Sunday, November 29, 2015
Sunday, November 22, 2015
Sunday, November 15, 2015
“Taxi drivers..switched off their meters..Parisians offered their homes..football fans [sang] the..national anthem” https://t.co/wFQBcbfOJm— Stefan Padfield (@ProfPadfield) November 14, 2015
"Courts Resist Application of Agency Principles in Open-Market Section 10(b) Cases" Ann M. Lipton, 92 Wash. U.L. Rev. 1261 #corpgov— Stefan Padfield (@ProfPadfield) November 10, 2015
Sunday, November 8, 2015
"Neoclassical modelling as a strategy to ‘unsee’ involuntary unemployment" https://t.co/XdSgw2M805— Stefan Padfield (@ProfPadfield) November 3, 2015
Thursday, October 29, 2015
Kent Greenfield, Professor of Law and Dean’s Research Scholar at Boston College Law School, recently posted a provocative piece on the CLS Blue Sky Blog (here) in which he argues, among other things, that progressives have “flipped” from supporting “corporate citizenship” pre-Citizens United, to supporting “shareholder primacy” post-Citizens United. (Kent has stressed to me that he does not believe this characterization extends to progressive corporate law scholars.) The piece is short, so I recommend you go read it before continuing on to my comments below, because I will simply be taking some short excerpts from his post and providing some responses, which will likely benefit from the reader having reviewed Kent’s post first. As just one disclaimer, Kent’s post is based on his article, “Corporate Citizenship: Goal or Fear?” – and I have not yet read that paper. Also, I consider the following to be very much an in-progress, thinking-out-loud type of project, and thus welcome all comments.
1. In 2010, the Supreme Court decided Citizens United v Federal Election Commission, ruling that corporations had a First Amendment right to spend money from general treasury funds in support of political candidates. Though seen as victory for political conservatives, the decision was in some ways based on a progressive view of the corporation. In the Court’s reasoning, corporations act as “associations of citizens” with rights of free speech.
Kent argues that the historical divide between progressives and conservatives can be viewed as one of “shareholder primacy” versus “corporate citizenship,” with progressives advocating for corporate citizenship while conservatives advance the cause of shareholder primacy. A couple of caveats are in order here. First, we must distinguish “shareholder primacy” as an assertion that shareholders should have the dominant (or at least more) controlling power within the corporation, from “shareholder wealth maximization,” which posits that the goal of corporate control is shareholder wealth maximization, independent of where the decision-making power resides. Second, we should keep in mind the competing corporate personality theories: aggregate theory, artificial entity (concession) theory, and real entity theory. I have argued in the past (see, e.g., here) that both aggregate theory and real entity theory tend to view the corporation as more private than public, with aggregate theory equating the relevant “association of citizens” with shareholders, while real entity theory looks to the board of directors – in either case positing a group of natural persons who can assert constitutional rights against government regulation. Artificial entity theory, on the other hand, views corporations as more public, at least in part because it is essentially impossible to mimic the corporate form solely through private contracting, and thus the state is entitled to more leeway in regulating corporations than natural persons acting in their purely private capacity. In light of all this, it may be better to view progressives as opposing shareholder wealth maximization as the sole goal of corporate governance, while being flexible as to the means used to achieve that end – be it shareholder primacy, director primacy, or “state primacy.” (I am not suggesting that a shift to shareholder primacy as the favored means of achieving the ends of progressive corporate governance is insignificant. Rather, I argue merely that a shift in means is less dramatic than a shift in ends, and thus less appropriately characterized as an ideological flip.) To the extent Citizens United is viewed as having merely strengthened the associational, private view of corporations without challenging the shareholder wealth maximization norm – it is hard to view it as advancing a progressive view of the corporation. In fact, it arguably stands simply as an opinion that gives more political power to corporations to pursue shareholder wealth maximization (or for managers to use shareholder wealth maximization as a justification for self-dealing) at the expense of other stakeholder concerns.
2. The biggest impediment to using the Citizens United moment to change corporate governance for the better is the progressive left.
In light of my comments above, I think there is a stronger argument to be made that the biggest impediment to changing corporate governance for the better is the continuing identification of corporations as purely private entities. It has been said that the greatest trick the devil played was convincing the world he didn’t exist. In this context, we might say the greatest trick played on progressives was convincing them their only viable choices are contractarian.
3. Justice John Paul Stevens’s dissent in Citizens United …. (perhaps unwittingly) bolsters shareholder supremacy by arguing that corporate speech should be limited in order to protect shareholders’ investments.
It may be better to view this part of Justice Stevens’s dissent as challenging the majority’s view that opening the corporate political contribution floodgates is not problematic because “corporate democracy” will address any problems. Meanwhile, Justice Stevens quotes Dartmouth College approvingly, and states that “corporations have been ‘effectively delegated responsibility for ensuring society's economic welfare,’” both of which place him squarely in the concession theory camp – despite his protestations to the contrary.
4. The irony runs the other way as well. In the 2014 Hobby Lobby case, the Court granted corporations the statutory right under the Religious Freedom Restoration Act to object to otherwise applicable regulations on religious grounds. Writing for the Court, Justice Samuel Alito recognized that corporations need not maximize the bottom line ….
Go here for my take on whether Hobby Lobby changed anything in terms of the ability of those who control corporations to pursue “socially responsible” ends. It is worth noting that a corporation’s ability to pursue “socially responsible” ends as part of an overall shareholder-wealth-maximizing strategy in light of the business judgement rule is not necessarily the same thing as concluding corporations will pursue some optimal level of “corporate citizenship,” which may rather require recognizing state power to require such activity or prohibit related harmful activity.
5. The world is flipped. Progressives are championing shareholder rights. Conservatives are planting their ideological flag on the summit of corporate citizenship.
As noted above, to the extent one views progressives as seeking more corporate social responsibility, and being willing to consider alternative methods to that end – be it shareholder primacy, director primacy, or state primacy – I do not see a significant flip here. Meanwhile, to the extent conservatives can be viewed as having supported shareholder wealth maximization as the optimal, but not sole, means to the end of lifting all ships via a rising tide, in addition to being consistently united against government regulation, there is also arguably nothing here that constitutes a significant “flip.”
Of course, generalities like “progressive” and “conservative” typically suffer from significant amounts of imprecision, and it may be that the “flip” characterization is more or less appropriate given the strand of progressive or conservative one is considering.
Sunday, October 25, 2015
"Courts are divided": "SLUSA...to completely eliminate states' concurrent jurisdiction over Securities Act claims"? https://t.co/aFpcnLLxXX— Stefan Padfield (@ProfPadfield) October 25, 2015
Sunday, October 18, 2015
Sunday, October 11, 2015
Between the US Supreme Court's decision to let Newman stand and the Delaware Supreme Court's Sanchez decision, the intersection of friendship and corporate governance has been a hot topic this past week. While the commentary has been enlightening, it's always good to reflect on the primary sources. To that end, I have collected below a series of what I perceive to be interesting quotes from the relevant opinions as follows (I also included an excerpt from a law review article referencing Reg FD, which has something to say about the extent to which we need to protect insider communications with analysts):
1. Dirks v. S.E.C.,
2. United States v. Newman,
3. United States v. Salman,
4. Delaware Cnty. Employees Ret. Fund v. Sanchez,
5. Dirks v. S.E.C. (dissent, excerpt 1),
6. Dirks v. S.E.C. (dissent, excerpt 2), and
7. Donna M. Nagy & Richard W. Painter, Selective Disclosure by Federal Officials and the Case for an Fgd (Fairer Government Disclosure) Regime.
Obviously, Sanchez may be viewed as an outlier here, but perhaps this will spur some creative work on how the standard for director independence might inform the standard for improper tipping or vice versa.
Sunday, October 4, 2015
"The Case Against The Roberts Court: A Decade of Justice Undone" http://t.co/nWJ1k0LBEv— Stefan Padfield (@ProfPadfield) September 28, 2015
"two trends which are politically induced and reinforce income inequality" https://t.co/jt6Mmzh76m— Stefan Padfield (@ProfPadfield) October 1, 2015
Sunday, September 27, 2015
"Piketty argues that the internal dynamics of capitalism ensure that wealth will concentrate" https://t.co/jsBdxRwVTy— Stefan Padfield (@ProfPadfield) September 21, 2015
"Trade groups representing pharmaceutical and biotech companies oppose letting Americans buy drugs overseas" http://t.co/AdD1RP3Cbc— Stefan Padfield (@ProfPadfield) September 22, 2015
ICYMI: "Bar Exam Scores Drop to Their Lowest Point in Decades" http://t.co/sMq4sygiCB— Stefan Padfield (@ProfPadfield) September 22, 2015
Has "our veneration of...'free market'...masked the power of moneyed interests to tilt the market to their benefit"? http://t.co/i354ib2c3o— Stefan Padfield (@ProfPadfield) September 27, 2015
Sunday, September 20, 2015
Does "concentration of capital in a small number of hands make free markets and perfect competition impossible"? https://t.co/Tgt5kKhkfd— Stefan Padfield (@ProfPadfield) September 13, 2015
News release: SEC announces agenda for Sept. 23 meeting of the Advisory Committee on Small and Emerging Companies: http://t.co/RGgJwXfCnO— SEC_News (@SEC_News) September 18, 2015
Sunday, September 13, 2015
ICYMI: dare to ask "how much longer we can thrive as a nation when [our young adults]..'lack the skills required..'" http://t.co/DcfvD45oN0— Stefan Padfield (@ProfPadfield) September 7, 2015
"Are our self-rewarding top executives so..excellent..that they must hear in their private chamber no whisper from the workers?"44IndusLJ394— Stefan Padfield (@ProfPadfield) September 8, 2015
"This Article examines the significant problem of fraud within nonprofit organizations" 13 Cardozo Pub. L. Pol'y & Ethics J. 711 #corpgov— Stefan Padfield (@ProfPadfield) September 8, 2015
Sunday, September 6, 2015
"external governance--firm characteristics that maximize vulnerability to hostile takeovers" 2015 Colum. Bus. L. Rev. 1 #corpgov— Stefan Padfield (@ProfPadfield) September 1, 2015
"Law school is expensive .... The average student debt for the graduating class of 2014 was $111,899." http://t.co/fYCt9Iw4NO— Stefan Padfield (@ProfPadfield) September 2, 2015
SAT: "latest scores ...show a majority of students...aren’t ready for college-level work or career-training programs" http://t.co/VUTWYolXc9— Stefan Padfield (@ProfPadfield) September 4, 2015
Sunday, August 30, 2015
"telltale signs that your mediator will be ineffective" http://t.co/X44FK8gX9p— Stefan Padfield (@ProfPadfield) August 29, 2015
2/3: with "unfettered discretion..& w/o..sanctioning..benefit corporations may be..worse..than..for-profits" 52 Am. Bus. L.J. 501 #corpgov— Stefan Padfield (@ProfPadfield) August 25, 2015
Sunday, August 23, 2015
"Name-calling is now commonplace .... class action attorneys have been redefined as the predators" 80 Brook. L. Rev. 743 #corpgov— Stefan Padfield (@ProfPadfield) August 20, 2015
"Bankruptcy..Forum shopping allows..management..to..benefit..selves while preventing stakeholders from participating" http://t.co/qPk5u76p4k— Stefan Padfield (@ProfPadfield) August 21, 2015
"most companies were unable to determine the source of their conflict minerals" http://t.co/g6lyjmi0gF— Stefan Padfield (@ProfPadfield) August 21, 2015
Sunday, August 16, 2015
"For-profit corporations ... are not ... voluntary associations ... equa[l] to ... members of a church" 30 Const. Comment. 277, 280 #corpgov— Stefan Padfield (@ProfPadfield) August 11, 2015
Sunday, August 9, 2015
ICYMI: "SEC Allows Tweets for Startups Raising Money" http://t.co/VKFJQ5S5zd— Stefan Padfield (@ProfPadfield) August 9, 2015
Sunday, August 2, 2015
"the potential development of fascism arising at the national level due to the influence of global corporate rule" http://t.co/cbcBLs4Nol— Stefan Padfield (@ProfPadfield) July 26, 2015
"As long as there is profit to be made, sellers will systematically exploit ... through manipulation and deception" http://t.co/dX6xbDp9Qu— Stefan Padfield (@ProfPadfield) July 29, 2015
Could IBM "have 'purposefully' aided and abetted the human rights abuses perpetrated by the apartheid government"? https://t.co/ZNSxFRuPDB— Stefan Padfield (@ProfPadfield) July 31, 2015
Sunday, July 26, 2015
"Tying the gift prong to the presence of a friend or relative...restricts...strained theories of gifting by insiders" http://t.co/kKNXDaMOdv— Stefan Padfield (@ProfPadfield) July 19, 2015
Wednesday, July 22, 2015
The following comes to us from Dorothy Brown, Vice Provost for Academic Affairs & Professor of Law at Emory University School of Law:
We are conducting searches in two areas: health law and business law. We are looking for a senior health law scholar with a national reputation in health care regulation who is interested in helping to build a multidisciplinary health law, policy & management center, in cooperation with other Emory divisions including our School of Medicine, School of Public Health, and the nearby Center for Disease Control. In addition, we are looking for a junior (no more than 2-3 years of teaching experience) in Business law. Please feel free to contact me [at firstname.lastname@example.org] if you are interested or know of others who might be interested in being considered.