Business Organizations Law Commons^™

The Corporation As A Time Machine: Intergenerational Equity, Intergenerational Efficiency, And The Corporate Form, Lynn A. Stout

Cornell Law Faculty Publications

This Symposium Article argues that the board-controlled corporation can be understood as a legal innovation that historically has functioned as a means of transferring wealth forward and sometimes backward through time, for the benefit of present and future generations. In this fashion the board-controlled corporation promotes both intergenerational equity and intergenerational efficiency. Logic and evidence each suggest, however, that the modern embrace of "shareholder value" as the only corporate objective and "shareholder democracy" as the ideal of corporate governance is damaging the corporate form's ability to serve this economically and ethically important function.

The Macroprudential Turn: From Institutional 'Safety And Soundness' To Systematic 'Financial Stability' In Financial Supervision, Robert C. Hockett

Cornell Law Faculty Publications

Since the global financial dramas of 2008-09, authorities on financial regulation have come increasingly to counsel the inclusion of macroprudential policy instruments in the standard ‘toolkit’ of finance-regulatory measures employed by financial supervisors. The hallmark of this perspective is its focus not simply on the safety and soundness of individual financial institutions, as is characteristic of the traditional ‘microprudential’ perspective, but also on certain structural features of financial systems that can imperil such systems as wholes. Systemic ‘financial stability’ thus comes to supplement, though not to supplant, institutional ‘safety and soundness’ as a regulatory desideratum.

The move from primarily micro- …

Wto Agricultural Trade And The Unfulfilled Promise Of Development, Destaw A. Yigzaw

South Carolina Journal of International Law and Business

The World Trade Organization (WTO) was established with an alluring promise of enhancing the living standards of people around the world, creating jobs and spurring development, while ensuring equitable distribution of the fruits of trade, with particular regard to the needs of the poor. However, critics see the WTO as a mercantilist system tailored to the commercial interests of wealthy nations and their corporations, with little or no attention to the interests of the poor. What happens to agriculture affects the poor disproportionately. If spurring economic development and thereby enhancing the living standards of people is indeed the WTO’s goal, …

The Outer Limits Of Realization: Weiss V. Stearn And Corporate Dilution, Jeffrey L. Kwall, Katherine K. Wilbur

Faculty Publications & Other Works

The United States Supreme Court's 1924 Weiss v. Stearn decision involved a classic case of corporate dilution. In that case, a corporation ("Oldco') transferred its business to a new corporation ("Newco ') in a transaction in which the Oldco shareholders surrendered all their stock for 50 percent of the stock of Newco (and cash). The transaction diluted the proprietary interest of the Oldco shareholders from 100 percent to 50 percent. Because the Oldco shareholders surrendered control of the enterprise, the 50 percent interest they received in Newco was fundamentally different from the 100 percent interest they had owned in Oldco. …

More Than A Woman: Insights Into Corporate Governance After The French Sex Quota, Darren Rosenblum

Elisabeth Haub School of Law Faculty Publications

In 2011, France enacted a Corporate Board Quota to establish a forty percent floor for either sex on corporate boards. Existing literature presumes that women will change the way firms function and that their presence in upper management will improve both governance and financial returns. To assess the potential impact of the quota, we interviewed twenty-four current and former corporate board members. Our analysis of these interviews generates two findings. First, our results indicate that, at least in the view of board members, the sex quota has had an impact on the process of board decision-making, but adding women has …

Political Uncertainty And The Market For Ipos, Jay B. Kesten, Murat C. Mungan

Scholarly Publications

No abstract provided.

Government By Contract: Considering A Public Service Ethics To Match The Reality Of The "Blended" Public Work Force, Dan Guttman

Emory Business Law Review

The Iraq War brought to public attention the reality that much of the basic work of government is done by contractors, and that the government's ability to account for its contractors cannot be taken for granted. What, for example, if the rules that protect us against official abuse are not applied to those who, in fact, increasingly do the government's work? What if, for example, the presumption that officials have the capacity to oversee contractors runs against the reality that they do not and, indeed, that the work of contractor management is itself often contracted out? What should we do …

Enduring Design For Business Entities, William E. Foster

Utah Law Review

The success or failure of an institution may hinge on some of the earliest decisions of its founders. In constitutional design literature, endurance is a widely accepted drafting objective. Indeed, constitutional endurance is positively associated with prosperous and stable societies. Like drafters of constitutions, business organizers have almost innumerable objectives for their enterprises, and attorneys drafting organizational documents must take into account these myriad goals. Oftentimes the drafting process fails to fully address some of the most important of these aims and results in suboptimal structures that lack predictability and reliability.

This article looks specifically at small business organizations and …

More Than A Woman: Insights Into Corporate Governance After The French Sex Quota, Darren Rosenblum, Daria Roithmayr

Faculty Publications

In 2011, France enacted a Corporate Board Quota to establish a forty percent floor for either sex on corporate boards. Existing literature presumes that women will change the way firms function and that their presence in upper management will improve both governance and financial returns. To assess the potential impact of the quota, we interviewed twenty-four current and former corporate board members. Our analysis of these interviews generates two findings. First, our results indicate that, at least in the view of board members, the sex quota has had an impact on the process of board decision-making, but adding women has …

Stock-Market Law And The Accuracy Of Public Companies’ Stock Prices, Kevin S. Haeberle

Faculty Publications

The social benefits of more accurate stock prices—that is, stock-market prices that more accurately reflect the future cash flows that companies are likely to produce—are well established. But it is also thought that market forces alone will lead to only a sub-optimal level of stock-price accuracy—a level that fails to obtain the maximum net social benefits, or wealth, that would result from a higher level. One of the principal aims of federal securities law has therefore been to increase the extent to which the stock prices of the most important companies in our economy (public companies) contain information about firms’ …

The Nonfinancial Returns Of Crowdfunding, Andrew A. Schwartz

Publications

Securities crowdfunding — the sale of unregistered securities to the public over the Internet — has come under attack before it has even begun. Legal scholars in particular have expressed concern that investors will lose any money they invest in crowdfunding companies. Even assuming that this may be true from a purely financial perspective, these critics are missing an important point: Crowdfund investors with negative returns will not simply have lost their money, but rather they will have spent it (at least in part) on nonpecuniary benefits, including entertainment, political expression and community building. These nonfinancial returns of crowdfunding are …

Equity And Corporate Law, Mark J. Loewenstein

Publications

The article explores the continuing relevance of the 1991 Delaware Supreme Court decision in Schnell v. Chris-Craft Industries, Inc., in particular the extent to which evolving concepts of good faith have, or should, displace the free-wheeling equity doctrine of Schnell.

Do Corporations Have Religious Beliefs?, Jason Iuliano

Indiana Law Journal

Despite two hundred years of jurisprudence on the topic of corporate personhood, the Supreme Court has failed to endorse a philosophically defensible theory of the corporation. In this Article, I attempt to fill that void. Drawing upon the extensive philosophical literature on personhood and group agency, I argue that corporations qualify as persons in their own right. This leads me to answer the titular question with an emphatic yes. Contrary to how it first seems, that conclusion does not warrant granting expansive constitutional rights to corporations. It actually suggests the opposite. Using the Affordable Care Act’s contraception mandate as a …

"Was The Deal Worth It?": The Dilemma Of States With Ineffective Economic Incentives Programs, Randle B. Pollard

UC Law Business Journal

Federal subsidies to state and local governments have been substantially reduced due to public opinion prioritizing the reduction of the federal deficit, the recent "fiscal cliff" legislation, and the federal budget "sequester cuts." In addition, in many states, revenue collection from individual and corporate income tax is below prerecession levels. To address the reduction in federal funding and reduced revenue collections, state and local governments will increasingly rely on economic incentive programs to grow their economies through increased job creation and private capital investment within their jurisdictions. These economic incentive programs are no longer comprised of simple tax reductions for …

Corporate Governance In Japanese Law: Recent Trends And Issues, Hideki Kanda

UC Law Business Journal

This article discusses recent trends and issues concerning corporate governance in Japanese law. The purpose of this article is to offer brief overviews on selected topics, including empirical studies, recent scandals, board structure, rule making by the stock exchange, disclosure rules under Japanese securities regulation, and the forthcoming reform of Japanese corporate law.

Japanese Corporate Governance Reform: A Comparative Perspective, Bruce E. Aronson

UC Law Business Journal

Japan has been widely criticized as being slow to reform a corporate governance system that seemingly remains fixed on the interests of employees over shareholdersand unresponsive to recent global trends such as the spreadof fidependent directors.This article seeks to present a more nuancedand balanced view of the ongoing evolution of Japanese corporate governance.

This article discusses how analysis of Japanese corporate governance is hamperedby the lackofboth anagreed-uponstandard for evaluating change in Japan and data concerning important governancepractices,such as the actualrole of company auditors (kansayaku). The main focus, however, is on describing and evaluating experimentation at leading individual Japanese companies that …

The Long Tail And Demand Creation In The Legal Marketplace, Kristen E. Killian

UC Law Business Journal

This note examines new legal technology companies that are innovating transactional legal products, but not legal services. Legal Tech Innovation Companies (LTICs) represent an innovative leap in how companies that are not law firms provide legal products directly to a consumer. Although these companies are not yet disrupting the core of the legal marketplace, they are meaningfully lowering cost and increasing efficiency through both simplification and speed.

This note describes the type of legal consumers for whom LTICs are creating demand for their legal products and discusses several LTICs in greater detail. It further addresses policy considerations for the transactional …

A Software Patent War: The Effects Of Patent Trolls On Startup Companies, Innovation, And Entrepreneurship, Sonia Karakashian

UC Law Business Journal

This note analyzes the effects of patent trolls on startup companies and the issues that software patentability under 35 U.S.C. § 101 impose on this highly controversial area of intellectual property. This note elaborates on the current patent reforms as well as the common law struggles addressed in Supreme Court decisions. Further, it discusses the software patent war and the controversial issues raised in § 101 of the patent system followed by the issues of patentability and its effects on startup companies. Lastly, this note discusses short-term and long-term progress in the patent system, as well as address the current …

Goodwill And The Excesses Of Corporate Political Spending, David Rosenberg

UC Law Business Journal

This article argues that legislation that provide "special rules" is not necessary because the business judgment rule should not be interpreted to protect corporate directors' decisions to donate to political campaigns in the same way that it protects ordinary corporate charitable contributions or decisions based on CSR. The rule protects donations in the public interest even if they are profit- sacrificing because courts are not in a position to judge whether or not a particular act of giving is designed to maximize profits or is simply an acceptable act of charity with no obvious financial benefit to the corporation itself. …

Privacy: An Issue Of Priority, Stephanie Segovia

UC Law Business Journal

This note highlights the competing stakes in the online privacy debate. It provides an overview of the U.S. business model of companies that participate in data gathering and analysis, and why they do so (namely because of the emergence of Big Data technologies), and discusses examples of how online privacy has eroded in recent years, in turn highlighting the need for federal action. This note also discusses the current status quo of online privacy in America, and why current legislation is inadequate to address online privacy issues. It further includes a discussion of why the U.S. should let the new …