Business Organizations Law Commons^™

Sunlight On Iran: How Reductive Standards Of Materiality Excuse Incomplete Disclosure Under The Securities Laws, Amy Deen Westbrook

UC Law Business Journal

U.S. federal securities law protects investors by requiring companies to disclose information that is "material," information that would be significant to a reasonable person making an investment decision. This article examines the doctrine of materiality as it is currently being used by reporting companies to avoid disclosure of activities in Iran. The Securities and Exchange Commission's reductive standard relies on notions of informational efficiency made implausible after the financial crisis, undercuts crucial U.S. foreign policy, and fails to protect investors. Consequently, this article argues that the Securities and Exchange Commission should use a broader understanding of materiality.

Why Can't We Be Friends?: Why California Needs A Lifestyle Discrimination Statute To Protect Employees From Employment Actions Based On Their Off-Duty Behavior, Jean M. Roche

UC Law Business Journal

This note explores the employment implications that social networking has on private employees and discusses the need for a lifestyle discrimination statute in California. The note begins with an overview of the increasing use of social networking, both within the employment context as well as within society as a whole. The note then analyzes current privacy protections under federal and California law and contrasts those protections with lifestyle discrimination statutes adopted in Colorado and New York. Ultimately, the note concludes that California should adopt a statute that would provide protection to employees who are terminated for off-duty, off-site behaviors which …

An Unstoppable Force: The Offshore World In A Modern Global Economy, Michael J. Burns, James Mcconvill

UC Law Business Journal

Offshore financial centres ("OFCs") are often labelled "tax havens" due to a misconception that they only serve to avoid tax liability. This comment focuses on the many other practical reasons for using OFCs in international business. Reducing tax liability is just one of many reasons why structures utilise products from OFCs. The authors argue that OFCs are not simply "tax havens," but are a positive, unstoppable force in their own right.

Access To United States Courts By Purchasers Of Foreign Listed Securities In The Aftermath Of Morrison V. National Australia Bank Ltd., Roger W. Kirby

UC Law Business Journal

This article evaluates and critiques the Morrison decision, which precluded access to United States federal courts for purchasers of securities listed on foreign exchanges bringing claims arising under section 10(b) of the Securities Exchange Act of 1934. The article also identifies alternative methods by which those purchasers may pursue claims for securities related fraud in United States courts.

Chasing The Greased Pig Down Wall Street: A Gatekeeper’S Guide To The Psychology, Culture And Ethics Of Financial Risk-Taking, Donald C. Langevoort

Georgetown Law Faculty Publications and Other Works

The current financial crisis has once again focused attention on lawyers, corporate directors and auditors as gatekeepers, who are expected to introduce some degree of cognitive independence to the task of risk assessment and risk management in public companies, including financial services firms. This essay examines the psychological and cultural forces that may distort risk perception and risk motivation in hyper-competitive firms, beyond the standard economic incentives associated with agency costs and moral hazards, warning gatekeepers against too easily assuming that all is well when insiders display high levels of intensity, focus and devotion to hard-to-achieve goals. In fact, these …

A Tisket, A Tasket: Basketing And Corporate Tax Shelters, Leandra Lederman

Articles by Maurer Faculty

In an income tax system that comported with the economic, or Haig-Simons, definition of income, deductible expenses would not face source-based limitations. A true Haig-Simons income tax system therefore would not take the schedular approach of sorting different types of expenses and losses into distinct conceptual “baskets” containing corresponding types of income. Practical realities often require departing from the Haig-Simons norm, however. The U.S. federal income tax system does require individuals to basket a number of types of expenses and losses. For example, individuals’ passive activity losses can only be deducted from passive income gains. By contrast, most corporations taxed …

Fiduciary Duty And The Public Interest, Cheryl L. Wade

Faculty Publications

(Excerpt)

Professor Tamar Frankel’s excellent book, Fiduciary Law, is a thorough and comprehensive look at the fiduciary-law forest. My contribution to the Symposium on The Role of Fiduciary Law and Trust in the Twenty-First Century is one leaf on one branch of one tree in the forest that Professor Frankel so expertly navigates. In this Essay, I explore the fiduciary relationship between corporate directors and officers and the shareholders they serve. I examine how the breach of fiduciary duties owed to shareholders has the power to dramatically impact non-shareholder groups.

Professor Frankel accurately observes that “[f]iduciary duties are anchored …

Beyond Profit: Rethinking Corporate Social Responsibility And Greenwashing After The Bp Oil Disaster, Miriam A. Cherry, Judd F. Sneirson

Faculty Publications

The explosion of the BP-leased Deepwater Horizon and subsequent oil spill stand as an indictment not just of our national energy priorities and environmental law enforcement; they equally represent a failure of Anglo-American corporate law and what passes for corporate social responsibility in business today. Using BP and the disaster as a compelling case study, this Article examines green marketing and corporate governance and identifies elements of each that encourage firms to engage only superficially in corporate social responsibility yet trumpet those efforts to eager consumers and investors. This Article then proposes reforms and protections designed to increase corporate social …

Teaching Gender As A Core Value In Business Organizations Class, Cheryl L. Wade

Faculty Publications

(Excerpt)

I teach a business organizations course that is typically a large class with up to ninety students. At some point in the first week of each semester, I talk about public companies and the men who lead them. I point out to my students that while it is appropriate in most contexts to use gender-neutral language, it would be inaccurate to do so when talking about big business. Only fifteen percent of the board seats at Fortune 500 companies are held by women, and only sixteen percent of Fortune 500 corporate officers are women. I let my students know …

Strategic Spillovers, Daniel B. Kelly

Journal Articles

The conventional problem with externalities is well known: Parties often generate harm as an unintended byproduct of using their property. This Article examines situations in which parties may generate harm purposely, in order to extract payments in exchange for desisting. Such “strategic spillovers” have received relatively little attention, but the problem is a perennial one. From the “livery stable scam” in Chicago to “pollution entrepreneurs” in China, parties may engage in externality-generating activities they otherwise would not have undertaken, or increase the level of harm given that they are engaging in such activities, to profit through bargaining or subsidies. This …

Deconstructing Corporate Governance: Absolute Director Primacy, René Reich-Graefe

Faculty Scholarship

Microtheoretical models of the corporation which focus on corporate governance attempt to answer two deceptively simple, but fundamentally elusive questions: ‘Who are in control of the corporation?’ and ‘Whose interests ultimately control those in control of the corporation?’ Both questions remain partially unanswered within the models developed to date by corporate theoreticians. This Article proposes a radically new model: 'absolute director primacy.’ Existing microtheoretical models conceive that we only need to—and, indeed, can—determine the controlling interests guiding corporate decisionmaking in order to prove the existence of control over the decisionmaking latitude of corporate boards. The absolute director primacy …

Allen V. Dackman: Doing Away With Limited Liability In Maryland, Jeffrey S. Quinn

Maryland Law Review

No abstract provided.

The “Non-Cumulation Clause”: An “Other Insurance” Clause By Another Name, Chris French

Faculty Scholarship

How long-tail liability claims such as asbestos bodily injury claims and environmental property damage claims are allocated among multiple triggered policy years can result in the shifting of tens or hundreds of millions of dollars from one party to another. In recent years, insurers have argued that clauses commonly titled, “Prior Insurance and Non-Cumulation of Liability” (referred to herein as “Non-Cumulation Clauses”), which are found in commercial liability policies, should be applied to reduce or eliminate their coverage responsibilities for long-tail liability claims by shifting their coverage responsibilities to insurers that issued policies in earlier policy years. The insurers’ argument …

Hedge Fund Regulation Via Basel Iii, Wulf A. Kaal

Vanderbilt Journal of Transnational Law

This Article is a rejoinder to a recent comment by Professor Romano on an earlier paper I coauthored with Christian Kirchner. Professor Romano suggests regulatory arbitrage, rather than the targeted regulation of bank lending to hedge funds under Basel II, as a hedge against systemic failure. I contend that it was not harmonization through Basel II but rather the profitability of certain assets and business strategies that caused banks to hold similar assets and engage in similar strategies. In particular, I find that the increasing role of hedge funds in the credit derivatives market, in combination with the market's recent …

Upper-Level Courses: Three Examplars, Mark Fagan, Tamar Frankel, Eric J. Gouvin, Kathy Z. Heller

Faculty Scholarship

I'm Mark Fagan, and I co-teach a course on securitization with Tamar Frankel at Boston University School of Law. We have come together to teach several interdisciplinary courses that combine law, business and public policy. Our course on securitization is a wonderful exemplar because it touches so many aspects of law as well as business and public policy.

We spent quite a bit of time wrestling with how to teach it. Do you teach it in a process fashion? Do you teach it by legal topic? Do you take examples and examine them? After much debate and discussion, we actually …

Citizens United And The Corporate Form, Reuven S. Avi-Yonah

Articles

In Citizens United vs. FEC, the Supreme Court struck down a Federal statute banning direct corporate expenditures on political campaigns. The decision has been widely criticized and praised as a matter of First Amendment law. But it is also interesting as another step in the evolution of our legal views of the corporation. This article argues that by viewing Citizens United through the prism of theories about the corporate form, it is possible to see that the majority and the dissent departed from previous Supreme Court jurisprudence on the First Amendment rights of corporations. It is also possible to then …

Ethical Issues In Business And The Lawyer's Role, Carol Morgan, Robert Rhee, Tamar Frankel, Mark Fagan

Scholarly Works

This is a transcript of a panel discussion on teaching Business Ethics.

Happiness In Business Or Law, Peter H. Huang

Publications

This article provides a short introduction to recent happiness research and its applications to business or law that is organized as follows. Section I briefly considers: (1) troubling and not so troubling reservations about happiness research, and (2) how money and happiness are related. Section II concisely surveys two sets of applications of happiness research to business, namely: (1) workplace well-being and meaning, and (2) marketing. Section III succinctly reviews two categories of happiness research implications for law: (1) business regulation, and (2) law student and lawyer happiness.

Clinicians, Practitioners, And Scribes: Drafting Client Work Product In A Small Business Clinic, Robert Statchen

Faculty Scholarship

The recent and rapid growth of transactional clinics, and more specifically small business clinics (SBCs), mandates that time and attention be given to pedagogical methods within this specialized clinical structure. This Article focuses on the drafting component of an SBC. It is often asserted that legal education does not effectively provide students with business-oriented, practical skills training. At the heart of an SBC, is the necessity to prepare appropriate written client work product. SBCs also provide an excellent opportunity for students to acquire interviewing, researching, drafting, counseling, problem-solving, and other areas of expertise. This Article attempts to provide a process …

Outsourcing Modularity, And The Theory Of The Firm, Margaret M. Blair, Erin O'Hara O'Connor, Gregg Kirchhoefer

Vanderbilt Law School Faculty Publications

Firms have increasingly moved productive activities from within to outside the firm through outsourcing arrangements. According to some estimates, the value of outsourcing contracts has been nearly 100 billion dollars per year since 2004. Firm outsourcing happens for a number of reasons, including to save labor costs, capture the benefits of regulatory arbitrage, and take advantage of economies of scale in the provision of firm needs. We review a number of outsourcing contracts for evidence that contract techniques are used to help modularize the relationship between the firm and its service provider. Consistent with what modularity theory might predict, some …