Category Archives: Corporate Law
Jul 1, 2025 Joan MacLeod HeminwayCorporate Law
Many business law scholars in the United States are attracted to research projects focused on domestic—and more particularly Delaware—corporate legal doctrine and enforcement. Rightly so, given Delaware’s historic prominence as a home for publicly traded and multijurisdictional corporations. Yet even in the throes of tariff wars being waged at the time this post was authored, business—corporate business—is international and often global.
Legal enforcement against corporations in a transnational context proves to be complex. Typically, it is undertaken through traditional approaches ordained by international law—legal actions brought in courts and governmental regulatory processes. These avenues of enforcement are most frequently seen as exclusive and distinct. However, in her article Corporate Governance & International Law, Kishanthi (“Kish”) Parella encourages inspection of a potential third enforcement option that can work with the others: stakeholder enforcement of international law. Her insights inform a fresh look at global corporate legal enforcement mechanisms in an era that tends to value, if not embrace, a more holistic participation of stakeholders in corporate governance. Continue reading "Stakeholder Enforcement of International Law: A Potentially Significant Adjunct to Traditional Enforcement Efforts"
May 28, 2025 Robert RosenCorporate Law
This article explores “normative” agency cost theory. It does so by examining its most discussed prescriptions for making healthy corporations (empowered shareholders, monitoring boards, pay-for-performance, and the market for corporate control). Presenting very impressive evidence, the article concludes that the remedies prescribed don’t work either to minimize managerial self-dealing or increase returns to shareholders. Yet despite the evidence, these remedies are still being prescribed. Professor Tingle’s confrontation with that fact is a singular contribution. Until I read this article, I believed the response “agency cost theory is good, it just has been poorly implemented; the dosages just need adjusting.” Professor Tingle offers a different response, the incontestability of agency theory’s “seductive simplicity” (P. 60).
Tingle reveals that normative agency theory’s continuing power derives from it telling a tale of temptation and seduction that “seems uncontroversial” (P. 15). It provides an account of how self-interested and unrestrained agents would act if given the opportunity to cheat. Without evidence, it assumes that “managers are systematically disloyal” (P. 59). And this assumption is not testable. If corporations were run by monks, the successes of their corporations would confirm the theory, and if their corporations were unsuccessful, the monks would be revealed to be disloyal by how they were selected or by their ignorance (Pp. 10-11). Continue reading "Don’t be Seduced by Agency Cost Theory and its Tales of Managers and their Temptations"
May 2, 2025 Brett McDonnellCorporate Law
Ann Lipton,
The Legitimation of Shareholder Primacy,
__ J. Corp. L. __ (forthcoming, 2025), available at
SSRN (Feb. 03, 2025).
The United States is going through a moment of extreme political strife and uncertainty. Delaware’s corporate law ecosystem is going through its own moment of strife and uncertainty, albeit with less stratospheric—but still high—stakes. Significant connections exist between the conflict occurring within these two systems, including but not limited to the techno-king himself, Elon Musk.
Ann Lipton explores some of those connections in The Legitimation of Shareholder Primacy. Lipton argues that the central corporate law norm of shareholder primacy was intended to shield Delaware law from political debate, but internal tensions within the concept combined with the political polarization of our times have battered that shield. The development of that argument features Lipton’s deep knowledge of corporate law and governance, which is tied here to an interesting political story. Continue reading "A Legitimation Crisis Strikes Delaware Corporate Law"
Apr 3, 2025 Anna GelpernCorporate Law
Jeremy C. Kress, “
Least-Cost” Resolution, 43
Yale J. on Reg. __ (forthcoming, 2026), available at
SSRN (Sep. 03, 2024).
Banks have magic powers: they can conjure money out of thin air, send it across the street or around the world instantly, make your startup dreams come true, and these days, even make you a cappuccino. They are also fragile and toxic: liable to fail suddenly and bring people, firms, other banks, and entire economies down with them. Generations of reformers have tried to make bank failure more orderly, less destructive, and less costly to the public. Judging by the crop of papers inspired by the crop of bank failures in 2023, they have failed again.
Why do we keep failing at bank failure? This article by Jeremy Kress suggests a piece of the puzzle: we mismeasure success. Continue reading "A Costly Cost Test"
Feb 27, 2025 Bill BrattonCorporate Law
Corporate governance and corporate finance operate very differently as legal academic topics. With governance, there’s always some new legal development—a Delaware ruling, a provision in a corporate code, or a new SEC regulation. Failing that, the international corporate governance machine is a reliable generator of new material, whether a new wrinkle on a monitoring process or a substantive initiative falling inside the big tent of corporate purpose. With finance, law and legal theory are more in the back seat while practice takes the lead. Bankruptcy is the one important exception, but even there, practice has been trumping law in recent years as bankruptcy courts have passively turned the reins over to controlling creditors. Not that there aren’t developments in the practice to write about. There are. But this will be more a matter of tracking new wrinkles than accounting for great upheavals.
It is, accordingly, a big deal for legal finance when a whole new mode of financing springs up on the upper part of the right side of corporate balance sheets. The quick rise of private credit in recent years is just such a development. Jared A. Ellias and Elisabeth de Fontenay, The Credit Markets Go Dark, 134 Yale Law Journal 779 (2025), lays out the territory with diligence, clarity, and sophistication. Continue reading "Private Credit"
Jan 31, 2025 Charles O'KelleyCorporate Law
Kyle Edward Williams, Taming the Octopus: The Long Battle For The Soul of The Corporation (2024).
In Taming the Octopus, historian Kyle Edward Williams focuses on the evolution of the modern corporation from its birth in the early days of the twentieth century to the present. This work deftly synthesizes a vast array of historical and legal research with the author’s own archival research. The result is a fast-moving, comprehensive, and captivating story of the people and events that have shaped scholarly and political debate about, and understanding of, the corporation and its place in society as the United States gradually assumed its place as world hegemon. This is a book intended for the informed citizen but should be of special interest to teachers of Corporations and related subjects, for here the reader will encounter the giants who have affected what we think and believe about what the corporation is and how it should be governed, as well as the debates that have raged throughout the life of the modern corporation.
The book begins and ends with the imagery of the modern corporation as an imaginary sea creature, an octopus as terrifying and as untamable as the giant squid in Jules Verne’s Twenty Thousand Leagues Under the Sea. That imagery had been used in books and editorial cartoons in the first decade of the twentieth century to caricature the might of emerging business behemoths, including the Standard Oil Trust, whose tentacles reached into every aspect of American life and controlled the politicians who acted counter to the public interest as the mighty creature demanded. The public indignation and resolve to combat this evil creature is an underlying theme throughout the book, which Williams identifies with three continuing tensions in the political and cultural life of the modern corporation. Continue reading "The Continuing Evolution of the Modern Corporation: What’s Past is Prologue"
Jan 6, 2025 Gina-Gail FletcherCorporate Law
In the wake of the extrajudicial murders of George Floyd and Breonna Taylor, millions protested across the U.S. and worldwide against the racial and social injustices that persist within society. The 2020 “racial reckoning” protests were the largest racial justice demonstrations in the U.S. since the Civil Rights movement of the 1950s and witnessed a broad spectrum of society coming together to demand redress for pervasive inequities across race, gender, and socioeconomic lines. Even companies, that had traditionally preferred to stand on the sidelines with respect to racial justice issues, stepped into the fray, publicly declaring their support for racial justice and promising to do their part to combat racial inequities. As part of these efforts, hundreds of companies since 2020 have voluntarily pledged to increase people of color within their ranks, specifying numerical targets and timelines for achieving these goals.
In her new paper, Racial Targets, published in Northwestern Law Review, Professor Atinuke Adediran tackles the thorny question: are corporate racial targets legally permissible? Adediran joins in conversation with several scholars who have been considering how the 2020 “racial reckoning” has impacted corporate behavior. To do so, she examines voluntary racial goals (i.e., racial targets) that companies have publicly established for themselves in response to shareholder, investor, and employee pressures to support racial equity. Adediran argues that racial targets are meaningfully distinct from racial quotas and, as such, despite the constitutional illegality of the latter, the former are within the boundaries of the law. Continue reading "Racial Goals & Private Companies: What’s Legal & What’s Not"
Nov 15, 2024 Tom C.W. LinCorporate Law
Many businesses today are subjected to a myriad of regulations. In order to ensure compliance with the large and dynamic bodies of federal, state, and local rules, many businesses create internal policies and systems to facilitate adherence to the law. However, such policies and systems exist in a dynamic marketplace filled with resource constraints and other business considerations. So, how do corporate managers construct internal compliance policies for their firms? What rules and regulations do they prioritize? How do they design internal systems to reflect the realities of law and enforcement?
In a recent article, Strategic Compliance, Professor Geeyoung Min offers a sharp and insightful perspective on these questions and more. Through an astute and deep analysis of a hand-collected dataset of corporate policies on insider trading and related party transactions from companies making up the Standard and Poor’s (S&P) 500 index, Professor Min reveals the policy customizations that occur at the firm level. Specifically, she reveals how firms customize internal policies on insider trading and related party transaction, oscillating between stringency and leniency. These revelations illuminate, inform, and interrupt conventional understandings about corporate compliance and internal policies. Continue reading "Compliance and Strategic Corporate Policies"
Oct 17, 2024 Joan MacLeod HeminwayCorporate Law
The rise and dominance of institutional investors in public company stockholder profiles has increasingly shifted significant scholarly and popular attention toward those institutions and away from individual investors. Market factors periodically refocus attention on retail investors, however. One of those factors in recent years has been the meme stock phenomenon, which attracted widespread public attention in early 2021 when the common stock of GameStop Corp. and AMC Entertainment Holdings Inc. achieved record high public market prices. The continued salience of activist retail investors recently has been reinforced by a meme stock resurgence that has again put GameStop and AMC in the news.
The ongoing work of Professors Sergio Alberto Gramitto Ricci and Christina Sautter is helping to educate many audiences about legally significant demographics that shed light on current retail investors and their behaviors. Specifically, their joint work addresses ways in which investors’ behaviors have responded to the nearly universal availability of wireless access through a variety of ubiquitous devices (including especially cell phones). This broad-based wireless access has created a new cadre of “wireless investors” who collect and share investment information through social media and Internet applications and buy and sell securities through online trading platforms.
In Wireless Investors & Apathy Obsolescence, Gramitto Ricci and Sautter focus on the potential for wireless investors to overcome investor apathy. They describe that apathy and explain its genesis. They then illustrate why the advent of wireless investors may more optimally empower retail shareholders. Continue reading "Digital Engagement and the Retail Investor"
Sep 17, 2024 Atinuke AdediranCorporate Law
Are corporations responsible for addressing racial inequality? In a timely and compelling examination of corporate race relations during the civil rights movement and current corporate processes and decision-making on race, Gina-Gail S. Fletcher and H. Timothy Lovelace, Jr. argue in their article, Corporate Racial Responsibility, that corporations are responsible for addressing racial inequality because they have historically been inescapably involved in it.
The authors’ historical exploration of race and corporate relations is an important contribution to scholarship. The authors show that corporate engagement in race is not new. It extends back to the time of slavery and became much more extensive during the civil rights movement. As the authors document, sit-ins at hotels, restaurants, and other segregated businesses were catalysts for the civil rights movement.
Businesses were drawn to voluntary desegregation, which was woefully unsuccessful as evidenced by accounts in cities like Birmingham, Alabama and Atlanta, Georgia. It was not until the passage of Title II of the Civil Rights Act of 1964, mandating that businesses desegregate, that change began to occur. The authors explain that this is compelling evidence that mandates succeed while voluntary action, a form of corporate social responsibility, does not. Continue reading "Civil Rights Meets Corporate Governance"
