Business Organizations Law Commons^™

Too Many Cooks In The Kitchen: Battling Corporate Corruption In Brazil And The Problems With A Decentralized Enforcement Model, Michelle A. Winters

Richmond Journal of Global Law & Business

No abstract provided.

Fiduciary Duties Of Llc Managers: Are They Subject To Prospective Waiver Under The New York Llc Statute?, Jack Graves, Yelena Davydan

Touro Law Review

No abstract provided.

The Responsible Corporation: Its Historical Roots And Continuing Promise, Larry D. Thompson

Scholarly Works

The article focuses on the on the history of American corporations from the colonization period and its impact on private corporations such as venture capitalism. Topics discussed include legal and sustainable approach to corporate responsibility, role of laws in shaping corporate duties and behavior and devastating effect of excessive dividend payments. It also discusses the cases in which courts refuse to interfere with management's long-term decision making.

The Enigma Of Veil-Piercing, Pey Woan Lee

Research Collection Yong Pung How School Of Law

In Prest v Petrodel Resources Ltd [2013] 3 WLR 1, Lord Sumption narrowly confined veil-piercing at common law to those cases where a controller had used a company under his control to evade a pre-existing legal liability. This article argues against this approach as it is so narrow that it practically abolished the jurisdiction. Instead, the jurisdiction should be preserved, and its exercise should be constrained by clearly articulated principles.

Banker Loyalty In Mergers And Acquisitions, Andrew F. Tuch

Scholarship@WashULaw

When investment banks advise on merger and acquisition (M&A) transactions, are they fiduciaries of their clients, gatekeepers for investors, or simply arm’s-length counterparties with no other-regarding duties? Scholars have generally treated M&A advisors as arm’s-length counterparties, putting faith in the power of contract law and market constraints to discipline errant bank behavior. This Article counters that view, arguing that investment banks are rightly characterized as fiduciaries of their M&A clients and thus required to loyally serve client interests.

This Article also develops an analytical framework for assessing the liability rules that will most effectively deter disloyalty on the part of …

The New Financial Order: An Essay For Alan Bromberg - Tributes To Professor Alan R. Bromberg, Joel Seligman

Scholarship@WashULaw

In the aftermath of the 2008-2009 financial crisis, I characterized its causes broadly:

First, there was an ongoing economic emergency, initially rooted in the housing and credit markets, which has been succeeded by the collapse of several leading investment and commercial banks and insurance companies, dramatic deterioration of stock market indices, and a rapidly deepening recession.

Second, there were serious breakdowns in the enforcement and fraud deterrence missions of federal financial regulation, notably as illustrated by matters involving Bear Stearns and the other four then independent investment banks subject to the SEC's former Consolidated Supervised Entities program, the government creation …

Intermediary Influence, Kathryn Judge

Faculty Scholarship

Ronald Coase and others writing in his wake typically assume that institutional arrangements evolve to minimize transaction costs. This Article draws attention to a powerful, market-based force that operates contrary to that core assumption: Intermediary influence." The claim builds on three observations: (1) many transaction costs now take the form of fees paid to specialized intermediaries, (2) intermediaries prefer institutional arrangements that yield higher transaction fees, and (3) intermediaries are often well positioned to promote self-serving arrangements. As a result, high-fee institutional arrangements often remain entrenched even in the presence of more-efficient alternatives.

This Article uses numerous case studies from …

Appraisal Arbitrage And The Future Of Public Company M&A, Minor Myers, Charles R. Korsmo

Faculty Scholarship

No abstract provided.

Cancellation Of Debt And Related Transactions, Douglas A. Kahn, Jeffrey H. Kahn

Articles

If a taxpayer borrows money, the borrowed funds are not included in the taxpayer's gross income. That treatment is proper even though the taxpayer has increased his assets by the amount he borrowed because he also has created a corresponding liability to pay back the loan. The taxpayer's net: wealth has not increased. 'The more difficult and interesting questions arise when the taxpayer fails to repay the loan. At first blush, it would appear that upon cancellation of a loan, the taxpayer should have income for the amount that was cancelled. However, the current tax treatment is not that simple. …

Institutional Investing When Shareholders Are Not Supreme, Christopher Greczy, Jessica S. Jeffers, David K. Musto, Anne M. Tucker

Scholarly Works

Institutional investors, with trillions of dollars in assets under management, hold increasingly important stakes in public companies and fund individual retirement for many Americans, making institutional investors' behaviors and preferences paramount determinants of capital allocation. In this paper, we examine high fiduciary duty institutions' (HFDIs') response to decreased profit maximization pressure as measured by the effect of constituency statutes on HFDI investment. We ask this question, in part, to anticipate HFDIs' response to alternative purpose firms, like benefit corporations. Only with access to institutional investors' capital can alternative purpose firms gain economic significance to rival the purely for-profit corporation. In …

Liquidity, Systemic Risk, And The Bankruptcy Treatment Of Financial Contracts, Rizwaan J. Mokal

Brooklyn Journal of Corporate, Financial & Commercial Law

No abstract provided.

The Derivative Nature Of Corporate Constitutional Rights, Margaret M. Blair

Vanderbilt Law School Faculty Publications

This Article engages the two hundred year history of corporate constitutional rights jurisprudence to show that the Supreme Court has long accorded rights to corporations based on the rationale that corporations represent associations of people from whom such rights are derived. The Article draws on the history of business corporations in America to argue that the Court’s characterization of corporations as associations made sense throughout most of the nineteenth century. By the late nineteenth century, however, when the Court was deciding several key cases involving corporate rights, this associational view was already becoming a poor fit for some corporations. The …

Boards Of Directors As Mediating Hierarchs, Margaret M. Blair

Vanderbilt Law School Faculty Publications

In June of 2014, the board of directors of Demoulas Supermarkets, Inc.-better known as Market Basket, a mid-sized chain of grocery stores in New England-decided to oust the man who had been CEO for the previous six years, Arthur T. Demoulas.' Most likely, the board of directors did not anticipate what happened next: Thousands of employees, customers, and fans of Market Basket boycotted the stores and staged noisy public protests asking the board to reinstate "Arthur T., The reaction by employees and customers made what had been a simmering, nasty, intrafamily feud within the closely held Market Basket chain into …

Public Actors In Private Markets: Toward A Developmental Finance State, Robert C. Hockett, Saule T. Omarova

Cornell Law Faculty Publications

The recent financial crisis brought into sharp relief fundamental questions about the social function and purpose of the financial system, including its relation to the “real” economy. This Article argues that, to answer these questions, we must recapture a distinctively American view of the proper relations among state, financial market, and development. This programmatic vision – captured in what we call a “developmental finance state” – is based on three key propositions: (1) that economic and social development is not an “end-state” but a continuing national policy priority; (2) that the modalities of finance are the most potent means of …

Searching For Market Efficiency, Ann Lipton

Publications

No abstract provided.

Slouching Towards Monell: The Disappearance Of Vicarious Liability Under Section 10(B), Ann Lipton

Publications

Liability under section 10(b) of the Securities Exchange Act is one of the primary mechanisms for enforcing the federal securities laws. Section 10(b), however, prohibits only intentional or reckless deception, and there has never been consensus as to how to determine whether an organization, rather than a natural person, harbors the relevant mens rea. Traditionally, organizational liability under federal law is determined according to agency principles, and most courts pay lip service to the notion that agency principles govern under section 10(b). As this Article demonstrates, they do not.

Many section 10(b) actions involve "open-market" frauds, whereby the allegedly fraudulent …

Quarterback By Committee: A Response In Memory Of Dan Markel, Andrew A. Schwartz

Publications

In Catalyzing Fans, Dan Markel, Michael McCann and Howard Wasserman propose so-called “Fan Action Committees” (“FACs”), whereby fans would crowdfund a sum of money and then spend it to influence the personnel decisions of their favorite teams. This Response — dedicated to the memory of Dan Markel — suggests that an effective FAC could upset a team’s overall hiring and compensation system, thereby risking a downturn in team performance to the detriment of all concerned.

The Digital Shareholder, Andrew A. Schwartz

Publications

Crowdfunding, a new Internet-based securities market, was recently authorized by federal and state law in order to create a vibrant, diverse, and inclusive system of entrepreneurial finance. But will people really send their money to strangers on the Internet in exchange for unregistered securities in speculative startups? Many are doubtful, but this Article looks to first principles and finds reason for optimism.

Well-established theory teaches that all forms of startup finance must confront and overcome three fundamental challenges: uncertainty, information asymmetry, and agency costs. This Article systematically examines this “trio of problems” and potential solutions in the context of crowdfunding. …

Corporate Legacy, Andrew A. Schwartz

Publications

Many public companies have shed takeover defenses in recent years, on the theory that such defenses reduce share price. Yet new data presented here shows that practically all new public companies--those launching their initial public offering (IPO)--go public with powerful takeover defenses in place. This behavior is puzzling because the adoption of takeover defenses presumably lowers the price at which the pre-IPO shareholders can sell their own shares in and after the IPO. Why would founders and early investors engage in this seemingly counterproductive behavior? Building on prior attempts to solve this mystery, this Article claims that IPO firms adopt …

Reflections On Teaching Business Associations: The Case For Teaching More Agency And Unincorporated Business Entity Law, Mark J. Loewenstein

Publications

This paper argues for increased coverage of the law of agency and alternative entities in business associations courses.