Business Organizations Law Commons^™

Behind The Numbers: State Capitalism And Executive Compensation In China, Li-Wen Lin

All Faculty Publications

The rapid rise of Chinese companies in the global economy has attracted great scholarly attention to Chinese corporate governance. Among the various areas of Chinese corporate governance, executive compensation is an important yet difficult part to research. The common research method of Chinese executive pay literature relies on pay figures disclosed in listed companies’ annual reports and tends to take the disclosed numbers at face value. This Article discusses three informal pay practices that constrain the usefulness and reliability of executive pay data formally disclosed in annual reports of Chinese listed companies, especially those owned by the state. A valid …

The Limitations Of Supply Chain Disclosure Regimes, Adam S. Chilton, Galit A. Sarfaty

All Faculty Publications

Although the past few decades have seen numerous cases of human rights violations within corporate supply chains, companies are frequently not held accountable for the abuses because there is a significant governance gap in the regulation of corporate activity abroad. In response, governments have begun to pass mandatory disclosure laws that require companies to release detailed information on their supply chains in the hopes that these laws will create pressure that will improve corporate accountability. In this paper, we argue that supply chain disclosure regimes are unlikely to have a large effect on consumer behavior, and as a result, their …

Why Anti-Surcharge Laws Do Not Violate A Merchant's Freedom Of Speech, Annie P. Anderson

American University Law Review

First Amendment litigation is surrounding state anti-surcharge laws, which prevent merchants from imposing surcharges on transactions where customers use credit cards. These laws effectively prevent stores from passing credit card "swipe fees" onto their customers. Merchants argue that because the laws still allow them to provide discounts to customers who use other forms of payment, the laws violate their First Amendment rights by impermissibly restricting the way the stores can communicate. The state governments, in contrast, have defended the laws by asserting that they regulate conduct, not business speech, and therefore do not violate the First Amendment.

The Supreme Court …

Fiduciary Duties Of Corporate Directors In Uncertain Times, Ellen J. Odoner, Stephen A. Radin, Lyuba A. Goltser, Andrew E. Blumberg

Ira M. Millstein Center for Global Markets and Corporate Ownership

Directors addressing new political uncertainties, a host of heightened challenges and asserted “best practices” from many sources may understandably ask whether their fiduciary duties have changed as well. This paper synthesizes the latest decisions of the Delaware courts on the standards of conduct for directors and the standards by which their conduct is reviewed. While directors should expect uncertainty to be a fact of corporate life for the foreseeable future, this paper emphasizes that neither the fiduciary duties of directors nor the protections afforded them have changed. Disinterested and independent directors acting in good faith continue to have broad protections …

Board Excellence And Fiduciary Duties Of Corporate Directors, E. Norman Veasey, Ira M. Millstein

Ira M. Millstein Center for Global Markets and Corporate Ownership

This article is intended for corporate directors and explores the key issues that directors should understand with respect to their fiduciary duties. An accompanying paper authored by Ellen Odoner, Stephen Radin, Lyuba Goltser, and Andrew Blumberg of Weil, Gotshal & Manges LLP provides a detailed analysis of the concepts discussed in this article and is recommended to general counsel, as they advise their corporate boards with respect to their fiduciary duties, as well as directors who wish to have a better understanding of their own fiduciary duties.

Adapting Global Standards To A Changing World, Serdar Çelik, Mats Isaksson

Ira M. Millstein Center for Global Markets and Corporate Ownership

In 1996, Ira Millstein received a phone call from Paris. It came from the Organization for Economic Co-operation and Development (OECD) asking him to head a small international group of distinguished businesspeople, including Sir Adrian Cadbury. Their assignment would be to provide economists and policy makers with advice for future work in the area of corporate governance. At the time, the topic was little understood among policy makers and its wider economic implications were rarely discussed. But OECD, already well known for its analysis of both macroeconomics and structural policies, wanted to change that. They looked at corporate governance as …

Report From The General Counsel Summit On Short-Termism And Public Trust, Ira M. Millstein Center For Global Markets And Corporate Ownership

Ira M. Millstein Center for Global Markets and Corporate Ownership

This summary report was prepared for participants in the General Counsel Corporate Governance Summit and presents some of the key discussion topics and views of participants at the summit. It is not intended to provide a complete summary or represent a unanimous consensus of the summit’s proceedings.

The Next Iteration Of Progressive Corporate Law, Matthew T. Bodie

All Faculty Scholarship

A wave of progressive corporate law scholarship in the late 1980s and early 1990s reimagined corporate law from the perspective of employees, consumers, and other stakeholders left behind by shareholder primacy. Almost thirty years later, it is time to revisit this literature and consider what progressive corporate law should be in the 21st Century. This essay argues for three changes: (1) a move to the theory of the firm as the underlying economic literature; (2) a focus on employees, rather than stakeholders more generally, and (3) an effort to change statutory and structural aspects of corporate law, such as board …

Monopolies In Multidistrict Litigation, Elizabeth Chamblee Burch

Vanderbilt Law Review

When transferee judges receive a multidistrict proceeding, they select a few lead plaintiffs' lawyers to efficiently manage litigation and settlement negotiations. That decision gives those attorneys total control over all consolidated plaintiffs' claims and rewards them richly in common-benefit fees. It's no surprise then that these are coveted positions, yet empirical evidence confirms that the same attorneys occupy them time and again.

Anytime repeat players exist and exercise both oligopolistic leadership control across multidistrict proceedings and monopolistic power within a single proceeding, there is concern that they will use their dominance to enshrine practices and norms that benefit themselves at …

Financing The Benefit Corporation, Dana Brakman Reiser, Steven A. Dean

Faculty Scholarship

The hybrid organizational forms designed with social enterprises in mind have proven to be hothouse flowers. Flourishing in state legislatures, even those with the most distinguished pedigrees-such as Delaware's public benefit corporation'-have so far failed to thrive in the marketplace. Fortunately, hybrid financial instruments offer a source of strength and stability that can help social enterprise to take root.

This Article examines the valuable role that financial instruments can play in providing social enterprises with the capital they need to grow. Debt with equity features and equity with debt characteristics constitute the lion's share of such financial tools. More exotic …

The Future Of Fast Food Governance, Andrew Elmore

Faculty Scholarship

The Fast Food Forward movement has swelled into one of the largest protests by low‐wage workers in U.S. history, animating efforts at all levels of government to raise and enforce workplace standards. One such strategy is to hold fast food franchisors accountable as joint employers of their franchisees’ employees. In what may be a watershed moment, New York Attorney General Eric Schneiderman (NYAG) recently filed suit against Domino’s Pizza, the franchisor, for wage‐and‐hour‐law violations in its franchisees’ stores across New York State.

Fast food store employees report widespread wage‐and‐hour law violations, and the NYAG’s Domino’s lawsuit appears to confirm this …

Recognizing Women's Rights At Work: Health And Women Workers In Global Supply Chains, Erika R. George, Candace D. Gibson, Rebecca Sewall, David Wofford

Faculty Scholarship

The Guiding Principles mandate that businesses respect the human fights enshrined in the International Bill of Human Rights and in the International Labour Organization (ILO)'s Declaration on Fundamental Principles and Rights at Work. Due diligence processes and risk impact assessments are the main recommended means for ensuring compliance with companies' commitments to respect international human fights. Because OSH as a conceptual framework and regulatory order is not sufficient to identify the risk of health fights violations to women workers, we argue companies should not anchor their due diligence and risk assessment in OSH conventions and settle for a check-the-box solution …

Evaluating Stock-Trading Practices And Their Regulation, Merritt B. Fox, Kevin S. Haeberle

Faculty Scholarship

High-frequency trading, dark pools, and the practices associated with them have come under tremendous scrutiny lately, giving rise to much hot rhetoric. Missing from the discussion, however, is a principled, comprehensive standard for evaluating such practices and the law that governs them. This Article fills that gap by providing a general framework for making serious normative judgments about stock-trading behavior and its regulation. In particular, we argue that such practices and laws should be evaluated with an eye to the secondary trading market’s impact on four main aspects of our economy: the use of existing productive capacity, the allocation of …

Stock Market Futurism, Merritt B. Fox, Gabriel Rauterberg

Faculty Scholarship

The U.S. stock market is undergoing extraordinary upheaval. The approval of the application of the Investors Exchange (IEX) to become the nation’s newest stock exchange, including its famous “speed bump,” was one of the SEC’s most controversial decisions in decades. Other exchanges have proposed a raft of new innovations in its wake. This evolving equity market is a critical piece of national infrastructure, but the regulatory scheme for its institutions is increasingly frayed. In particular, current regulation draws sharp distinctions among different kinds of markets for trading stocks, treating stock exchanges as self-regulatory organizations immune from private civil litigation, while …

Amazon's Antitrust Paradox, Lina M. Khan

Faculty Scholarship

Amazon is the titan of twenty-first century commerce. In addition to being a retailer, it is now a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space. Although Amazon has clocked staggering growth, it generates meager profits, choosing to price below-cost and expand widely instead. Through this strategy, the company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other …

Market Power And Inequality: The Antitrust Counterrevolution And Its Discontents, Lina M. Khan, Sandeep Vaheesan

Faculty Scholarship

In recent years, economic inequality has become a central topic of public debate in the United States and much of the developed world. The popularity of Thomas Piketty’s nearly 700-page tome, Capital in the Twenty-First Century, is a testament to this newfound focus on economic disparity. As top intellectuals, politicians, and public figures have come to recognize inequality as a major problem that must be addressed, they have offered a range of potential solutions. Frequently mentioned proposals include reforming the tax system, strengthening organized labor, revising international trade and investment agreements, and reducing the size of the financial sector.

One …

Proxy Access And Optimal Standardization In Corporate Governance: An Empirical Analysis, Reilly S. Steel

Faculty Scholarship

According to the conventional wisdom, “one size does not fit all” in corporate governance. Firms are heterogeneous with respect to their governance needs, implying that the optimal corporate governance structure must also vary from firm to firm. This one-size-does-not-fit-all axiom has featured prominently in arguments against numerous corporate law regulatory initiatives, including the SEC’s failed Rule 14a-11 — an attempt to impose mandatory, uniform “proxy access” on all public companies — which the D.C. Circuit struck down for inadequate cost-benefit analysis.

This Article presents an alternative theory as to the role of standardization in corporate governance — in which investors …

Corporate Political Spending And The Size Effect, Reilly S. Steel

Faculty Scholarship

In the years since Citizens United v. FEC, corporate-political-spending disclosure has become an increasingly heated public policy issue. The portion of the Court’s opinion that championed shareholder rights to make decisions about corporate political speech generated a substantial, interdisciplinary literature, and shareholders responded by demanding political-spending disclosure through a bevy of shareholder proposals. However, many commentators have argued that shareholder activists’ efforts to bring about disclosure on their own are bound to be inade­quate, and in 2011, a group of law professors petitioned the Securities and Exchange Commission (SEC) for rules that would mandate disclo­sure by public companies — a …

Moneys' Legal Hierarchy, Katharina Pistor

Faculty Scholarship

This chapter discusses the way in which money is legally constructed and hierarchically structured. In financial markets, participants trade different forms of money, some of which is state-issued and some privately issued. A form of money is closer to the “apex” of the system the closer it is to entities that can issue liquid means or determine acceptable forms of payment, such as central banks and governments. During financial crises, market participants close to the “apex” are systematically advantaged. Various legal devices, e.g. property rights, collateral rights, or trust law, contribute to hierarchically structuring the financial system, by granting preferential …

Law And Corporate Governance, Robert P. Bartlett, Eric L. Talley

Faculty Scholarship

Pragmatic and effective research on corporate governance often turns critically on appreciating the legal institutions surrounding corporate entities – yet such nuances are often unfamiliar or poorly specified to economists and other social scientists without legal training. This chapter organizes and discusses key legal concepts of corporate governance, including statutes, regulations, and jurisprudential doctrines that “govern governance” in private and public companies, with concentration on the for-profit corporation. We review the literature concerning the nature and purpose of the corporation, the objects of fiduciary obligations, the means for decision making within the firm, as well as the overlay of state …