Business Organizations Law Commons^™

Regulating Financial Guarantors, Steven L. Schwarcz

Faculty Scholarship

To improve financial regulation, scholars have engaged in extensive research over the past decade to try to understand why systemically important financial firms engage in excessive risk-taking. None of that research fully explains, however, the unusually excessive risk-taking by financial guarantors such as bond insurers, protection sellers under credit-default-swap (CDS) derivatives, credit enhancers in securitization transactions, and even issuers of standby letters of credit. With tens of trillions of dollars of financial guarantees outstanding, the potential for failure is massive. This Article argues that financial guarantor risk-taking is influenced by a previously unrecognized cognitive bias, which it calls “abstraction bias.” …

Equality Metrics, Veronica Root Martinez, Gina-Gail S. Fletcher

Faculty Scholarship

This time is different. This time the death of another Black man at the hands of white police officers prompted calls for change not only within police departments, but across all aspects of American life. Those calls for change resulted in significant displays of support for the Black Lives Matter movement and interest in how to eliminate systemic racism and promote racial diversity and justice within one’s daily life and workplace. For the most part, corporations were quick to publicly align themselves with the movement. When carefully examined, however, many of the statements issued by corporations in support of the …

Delaware’S Dominance And The Future Of Organizational Law, Peter Molk

Georgia Law Review

Delaware dominates the market for business formations.
Two main theoretical explanations have been offered to justify
Delaware’s continued success. One focuses on the state’s
credible commitment to producing responsive organizational
law in the future. The other looks to the network effects that
continue to encourage new formations once Delaware already
dominates. Yet, other than continued observation of Delaware’s
dominance, little empirical support exists for either theory.
This Article empirically tests entrepreneurs’, investors’, and
lawyers’ appetite for Delaware’s credible commitment. I use the
recent Delaware Supreme Court decision of Gatz Properties v.
Auriga Capital Corp., which was a negative shock to …

Codetermination In Theory And Practice, Grant M. Hayden, Matthew T. Bodie

All Faculty Scholarship

A system of shared corporate governance between shareholders and workers, codetermination has been mostly ignored within the U.S. corporate governance literature. When it has made an appearance, it has largely served as a foil for shareholder primacy and an example of corporate deviance. However, over the last twenty years—and especially in the last five—empirical research on codetermination has shown surprising results as to the system’s efficiency, resilience, and benefits to stakeholders. This Article reviews the extant American legal scholarship on codetermination and provides a fresh look at the current state of codetermination theory and practice. Rather than experiencing the failures …

From Mandates To Governance: Restructuring The Employment Relationship, Brett Mcdonnell, Matthew T. Bodie

All Faculty Scholarship

Employers are saddled with a dizzying array of responsibilities to their employees. Meant to advance a wide array of workplace policies, these demands have saddled employment with the burden of numerous social ends. However, that system has increasingly come under strain, as companies seek to shed employment relationships and workers lose important protections when terminated. In this Article, we propose that employers and employees should be given greater flexibility with a move from mandates to governance. Many of the employment protections required from employers stem from employees’ lack of organizational power. The imbalance is best addressed by providing workers with …

From Mandates To Governance: Restructuring The Employment Relationship, Brett H. Mcdonnell, Matthew T. Bodie

All Faculty Scholarship

Employers are saddled with a dizzying array of responsibilities to their employees. Meant to advance a wide array of workplace policies, these demands have saddled employment with the burden of numerous social ends. However, that system has increasingly come under strain, as companies seek to shed employment relationships and workers lose important protections when terminated. In this Article, we propose that employers and employees should be given greater flexibility with a move from mandates to governance. Many of the employment protections required from employers stem from employees’ lack of organizational power. The imbalance is best addressed by providing workers with …

Pension Fiduciaries And Climate Change: A Canadian Perspective, Maziar Peihani

All Faculty Publications

Climate change has emerged as a major issue of financial risk for Canadian pension funds when determining where to place investments. The author argues that while such pension funds recognize climate change as an issue that holds the potential for significant financial risk, the funds’ current approach to climate-related risks faces critical limitations. The author identifies the current practices of the five largest pension funds in Canada when faced with climate-related financial risks, then discusses the key shortcomings in current practices among the pension funds in three main areas.
First, the author examines organizational governance, which seeks to understand investment …

Pluralism And Convergence: Judicial Standardization In Canadian Corporate Law, Camden Hutchison

All Faculty Publications

This article uses statistical analysis of judicial decisions to address whether (and to what extent) the common law of corporations varies among the provinces. The primary findings are: (1) as measured by the number of case citations, provincial courts of appeal favour precedent from their home provinces; (2) the Supreme Court of Canada exerts a powerful standardizing influence across the provinces; and (3) on balance (and despite the “home province” bias of provincial courts of appeal), Canadian corporate law is largely homogeneous, with little variation among provincial jurisdictions. This article concludes that—for a variety of reasons—it is unlikely that any …

Toward Fair Gainsharing And A Quality Workplace For Employees: How A Reconceived Compensation Committee Might Help Make Corporations More Responsible Employers And Restore Faith In American Capitalism, Leo E. Strine Jr., Kirby M. Smith

Ira M. Millstein Center for Global Markets and Corporate Ownership

In the three decades after World War II, workers and stockholders shared equitably in the nation’s growing wealth. But over the last several decades, this fair gainsharing has diminished as the power of the stock market, in the form of institutional investors, has grown as the comparative voice and leverage of workers has declined. As a result of these and other factors, a much greater share of the gains from increased corporate profitability and productivity has gone to stockholders and top management, on the one hand, and much less to employees, on the other. Contributing to this divide has been …

Caremark And Esg, Perfect Together: A Practical Approach To Implementing An Integrated, Efficient, And Effective Caremark And Eesg Strategy, Leo E. Strine Jr., Kirby M. Smith, Reilly S. Steel

Ira M. Millstein Center for Global Markets and Corporate Ownership

With increased calls from investors, legislators, and academics for corporations to consider employee, environmental, social, and governance factors (“EESG”) when making decisions, boards and managers are struggling to situate EESG within their existing reporting and organizational structures. Building on an emerging literature connecting EESG with corporate compliance, this Essay argues that EESG is best understood as an extension of the board’s duty to implement and monitor a compliance program under Caremark. If a company decides to do more than the legal minimum, it will simultaneously satisfy legitimate demands for strong EESG programs and promote compliance with the law. Building on …

Restoration: The Role Stakeholder Governance Must Play In Recreating A Fair And Sustainable American Economy – A Reply To Professor Rock, Leo E. Strine Jr.

Ira M. Millstein Center for Global Markets and Corporate Ownership

This reply to For Whom Is the Corporation Managed in 2020? The Debate Over Corporate Purpose by Professor Edward Rock supports his depiction of the current state of corporate law in the United States. But by contrast to Professor Rock, I do not trace the debate over corporate purpose to recent statements by business elites belatedly recognizing that our corporate governance system has failed to work for the many and is contributing to growing inequality. Rather, I source the debate to the work of advocates and scholars who have long been trying to restore fairness to our economy by updating …

Challenging Gender Discrimination In Closely Held Firms: The Hope And Hazards Of Corporate Oppression Doctrine, Meredith R. Miller

Scholarly Works

The #MeToo Movement has ushered sexual harassment out of the shadows and thrown a spotlight on the gender pay gap in the workplace. Harassment and unfair treatment have, however, been difficult to extinguish. This has been true for all workers, including partners – those women who are owners in their firms and claim that they have suffered harassment or unfair treatment based on gender. That is because a partner’s lawsuit for discrimination often will suffer an insurmountable hurdle: plaintiff’s status as a partner in the firm means that they may not be considered an “employee” under the relevant employment discrimination …

Executive Pay Clawbacks And Their Taxation, David I. Walker

Faculty Scholarship

Executive pay clawback provisions require executives to repay previously received compensation under certain circumstances, such as a downward adjustment to the financial results upon which their incentive pay was predicated. The use of these provisions is on the rise, and the SEC is expected to soon finalize rules implementing a mandatory, no-fault clawback requirement enacted as part of the Dodd-Frank legislation. The tax issue raised by clawbacks is this: should executives be allowed to recover taxes previously paid on compensation that is returned to the company as a result of a clawback provision? This Article argues that a full tax …

Second Panel Discussion - Symposium: Who Makes Esg? Understanding Stakeholders In The Esg Debate, Lisa M. Fairfox, Carmen X. W. Lu, David H. Webber

Faculty Scholarship

This symposium was hosted virtually by Fordham University School of Law on October 23, 2020. The transcript has been edited for clarity and to provide sources, references, and explanatory materials for certain statements made by the speakers.

The second panel discussion was on the topic of "Stakeholders as the driving force of ESG." Panelists for the second panel were Carmen Lu, Lisa Fairfax, and David Webber.

Lending Innovations, Xuan-Thao Nguyen

Brooklyn Law Review

This article is about innovations. Startups and their founders in the innovation intensive sectors cannot reach their dreams without financing. They cannot turn to banks for loans. Banks, from community to commercial banks, shun startups due to antiquated banking law, business model and high risks associated with tech lending. But there are outlier banks who disrupt the banking business model with lending innovation, fueling startups with loans that allow tech innovations to occur from Silicon Valley to Route 128 of the northeast corridor, and from Shanghai, China to Herzliya, Israel. With qualitative and quantitative patent data, this article demonstrates how …

The Regulatory Production Of Vaccine Hesitancy, Eugene Mccarthy

Brooklyn Law Review

This article argues that U.S. vaccine law produces the “anti-vax” movement. The anti-vax movement is a growing problem, as more than half of American parents have concerns about vaccinating their children. Remarkably, these “vaccine-hesitant” individuals tend to be highly educated, wealthy, and experienced parents. Three legal structures cause vaccine hesitancy: strict immunization mandates, lax regulatory oversight, and blanket limited liability for vaccine manufacturers. The United States stands alone with regard to its vaccine mandates—no other developed democracy requires its citizens to receive such a large number of childhood vaccines. Meanwhile, the law permits financial conflicts of interest in vaccine approval …

Directors’ Duty Of Care In Times Of Financial Distress Following The Global Epidemic Crisis, Leon Yehuda Anidjar

Brooklyn Journal of International Law

The global COVID-19 pandemic is causing the large-scale end of life and severe human suffering globally. This massive public health crisis created a significant economic crisis and is reflected in a recession of global production and the collapse of confidence in the functions of markets. Corporations and boards of directors around the world are required to design specific strategies to tackle the negative consequences of the crisis. This is especially true for small and medium-sized enterprises (SMEs) that suffered tremendous economic loss, and their continued existence as ongoing concern is under considerable risk. Given these uncertain financial times, this Article …

Dr. Marye. Maida Order Denying Defendant Clerisy Corporation’S Motion For Interlocutory Injunction And Plaintiffs’ Motion For Judgment On The Pleadings, John J. Goger

Superior Court of Fulton County: Metro Atlanta Business Case Division Opinions

No abstract provided.

Warranty, Product Liability And Transaction Structure: The Problem Of Amazon, Edward J. Janger, Aaron D. Twerski

Brooklyn Journal of Corporate, Financial & Commercial Law

Amazon, and other internet sales platforms, have revolutionized the manner in which goods are purchased and sold. The obligations undertaken by Amazon in those sales are unclear, both as a matter of transparency, and as a matter of legal doctrine. Is Amazon a store? Is it a shipper? Is it a telephone? In various transactions Amazon can play some or all of these roles. Choosing the right metaphor has consequences. Amazon knows this and has done everything it can to deploy the metaphors selectively to its best legal and practical advantage, even when the chosen characterizations are inapt or even …

Door Shut And Ears Plugged: How Consumer Reporting Casts Identity Theft Victims Out Of Financial Society And How The Law Can Be Harmonized To Bring Them Back In, Ryan Bolger

Brooklyn Journal of Corporate, Financial & Commercial Law

Consumer Reporting Agencies (CRAs) are the gatekeepers to the American economy. As the chief informants for prospective lenders, landlords, and employers, they exert immense power over the day-to-day decisions of who gets what. Despite these high stakes, the CRAs run consumer reporting as an automated electronic process that causes a lot of reporting errors, disqualifying consumers from essential goods, services, and opportunities. This is painfully true in the context of identity theft, where perverse incentives pollute the integrity of consumer reporting, piling undue harm onto identity theft victims. The law provides a remedy for this problem, but circuit courts are …