Business Organizations Law Commons^™

Lawyers Keep Out: Why Attorneys Should Not Participate In Negotiating Critical Financial Numbers Reported By Public Company Clients, William O. Fisher

BYU Law Review

No abstract provided.

Are Investors’ Gains And Losses From Securities Fraud Equal Over Time? Theory And Evidence, Alicia J. Davis

Law & Economics Working Papers

Most leading securities regulation scholars argue that compensating securities fraud victims is inefficient. They maintain that because diversified investors that trade frequently are as likely to gain from trading in fraud-tainted stocks as they are to suffer harm from doing so, these investors should have no expected net losses from fraud over the long term. This assertion, which analogizes trading in fraud-tainted stocks to participating in a coin toss game in which players win $1 on heads and lose $1 on tails, is problematic for a number of reasons. First, even if we accept this analogy, probability theory holds that …

Shotgun Weddings: Director And Officer Fiduciary Duties In Government-Controlled And Partially-Nationalized Corporations, David M. Barnes

Vanderbilt Law Review

Corporate law considers the affairs of a corporation to be private activity. The prevailing concept of the firm is a nexus of private contract rights among participants in an economic enterprise. But for many U.S. auto and financial services corporations, the events of the fall of 2008 and the winter of 2009 turned this presumption on its head. The U.S. government's $700 billion bailout injected an alien actor-the United States Treasury-into this once-private enterprise. The bailout enabled the Treasury to take a direct equity stake in many of the nation's struggling auto and financial services corporations. In the fall of …

Planning And Practice - The Rooftops Project: Report Summarizing Results Of A Survey Of Not-For-Profit Organizations, James Hagy

Rooftops Project

The Rooftops Project's first national field study of the attitudes and approaches of not-for-profit organizations with respect to the owned, leased or hosted real estate that supports their core missions and operations.

Debt As Venture Capital, Darian M. Ibrahim

Faculty Publications

Venture debt, or loans to rapid-growth start-ups, is a puzzle. How are start-ups with no track records, positive cash flows, tangible collateral, or personal guarantees from entrepreneurs able to attract billions of dollars in loans each year? And why do start-ups take on debt rather than rely exclusively on equity investments from angel investors and venture capitalists (VCs), as well-known capital structure theories from corporate finance would seem to predict in this context? Using hand-collected interview data and theoretical contributions from finance, economics, and law, this Article solves the puzzle of venture debt by revealing that a start-up’s VC backing …

The Equity Trustee, Kelli A. Alces

Scholarly Publications

As we reel from the effects of a recent financial disaster, it is apparent that there is a significant gap in corporate governance and accountability for management. One reason we have experienced this financial cataclysm is the inability of shareholders to do the "shareholderj ob. " Shareholders, as the putative owners of corporations, hold a venerated place in corporate governance. They are responsible for electing directors and monitoring management as well as valuing companies through trades in a vigorous market. The shareholder collective action problem and resulting rational apathy have kept shareholders from effectively fulfilling their role in corporate governance. …

Locating The Regulation Of Data Privacy And Data Security, Edward J. Janger

Faculty Scholarship

No abstract provided.

Pennsylvania's Sales And Use Tax: Has Nearly $1 Billion Been 'Zapped' Away In Fraud?, Richard Thompson Ainsworth

Faculty Scholarship

The Sales and Use Tax is an essential part of Pennsylvania’s revenue profile. Not only is it the State’s second largest revenue source, it has historically played a critical role in reducing the volatility of Pennsylvania’s overall tax collections. The sales tax is also critical to the city of Philadelphia, and Allegheny County. During the current economic downturn both the revenue and structural attributes of this levy should be pushing it to the front of the tax policy line.

The two topics that should rest atop Pennsylvania’s tax policy agenda should be: (1) joining the Streamlined Sales Tax initiative and …

The Lion Awakens: The Foreign Corrupt Practices Act - 1977 To 2010, Michael B. Bixby

San Diego International Law Journal

This Article discusses the history, purposes and provisions of the Foreign Corrupt Practices Act, and traces its use and enforcement activity from 1977 to the present. This once little-used law has in recent years become the focus of aggressive activity by both the U.S. Department of Justice and the Securities and Exchange Commission. The manuscript also includes numerous charts reporting on key cases and enforcement activities over the last thirty-three years by the DOJ and SEC, as well as other information and statistics regarding the Foreign Corrupt Practices Act.

Breathing New Life Into Old Technological Infrastructure: Broadband Internet As A Means Of Jump-Starting The Economy And Connecting The Country, Elizabeth Chernow

Legislation and Policy Brief

This paper examines the current structure of universal service and the FCC’s Universal Service Fund, recent pushes to expand the definition of and funding for universal service to include broadband access, and how broadband internet can contribute to saving the ailing economy. This paper concludes by calling for the inclusion of broadband internet in the Universal Service Fund.

Citizens United And The Threat To The Regulatory State, Tamara R. Piety

Michigan Law Review First Impressions

Although Citizens United has been roundly criticized for its potential effect on elections and its display of judicial immodesty (or "activism"), the effect of the case which may be both most profound and perhaps most pernicious is its effect on the commercial speech doctrine. This is an aspect of the case which has been largely overlooked. Most people seem to be unaware of any connection between election law and the commercial speech doctrine-except, that is, those who have been working long and hard to accomplish the change it foreshadows. They are keenly aware of its implications.

The Power Of Warm Glow, Usha Rodrigues

Scholarly Works

Professor Brian Galle’s Keep Charity Charitable is a thoughtful contribution to the ongoing conversation about the proper tax treatment of charitable organizations. I largely agree with Galle’s arguments, but I would like to offer two criticisms of his positions: first, Galle overstates the problem posed by for-profit firms offering charitable services; and second, he understates the power of “warm glow” in the nonprofit organization.

Choice Of Form And Network Externalities, Larry E. Ribstein, Bruce H. Kobayashi

William & Mary Law Review

This Article provides the first detailed empirical analysis of firms' choice of organizational form. It provides important evidence on whether there is an efficient market in organizational forms or firms' choice of form is impeded by network externalities. We focus on formations of limited liability partnerships (LLPs) and limited liability companies (LLCs) in examiningthe effect of various factors on firms' choice of business form. Our data provides important evidence against the network externalities hypothesis. Because the LLP and LLC forms are similar except for the LLPs link to the existing "network" of partnership law, firms would prefer the LLP to …

Leveraged Etfs: The Trojan Horse Has Passed The Margin-Rule Gates, William M. Humphries

Seattle University Law Review

What do the Great Depression, the Great Recession, and the demise of Lehman Brothers and Bear Sterns all have in common? One word: leverage. The misuse of leverage, in all its forms, contributed greatly to all of these events. Yet even today, common investors can purchase a leveraged exchange-traded fund (leveraged ETF), a complex product that uses leverage to increase returns, without triggering applicable laws designed to regulate the use of leverage. This Comment articulates the basics surrounding the functions and operations of leveraged ETFs and margin rules in order to assess the compatibility of the two. The Comment argues …

The Challenges For Directors In Piloting Through State And Federal Standards In The Maelstrom Of Risk Management, Chief Justice E. Norman Veasey

Seattle University Law Review

In the 2010 Berle Center Directors’ Academy Keynote Address, Chief Justice Veasey addresses “the federal and state contexts relating to the corporate-governance focus on business risk and the expectations laid at the doorstep of directors and officers of U.S. public companies.” Specifically, Chief Justice Veasey looks “at the governance landscape through both a federal regulatory lens and a state judicial lens as it relates to risk assessment and risk management.”

Carpe Crisis: Capitalizing On The Breakdown Of Capitalism To Consider The Creation Of Social Businesses, Celia R. Taylor

Sturm College of Law: Faculty Scholarship

The recent meltdown of the world’s financial systems presents a unique opportunity to examine the very nature of the corporate form and to consider whether other models of business operation are needed. This article explains the idea of “social businesses” – profit-making, but not profit-maximizing entities that operate to further social good instead of exclusively generating returns for their shareholders. The article then explores the current legal regime for both profit and non-profit businesses under United States law, and suggests there is no ideal business structure currently available under which to operate a social business. In light of the increasing …

Transfer Pricing In Business Restructurings – Reasoning From Implausible Assumptions Issue Note 2 – (Oecd, Discussion Draft), Richard Thompson Ainsworth, Andrew Shact

Faculty Scholarship

The OECD’s Center for Tax Policy and Administration roundtable on business restructurings in January 2005 led to a Joint Working Group project later that year on permanent establishments and business restructurings. One of the results was the Discussion Draft on Transfer Pricing Aspects of Business Restructurings that was available for public comment between September 19, 2008 and February 19, 2009.

This paper concerns Issue Note No. 2 in the Discussion Draft – Arm’s Length Compensation for the Restructuring Itself.

Issue Note No. 2 is deeply flawed. It relies on an unproved correlation between structure and performance (profit/loss potential). The Discussion …

Revisiting Berle And Rethinking The Corporate Structure, Kelli A. Alces

Scholarly Publications

No abstract provided.

The New Financial Assets: Separating Ownership From Control, Tamar Frankel

Faculty Scholarship

This Article is organized in three parts. Part One examines the nature of financial assets and their transition by market transactions from contracts to property. The discussion highlights the gray areas which financial assets occupy in decoupling, falling within both contract and property law.

Part Two describes four types of decoupled financial assets. The first type separates into two financial assets: ownership benefits and ownership risks. The presumed reduction of owners' risks prompted some academics to justify reducing the owners' protection. I suggest that attempts to protect owners from ownership risk have failed. Therefore, the suggestion was ill-conceived. The second …

The Redemption Puzzle, Reuven S. Avi-Yonah

Law & Economics Working Papers

Following the adoption of partial integration in 2003, there was only a modest increase in dividends during the period 2004-7, from about 300 to about 500 (if 1987 levels are set at 100). Redemptions, however, showed a remarkable increase, jumping from about the same as dividends (300) to 1,800. This, therefore, leads to a new puzzle: Why the sudden sharp increase in redemptions following 2003?

Like the dividend puzzle, the redemption puzzle is susceptible to several explanations. For example, Bratton and Wachter note that managers who hold stock options tend to favor redemptions over dividends. But in this case, I …