The Creeping Federalization of Corporate Law PDF Download

Author: Stephen M. Bainbridge
Publisher:
ISBN:
Category :
Languages : en
Pages : 7

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Book Description
The collapse of Enron and WorldCom, along with only slightly less high profile scandals at numerous other U.S. corporations, has reinvigorated the debate over state regulation of corporate governance. Post-Enron, politicians and pundits called for federal regulation not just of the securities markets but also of internal corporate governance. As Congress and market regulators began implementing some of those ideas, there has been a creeping - but steady - federalization of corporate governance law. The NYSE'S new listing standards regulating director independence is one example of that phenomenon. Other examples appeared to little public debate in the sweeping Sarbanes-Oxley legislation. Taken individually, each of Sarbanes-Oxley's provisions constitutes a significant preemption of state corporate law. Taken together, they constitute the most dramatic expansion of federal regulatory power over corporate governance since the New Deal.No one seriously doubts that Congress has the power under the Commerce Clause to create a federal law of corporations if it chooses. The question of who gets to regulate public corporations thus is not one of constitutional law but rather of prudence and federalism. In this essay, I advance both economic and non-economic arguments against federal preemption of state corporation law. Competitive federalism promotes liberty as well as shareholder wealth. When firms may freely select among multiple competing regulators, oppressive regulation becomes impractical. If one regulator overreaches, firms will exit its jurisdiction and move to one that is more laissez-faire. In contrast, when there is but a single regulator, exit is no longer an option and an essential check on excessive regulation is lost.

Author: Roberta Romano
Publisher: American Enterprise Institute
ISBN: 9780844738369
Category : Business & Economics
Languages : en
Pages : 180

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Book Description
This is a study of the structure of American corporate law, which combines economic analysis with empirical insights to produce a number of policy insights. It is suitable for anyone studying corporate law, securities regulation, comparative company law or federalism.

Author: Robert B. Ahdieh
Publisher:
ISBN:
Category :
Languages : en
Pages : 38

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Book Description
Since the very moment of its adoption, the Sarbanes-Oxley Act of 2002 has been subject to a litany of critiques, many of them seemingly well-placed. The almost universal condemnation of the Act for its asserted 'federalization' of corporate law, by contrast, deserves short shrift. Though widely invoked - and blithely accepted - dissection of this argument against the legislation shows it to rely either on flawed assumptions or on normative preferences not ordinarily acknowledged (or perhaps even accepted) by those who criticize Sarbanes-Oxley for its federalization of state corporate law.Once we appreciate as much, we can begin by replacing the misleading rhetoric of 'federalization'. More importantly, we might begin to conceptualize a theory of corporate law that is both more effective in advancing our desired ends and perhaps closer to market realities than the competing paradigms presently in ascendance. In this spirit, I offer a model of jurisdictional redundancy - in which federal mandatory rules intertwine with state enabling rules, to create a more indeterminate regulatory regime than we might otherwise pursue. Such a scheme of 'mixed governance' may deprive legal scholars of the opportunity to draw clear distinctions, but may allow the regulation of corporate governance to operate more effectively, and to evolve more efficiently over time.

Author: Robert B. Ahdieh
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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Book Description
In few areas have legal scholars focused more closely on the sources of law than in the study of corporate governance. Questions of institutional design thus pervade the literature of corporate law. Most prominent among these questions have been ones surrounding the allocation of law-making authority as between federal and state authorities: What is the dynamic by which corporate law will be generated at the state level, absent federal intervention? What is the normative quality of the resulting rules? When might a federal role be advisable, if not essential, in the regulation of public corporations? What form ought any such intervention take, and what distortions might it be expected to introduce into our traditionally state-based regime of corporate law? There has been much debate over these questions, to which the literature of law and economics has contributed mightily. To a striking degree, however, scholars have come to embrace - at least in broad terms - a common view on these questions. In this standard account, sub-national rules of corporate governance are to be preferred. State law - and the dynamic of state competition that arises from it - generates (at least some) efficiency gains, helping to reduce agency costs, as between shareholders and managers. For these and other reasons, the law and economics literature admonishes, the scope of federal law in an optimal regime of corporate governance should be limited. Federal rules may have a role in imposing mandatory disclosure obligations, regulating aspects of the issuance and trading of corporate securities, and in selected other circumstances, but not more generally. In this chapter, I suggest that this account of corporate law, widely accepted as it has become in the law and economics literature, deserves a closer look. As to what might be thought of as its horizontal and vertical axes - the perception of (horizontal) state competition as beneficial for shareholder-managerial relations, and the notion of (vertical) federal preemption as properly limited - the meaning and implications of the conventional account turn out to be more ambiguous. A careful analysis thus highlights critical limitations of each of these claims, and offers a more complex picture of the optimal sources of corporate law. Ultimately, a closer analysis of the horizontal dimension of state-to-state interaction and the vertical dimension of potential federal intervention points us to the same result in institutional design: a more mixed architecture of corporate law-making.

Author: Robert B. Ahdieh
Publisher:
ISBN:
Category :
Languages : en
Pages : 57

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Book Description
In the standard rhetoric of the corporate law literature, federalism is quot;the genius of American corporate lawquot; - an engine of efficiency, motivating a race (or at least a leisurely walk) to the top. Some have dissented, suggesting that the prevailing wisdom is wrong as to either the direction or the vitality of the promised race. But the latter critiques are too forgiving. The standard account misunderstands the basic question; its answer, as such, is not even wrong. Rather than weighing in on the quot;race debate,quot; thus, I challenge the fundamentally flawed discourse behind it. I offer a distinct framework for evaluating the role of federalism in American corporate governance, which points to distinct measures of efficiency and a reinvigorated study of institutional design in corporate law.To begin, I challenge the literature's merger of two distinct competitions - state and managerial - into one. More critically, I decry the resulting linkage between corporate law's central goal-efficient regulation of the separation of ownership and control - and the central element of its institutional design - federalism. That rhetorical linkage has led us astray in important respects: First, it has bootstrapped a role for federalism in advancing not merely the quality of corporate law, but also the substantive quality of corporate governance. Second, it has essentialized the role of federalism, casting it as indispensable to the production of good law. Dominant as these conceptions are in the discourse of corporate law, neither is true.I suggest an alternative account of federalism's contribution to American corporate governance. Federalism is not directed to the traditional goal of corporate law - regulation of the vertical separation of ownership and control within the firm. Rather, it advances a distinct, horizontal goal of regulating the relationship of the firm as a whole with state regulators external to it. Given as much, a federal regime is not dictated by a commitment to efficiency in corporate law. Rather, it is an institutional design choice, to be evaluated for its efficacy and utility - as well as its limitations - in one area of corporate law versus another.

Author: Lucian A. Bebchuk
Publisher:
ISBN:
Category :
Languages : en
Pages : 48

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Book Description
This paper analyzes the history of federal intervention in corporate law and draws from it lessons for the future. We show that federal intervention has generally not alternated between tightening state law restrictions on corporate insiders and relaxing them. Rather, federal law has systematically replaced state law arrangements with ones imposing tighter constraints on insiders. Without federal intervention, state law would have produced a corporate system that provides substantially weaker investor protection than the United States enjoys today. We also show that federal interventions have systematically taken advantage of additional tools (including public enforcement, criminal sanctions, gatekeeper liability, and agency-based regulations) beyond those that state law has chosen or been able to use. Overall, unless one views existing levels of investor protection as substantially excessive, past patterns suggest that state competition on its own is unlikely to produce an adequate level of investor protection. Furthermore, the recurring need for federal officials to rectify state law failures in order to provide investors with adequate protection indicates that federal lawmaking should be proactive rather than reactive. We thus recommend that, going forward, federal policymakers examine in a systematic and comprehensive fashion which corporate law areas should be federalized either because tighter restrictions on insiders are needed or because the additional tools available to federal law would be useful.

Author: Lawrence W. Waggoner
Publisher:
ISBN:
Category :
Languages : en
Pages : 29

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Book Description
Federal authorities have little experience in making law that governs wealth transfers, because that function is traditionally within the province of state law. Although state wealth-transfer law has undergone significant modernization over the last few decades, all three branches of the federal government -- legislative, judicial, and executive -- have increasingly gone their own way. Lack of experience and, in many cases, lack of knowledge on the part of federal authorities have not dissuaded them from undermining well-considered state law. This article appears in a symposium issue published by the Vanderbilt Law Review on The Role of Federal Law in Private Wealth Transfer. The Article covers these topics: federal preemption of several areas of state law, the development of federal common law as a sometime substitute for preempted state law, the federal tax exemption for perpetual trusts, and the right of posthumously conceived children of assisted reproduction to Social Security survivor benefits.

Author: Claire A. Hill
Publisher: Edward Elgar Publishing
ISBN: 1781005214
Category : Law
Languages : en
Pages : 497

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Book Description
Comprising essays specially commissioned for the volume, leading scholars who have shaped the field of corporate law and governance explore and critique developments in this vibrant and expanding area and offer possible directions for future research. This important addition to the Research Handbooks in Law and Economics series provides insights into subjects such as the role of directors, shareholders, creditors and employees; empirical studies of litigation and shareholder activism; executive compensation; corporate gatekeepers; comparative law; and behavioral approaches to law and finance. Topics are organized within five sections: corporate constituencies, insider governance, gatekeepers, jurisdiction, and new theory. Taken as a whole, the volume serves as an introduction for those new to the field and as a reference for those unfamiliar with some of the topics discussed. Authoritative and accessible, the Research Handbook on the Economics of Corporate Law will be a valuable resource for students, scholars, and practitioners of corporate law and economics.

Author: Henry Melvin Hart
Publisher:
ISBN: 9781566622363
Category : Derecho
Languages : en
Pages : 0

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Book Description
Hart & Sacks' The Legal Process: Basic Problems in the Making and Application of Law provides detailed information on the making and application of law. The casebook provides the tools for fast, easy, on-point research. Part of the University Casebook Series®, it includes selected cases designed to illustrate the development of a body of law on a particular subject. Text and explanatory materials designed for law study accompany the cases.

Author: Helen Anderson
Publisher: Kluwer Law International B.V.
ISBN: 9041145060
Category : Law
Languages : en
Pages : 352

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Book Description
The corporation’s ability to avoid the costs of risks that materialize as a result of its pursuit of profits is a departure from the market model. It can easily be seen as an evasion of the obligations that go with being the un-coercing, freely-acting and choosing ‘invisible hand.’ Dramatic corporate collapses and major human and economic disasters due to bad corporate conduct have strengthened the common sense view that, if the corporate directors and officers have made the deliberate act their own in some way, they may be held responsible on the same basis that liberal law holds all individuals responsible for their intended actions in the non-corporate settings. Accordingly, recent decades have seen an increasing number of statutory interventions worldwide that impose direct responsibilities on directors and other corporate officers in respect of a wide range of regulatory regimes: environmental regulation, occupational health and safety and other employment standards, human rights statutes, transportation regimes, consumer and competition laws, protections for creditors and workers against insolvent trading, and the like. Legitimacy crises have pushed legislators to enlarge the number of responsibilities, to increase the amounts of the fines that may be levied and to make it clear that, in some cases, prison sentences will be imposed. This collection of essays describes and analyzes the legal regimes governing directors’ liability for corporate fault and default across eleven important trading jurisdictions. It asks: Are the reform provisions, especially director duties of ‘due diligence,’ sharply enough aimed to attain the goal of corporate accountability? Will it be easy or difficult for defendants to establish that due diligence was exercised? Is it possible that more reliance on self-policing may lead to less documenting and reporting of wrongs and dangers? What impact may schemes of greater self-monitoring have on State regulation? In what ways might corporations react to these demands that they become guardians of the public weal? The authors – each an authority in his or her respective jurisdiction – recognize that the reforms are a reaction to the political problems created by the ill fit of the corporation with the economic and political value systems that we purport to hold dear. As they survey the ways that vibrant economies can frame laws to influence the conduct of directors and companies, they invite further exploration into the political, economic, practical, and evolutionary factors that may explain the convergence and divergence of both statute law and judicial doctrines and the desirability or inevitability of this deeply significant trend.