegolder Voting Rights, J. Robert Brown Jr.

Sturm College of Law: Faculty Scholarship

Shareholders in public companies vote not by attending the meeting but by exercising their rights under the federal proxy rules. Recognizing this, the Securities and Exchange Commission has at times described the proxy rules as neutral in effect, designed only to provide shareholders with the same rights accorded under state law. In fact, this has often not been the case. Over their eighty-year development, the rules have often reduced rather than complemented the rights otherwise available to shareholders at these meetings.

This can be seen with particular clarity in connection with the erosion of shareholder voting rights. Under the proxy …

The Theory Of Fields And Its Application To Corporate Governance, Neil Fligstein

Seattle University Law Review

My goal here is twofold. First, I want to introduce the theory of strategic action fields to the law audience. The main idea in field theory in sociology is that most social action occurs in social arenas where actors know one another and take one another into account in their action. Scholars use the field construct to make sense of how and why social orders emerge, reproduce, and transform. Underlying this formulation is the idea that a field is an ongoing game where actors have to understand what others are doing in order to frame their actions. Second, I want …

Culture In Corporate Law Or: A Black Corporation, A Christian Corporation, And A Māori Corporation Walk Into A Bar . . ., Gwendolyn Gordon

Seattle University Law Review

Recent Supreme Court cases have entrenched a new image of corporate civic identity, assigning to the corporate person rights and abilities based upon the cultural characteristics, social ties, civic commitments, and internal lives of the human beings involved in it. This vision of the corporation is exemplified in recent cases implicating a corporate right to engage in political speech (Citizens United v. Federal Election Commission) and a right of corporations to be free of government interference regarding religious convictions (Burwell v. Hobby Lobby Stores, Inc.). Although much is being written about the soundness of the results in these cases and …

What Might Replace The Modern Corporation? Uberization And The Web Page Enterprise, Gerald F. Davis

Seattle University Law Review

The number of public corporations in the United States has been in decline for almost twenty years. Alternative forms of organization, from LLCs and benefit corporations to Linux and Wikipedia, provide robust competition to traditional corporations, while short-lived, project-based enterprises that assemble supply chains from available parts are increasingly cost effective. Yet our understanding of corporate governance has not kept pace with the new organization of the economy and we continue to treat the public corporation with dispersed ownership as the default form of doing business. Meanwhile, many of the corporations going public in recent years have abandoned traditional standards …

Corporations In The Flow Of Culture, Greg Urban

Seattle University Law Review

As an anthropologist, coming out of three decades of research among indigenous Brazilian populations, I naturally saw modern for-profit business corporations as tribes—the collective bearers of adaptive cultural know-how. They appeared to me to be the entities housing the culture needed to produce commodities, to trade commodities on the open market, or both. I was also, of course, aware of the legal concept of the corporation as fictive person capable of owning property and having standing in court cases, which I thought of as akin to the anthropological corporation insofar as both recognized the group as social actor. However, it …

The Widening Scope Of Directors' Duties: The Increasing Impact Of Corporate Social And Environmental Responsibility, Thomas Clarke

Seattle University Law Review

This Article concerns the widening scope of directors’ duties under the increasing impact of the pressures for corporate social and environmental responsibility. Narrow interpretations of directors’ duties that focus simply on the commercial success of the business and relegate other considerations to externalities are not tenable in the present context. The dawning realization of the global consequences of imminent climate change provides a series of inescapable challenges for business enterprises.

Agency Theory As Prophecy: How Boards, Analysts, And Fund Managers Perform Their Roles, Jiwook Jung, Frank Dobbin

Seattle University Law Review

In 1976, Michael Jensen and William Meckling published a paper reintroducing agency theory that explained how the modern corporation is structured to serve dispersed shareholders. They purported to describe the world as it exists but, in fact, they described a utopia, and their piece was read as a blueprint for that utopia. We take a page from the sociology of knowledge to argue that, in the modern world, economic theories function as prescriptions for behavior as much as they function as descriptions. Economists and management theorists often act as prophets rather than scientists, describing the world not as it is, …

Notes On The Difficulty Of Studying The Corporation, Marina Welker

Seattle University Law Review

In the award-winning documentary The Corporation, public intellectuals and activists characterize corporations as “externalizing machines,” “doom machines,” “persons with no moral conscience,” and “monsters trying to devour as much profit as possible at anyone’s expense.” In other footage, people on the street personify corporations: “General Electric: a kind old man with lots of stories;” “Nike: young, energetic;” “Microsoft: aggressive;” “McDonald’s: young, outgoing, enthusiastic;” “Monsanto: immaculately dressed;” “Disney: goofy;” “The Body Shop: deceptive.” The documentary, like screenwriter and legal scholar Joel Bakan’s book The Corporation: The Pathological Pursuit of Profit and Power, imparts dissonant messages about corporations. On the one hand, …

"Special," Vestigial, Or Visionary? What Banking Regulation Tells Us About The Corporation—And Vice Versa, Robert C. Hockett, Saule T. Omarova

Seattle University Law Review

A remarkable yet seldom noted set of parallels exists between modern U.S. bank regulation, on the one hand, and what used to be garden-variety American corporate law, on the other hand. For example, just as bank charters are matters not of right but of conditional privilege even today, so were all corporate charters not long ago. Just as chartered banks are authorized to engage only in limited, enumerated activities even today, so were all corporations restricted not long ago. And just as banks are subject to strict capital regulation even today, so were all corporations not long ago. In this …

Open Sesame: The Myth Of Alibaba's Extreme Corporate Governance And Control, Yu-Hsin Lin, Thomas Mehaffy

Brooklyn Journal of Corporate, Financial & Commercial Law

In September 2014, Alibaba Group Holding Limited (Alibaba) successfully launched a $25 billion initial public offering (IPO), the largest IPO ever, on New York Stock Exchange. Alibaba’s IPO success witnessed a wave among Chinese Internet companies to raise capital in U.S capital markets. A significant number of these companies have employed a novel, but poorly understood corporate ownership and control mechanism—the variable interest entity (VIE) structure and/or the disproportional control structure. The VIE structure was created in response to the Chinese restriction on foreign investments; however, it carries the risk of being declared illegal under Chinese law. The disproportional control …

The Long Road To Reformulating The Understanding Of Directors' Duties: Legalizing Team Production Theory?, Thomas Clarke

Seattle University Law Review

In this Article, the historical evolution of corporate governance is considered, highlighting the different eras of governance, the dominant theoretical and practical paradigms, and the reformulation of paradigms and counter paradigms. Two alternative and sharply contrasting theorizations, one collective and collaborative (the work of Berle and Means), the other individualistic and contractual (agency theory and shareholder value) are focused upon. The explanatory potential of Blair and Stout’s team production theory is elaborated, along with its conception of the complexity of business enterprise, with a mediating hierarch (the board of directors) securing a balance between the interests of different stakeholders. The …

Contemporary Practice Of The United States Relating To International Law, October 2014, Kristina Daugirdas, Julian Davis Mortenson

Articles

In this section: • United States Condemns Russia’s Use of Force in Ukraine and Attempted Annexation of Crimea • In Wake of Espionage Revelations, United States Declines to Reach Comprehensive Intelligence Agreement with Germany • United States Defends United Nations’ Immunity in Haitian Cholera Case • French Bank Pleads Guilty to Criminal Violations of U.S. Sanctions Laws • D.C. Circuit Strikes down Administrative Order Requiring Divestment by Foreign-Owned Corporation • United States Adopts New Land Mine Policy • United States Claims That Russia Has Violated the INF Treaty

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

Pepperdine Law Review

No abstract provided.

Delaware Dissolves The Glue Of Capitalism: Exonerating From Claims Of Incompetence Those Who Manage Other People's Money, Daniel S. Kleinberger

Faculty Scholarship

Delaware law is the leading source of non-federal law governing U.S. business organizations. Over the past 25 years that law has tilted further and further toward insulating individuals who manage business firms from any liability to the firms’ owners based on claims of misconduct. These developments have occurred both in corporate law and the law of unincorporated organizations.

Although often described as consistent with market principles, these developments actually undercut the proper functioning of a market system. Effective competition among firms does not require a “dog eat dog” mentality within firms. Managerial responsibility is a prerequisite to healthy firms, which …

Two Ways To Think About The Punishment Of Corporations, Albert Alschuler

Faculty Working Papers

This article compares the criminal punishment of corporations in the twenty-first century with two ancient legal practices—deodand (the punishment of animals and objects that have produced harm) and frankpledge (the punishment of all members of a group when one member of the group has avoided apprehension for a crime). It argues that corporate criminal punishment is a mistake but that viewing it as frankpledge is less ridiculous than viewing it as deodand. The article considers the implications of the choice between these concepts for standards of corporate guilt and for the sentencing of corporate offenders. After a brief historical description …

Returning Fairness To Executive Compensation, J. Robert Brown Jr.

Sturm College of Law: Faculty Scholarship

The current waive of turmoil in the financial markets has cast attention on the problem of executive compensation. Companies that have failed or disappeared in shot-gun mergers have nonetheless paid exorbitant sums to officers who arguably played a substantial role in their demise. In response, Congress for the first time established federal standards for determining compensation, including clawbacks and limits on golden parachutes.

The congressional efforts, although mild, represent a deep frustration with the system used by the Delaware courts in assessing executive compensation. With the CEO on the board, executive compensation has traditionally been examined under the duty of …

Do Delaware Ceos Get Fired?, Murali Jagannathan, Adam C. Pritchard

Law & Economics Working Papers Archive: 2003-2009

Critics have charged that state competition in corporate law, which Delaware dominates, leads to a “race to the bottom” making management unaccountable. One metric of management accountability is forced CEO turnover, which we use to test the race to the bottom hypothesis. We compare California firms that choose to incorporate in California – the state with arguably the most restrictive corporate law rules – with those that incorporate in Delaware. We show that aspects of Delaware law attract firms that plan to grow through merger or acquisition and are vulnerable to shareholder lawsuits. We also document differences in corporate governance …

A Complete Property Right Amendment, John H. Ryskamp

ExpressO

The trend of the eminent domain reform and "Kelo plus" initiatives is toward a comprehensive Constitutional property right incorporating the elements of level of review, nature of government action, and extent of compensation. This article contains a draft amendment which reflects these concerns.

Explaining The Value Of Transactional Lawyering, Steven L. Schwarcz

ExpressO

This article attempts, empirically, to explain the value that lawyers add when acting as counsel to parties in business transactions. Contrary to existing scholarship, which is based mostly on theory, this article shows that transactional lawyers add value primarily by reducing regulatory costs, thereby challenging the reigning models of transactional lawyers as “transaction cost engineers” and “reputational intermediaries.” This new model not only helps inform contract theory but also reveals a profoundly different vision than existing models for the future of legal education and the profession.

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

ExpressO

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 can be the difference between a director's liability and her exoneration, affects 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 of …

Bond Repudiation, Tax Codes, The Appropriations Process And Restitution Post-Eminent Domain Reform, John H. Ryskamp

ExpressO

This brief comment suggests where the anti-eminent domain movement might be heading next.

The Dutch Auction Myth, Peter B. Oh

ExpressO

The initial public offering process is under assault. Critics of this process have woven a complex set of interconnected objections to the orthodox method for conducting IPOs, pricing of shares, and allocating them to preferred investors. These critics instead point to online auctions as an alternative IPO method that can provide more equitable access, efficient prices, and egalitarian allocations. These claims rest on Google’s recent IPO and W.R. Hambrecht + Co.’s OpenIPO mechanism, conventionally regarded as impure variants of what is known as a descending-bid or Dutch auction (Dutch IPO).

This article assesses the empirical and theoretical case for Dutch …

Overvalued Equity And The Case For An Asymmetric Insider Trading Regime, Thomas A. Lambert

ExpressO

The forty-year debate over whether insider trading should be regulated has generally proceeded in all-or-nothing terms: Either all insider trading should be permitted (subject only to private restrictions imposed by issuers themselves), or none should. This Article argues for an asymmetric insider trading policy under which insider trading that decreases the price of an overvalued stock is generally permitted, but insider trading that increases the price of an undervalued stock is generally prohibited. Concluding that the net investor benefits of price-decreasing insider trading exceed those of price-enhancing insider trading, the Article argues that an asymmetric insider trading regime likely represents …

Organizational Form As Status And Signal, Kimberly D. Krawiec

ExpressO

In this Article, the author analyzes the reactions of 147 New York City law firms to the 1994 enactment of the New York Limited Liability Partnership statute, which provided New York law firm partners with the first convenient mechanism to limit their personal liability for partnership debts. Using both quantitative and qualitative evidence, she evaluates whether the behavior of New York law firms supports the signaling theory of organizational form—that is, the theory that firms use the partnership form to signal to the marketplace that they provide high quality legal services, due to either superior monitoring or to profit sharing. …

Breaking The Bank: Revisiting Central Bank Of Denver After Enron And Sarbanes-Oxley, Celia Taylor

ExpressO

No abstract provided.