Hot off the presses comes a stimulating way to start the summer for corporate law professors. Cambridge recently published Christopher Bruner’s new book Corporate Governance in the Common-Law World. The book builds on his earlier law review work, including Power and Purpose in the “Anglo-American” Corporation and Corporate Governance Reform in a Time of Crisis.

Bruner lays patient, meticulous siege to functionalist accounts that have occupied center stage in comparative corporate law scholarship. The key moves in his gambit:

¶ Disaggregating the idea of “Anglo-American” corporate law by arguing that British, Australian, and Canadian systems give far more power to shareholders than does the U.S. approach;

¶ Arguing that a functional approach (which has led to predictions that differing social welfare and social democracy concerns explains a divergence between continental European systems and Anglo-American systems) fails to account for the differing approaches among these four common-law countries;

¶ Articulating the further differences among the U.K., Canadian, and Australian approaches; and

¶ Providing evidence that politics, not functional concerns, provides a better explanation for the diverging paths within the common-law world.

Bruner also looks at how the crisis has affected these four common-law countries to different degrees. Harder hit, the U.K. and United States have moved to increase shareholder power within corporations. Although in the introduction Bruner sets out to navigate middle course between “functionalism” and “contextualism,” the book hews much closer to the latter. In doing so, he stages a serious challenge to comparative scholarship that poses grander economic arguments to explain differences and similarities among corporate law regimes.

To my mind, the book also raises a challenge of whether a similar political approach might explain divergences within continental Europe.  Moreover, might a politics focus provide an explanation for divergences and convergences well before the latter half of the 20th Century?

Bruner’s Introduction is available on ssrn.

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A little Friday reading:

Via CLS Blue Sky Blog, Lawrence Cunningham on the wily Oracle of O vs. Modern Finance Theory:

Threatened by Buffett’s performance, stubborn devotees of modern finance theory resorted to strange explanations for his success. Maybe he is just lucky—the monkey who typed out Hamlet— or maybe he has inside access to information that other investors do not. In dismissing Buffett, modern finance enthusiasts still insist that an investor’s best strategy is to diversify based on betas or dart throwing, and constantly reconfigure one’s portfolio of investments.

Buffett responds with a quip and some advice: the quip is that devotees of his investment philosophy should probably endow chaired professorships at colleges and universities to ensure the perpetual teaching of efficient market dogma; the advice is to ignore modern finance theory and other quasi-sophisticated views of the market and stick to investment knitting. That can best be done for many people through long-term investment in an index fund. Or it can be done by conducting hard-headed analyses of businesses within an investor’s competence to evaluate. In that kind of thinking, the risk that matters is not beta or volatility, but the possibility of loss or injury from an investment.

And NYT's Deal Professor, Steven Davidoff, tells a gripping tale of hedge fund vs family hegemony playing out in Maryland's courts.  CommonWealth REIT is controlled by the Portnoy family, which has made a pretty penny in the process, and 2 hedge funds are trying to get it to change its ways.  

First, the story has implications for the future of shareholder arbitration provisions.  I knew the SEC objects to these puppies at IPO, but didn't think that a board might turn around post-IPO and and adopt amend the bylaws to require arbitration to resolve disputes with shareholders.  Shady.  But apparently that's what happened at CommonWealth REIT.  

And there's more to the story.  

On March 1, CommonWealth’s board passed a bylaw amendment that purports to require that any shareholder wishing to undertake a consent solicitation must, among other things, own 3 percent of the company’s shares for three years. This is an extremely aggressive position that if upheld would stop Corvex and Related in their tracks.

Not satisfied with this attempted knockout blow, CommonWealth appears to have lobbied the Maryland Legislature to amend the Maryland Unsolicited Takeover Act. This law allows companies to have a mandatory staggered board.

CommonWealth already has such a board, but the company has also reportedly lobbied the legislature to make a change that companies opting into this statute would now be unable to have their directors removed by written consent. Again, this would kill Corvex and Related’s campaign. When the two funds got wind of this, they fought back, and the Maryland legislature adjourned without adopting CommonWealth’s proposal.

CommonWealth still announced this week that it had opted into the act. The REIT is claiming that even though the Maryland Legislature did not adopt any amendment, the law still implicitly has this requirement. The funds will now have to sue CommonWealth to force them to change their interpretation.

Go read the whole thing.  Some wacky shenanigans from my home state.  If it does come down to arbitration I'd love to see CommonWealth's arbitrator, allegedly a friend of its controlling family, go toe to toe with the hedge funds' choice-- former Delaware Chancellor Bill Chandler.  

 

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Lyman Johnson is writing the history of corporate social responsibility. On Friday, April 26, Lyman is hosting a conference at St. Thomas School of Law on this subject, which is not only fun and interesting, but important. The agenda for the conference is here.

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One of my colleagues said that my latest article (written with one of my excellent students, Jordan Lee) sounds like an R-rated movie. The title is Discretion, and here is the abstract:

Discretion is an important feature of all contractual relationships. In this Article, we rely on incomplete contract theory to motivate our study of discretion, with particular attention to fiduciary relationships. We make two contributions to the substantial literature on fiduciary law. First, we describe the role of fiduciary law as “boundary enforcement,” and we urge courts to honor the appropriate exercise of discretion by fiduciaries, even when the beneficiary or the judge might perceive a preferable action after the fact. Second, we answer the question, how should a court define the boundaries of fiduciary discretion? We observe that courts often define these boundaries by reference to industry customs and social norms. We also defend this as the most sensible and coherent approach to boundary enforcement.

I wrote an article about a decade ago called "The Critical Resource Theory of Fiduciary Duty" that still gets downloaded and cited a fair amount, at least for a fiduciary duty article. It is about the structure of fiduciary relationships, and I wanted to do a follow on article about how courts know when someone has breached a fiduciary duty. I actually had a fairly long draft of an article that was just horrible, and I never published it, but I kept thinking about and teaching about this problem. Earlier this year, I had a brainstorm about the subject, and the result is this new article. 

By the way, interest in fiduciary law seems to have exploded in the past decade. Some of that interest stems from Tamar Frankel's book and the accompanying conference at Boston University. Some of the interest stems from the fact that fiduciary law is interesting in many countries outside the United States, where much of the best writing on this subject is found (see Paul Miller, for example). I look forward to a new surge in interest this summer, as Andrew Gold and Paul Miller have organized an excellent conference on The Philosophical Foundations of Fiduciary Law, to be held in Chicago. I am writing a paper entitled "True Loyalty" for that conference and very much looking forward to reading the other contributions.

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Jesse Fried, Brian Broughman, and Darian Ibrahim have an excellent paper on Delaware's dominance in the market for corporate charters, arguing "that firms often choose Delaware corporate law because it is the only law 'spoken' by both in-state and out-of-state investors." Jesse described the paper in a recent blog post, and you can download it on SSRN. Jesse's summary of the evidence:

To test for a lingua-franca effect, we exploit a database of 1,850 VC-backed firms that provides precise information on the firm’s location, the identity and location of its investors, and changes in the firm’s domicile as its investor base evolves over time. We find, consistent with the lingua-franca effect, that the presence of out-of-state investors in each round of financing significantly increases the likelihood of Delaware incorporation or reincorporation. We also find that a startup is less likely to incorporate in Delaware if its out-of-state VC investors have already invested in firms incorporated in the startup’s home state, and thus have greater familiarity with home-state corporate law.

Highly recommended.

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Hot off the presses ... Comparative Company Law: A Case-Based Approach, edited by Mathias Siems and David Cabrelli.

As attention moves rapidly towards comparative approaches, the research and teaching of company law has somehow lagged behind. The overall purpose of this book is therefore to fill a gap in the literature by identifying whether conceptual differences between countries exist. Rather than concentrate on whether the institutional structure of the corporation varies across jurisdictions, the objective of this book will be pursued by focusing on specific cases and how different countries might treat each of these cases. The book also has a public policy dimension, because the existence or absence of differences may lead to the question of whether formal harmonisation of company law is necessary. The book covers 10 legal systems. With respect to countries of the European Union, it focuses on the most populous countries (Germany, France, the UK, Spain, Italy and Poland) as well as two smaller Member States (Finland and Latvia). In addition, the laws of two of the world's largest economies (the US and Japan) are included for the purposes of wider comparison. All of these jurisdictions are subjected to scrutiny by deploying a comparative case-based study. On the basis of these case solutions, various conclusions are reached, some of which challenge established orthodoxies in the field of comparative company law.

This is a very cool project, for which I am the U.S. contributor. Mathias and David were patient and longsuffering editors, and I believe they have produced something truly worthwhile for those of us interested in comparative company law. Thanks to the many collaborators who made this happen.

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If you are looking for a teaching fellowship in corporate law, it would be hard to beat the Lowell Milken Institute Law Teaching Fellowship at UCLA. Now accepting applications.

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Here are a few gift suggestions culled from books published this year if your special someone is a lawyer who associates Modigliani and Miller with capital structure and not paintings with elongated faces and the Tropic of Cancer:

• Tamar Frankel’s The Ponzi Scheme Puzzle;
• Steve Bainbridge’s Corporate Governance after the Financial Crisis (for a point of comparison, see his former colleague Lynn Stout’s The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public);
• Research Handbook on the Economics of Corporate Law, a collection edited by Claire Hill & Brett McDonnell.

Even the non-lawyers and non-academics in your life might enjoy Frank Partnoy’s Wait: The Art and Science of Delay. Of course, the target audience might never get around to buying the book.

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A few links to tide you over during your tryptophan-induced torpor:

• Many law faculty dream (or so I’ve heard) of splitting their school in two and separating themselves from various colleagues (mimicking the good bank/bad bank model). Well Penn State is doing just that with its two campuses. (See the Dan Filler’s short post at the Faculty Lounge and the comments thereto);
• In the NY Review of Books, Elaine Blair reviews Every Love Story is a Ghost Story, D.T. Max’s bio of David Foster Wallace. It’s fascinating discussion of how Wallace drew on his own experience in addiction recovery, to create not only characters but a map out of the intellectual wilderness of “self-consciousness and hip fatigue” in American culture high and low;
• David Nasaw has slices of his new book, The Patriarch: The Remarkable Life and Turbulent Times of Joseph P. Kennedy at Slate;
• In the New Yorker, Nick Paumgarten explores the eternal musical afterlife in the Grateful Dead tape archives;
• Steve Bainbridge on vino for Thanksgiving (what about post-Thanksgiving?) and shareholder empowerment and banks.
• Track grandma’s flight home at FlightRadar24.

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This past February, I blogged about Chancellor Leo Strine's opinion in Auriga Capital Corp. v. Gatz Properties, LLC. The case was particularly interesting because Chancellor Strine expressed his view that a manager in a manager-managed LLC owes fiduciary duties, even if the participants in the LLC are silent about fiduciary duties. In other words, the manager has fiduciary duties by default.

I agree.

But Chief Justice Myron Steele has expressed a different view in his article, Freedom of Contract and Default Contractual Duties in the Delaware Limited Partnerships and Limited Liability Companies, 46 Am. Bus. L.J. 221, 223-224 (2009).

So when the Delaware Supreme Court issued an en banc opinion in Auriga earlier this week, we were all curious what Chief Justice Steele would say. The result was a per curium  decision and it was surprising. The Court affirmed Chancellor Strine's decision, then added:

[W]e pause to comment on one issue that the trial court should not have reached or decided. We refer to the court’s pronouncement that the Delaware Limited Liability Company Act imposes “default” fiduciary duties upon LLC managers and controllers unless the parties to the LLC Agreement contract that such duties shall not apply. Where, as here, the dispute over whether fiduciary standards apply could be decided solely by reference to the LLC Agreement, it was improvident and unnecessary for the trial court to reach out and decide, sua sponte, the default fiduciary duty issue as a matter of statutory construction. The trial court did so despite expressly acknowledging that the existence of fiduciary duties under the LLC Agreement was “no longer contested by the parties.” For the reasons next discussed, that court’s statutory pronouncements must be regarded as dictum without any precedential value.

First, the Peconic Bay LLC Agreement explicitly and specifically addressed the “fiduciary duty issue” in Section 15, which controls this dispute. Second, no litigant asked the Court of Chancery or this Court to decide the default fiduciary duty issue as a matter of statutory law. In these circumstances we decline to express any view regarding whether default fiduciary duties apply as a matter of statutory construction. The Court of Chancery likewise should have so refrained.

Third, the trial court’s stated reason for venturing into statutory territory creates additional cause for concern. The trial court opinion identifies “two issues that would arise if the equitable background explicitly contained in the statute were to be judicially excised now.” The opinion suggests that “a judicial eradication of the explicit equity overlay in the LLC Act could tend to erode our state’s credibility with investors in Delaware entities.” Such statements might be interpreted to suggest (hubristically) that once the Court of Chancery has decided an issue, and because practitioners rely on that court’s decisions, this Court should not judicially “excise” the Court of Chancery’s statutory interpretation, even if incorrect. That was the interpretation gleaned by Auriga’s counsel. During oral argument before this Court, counsel understood the trial court opinion to mean that “because the Court of Chancery has repeatedly decided an issue one way, . . . and practitioners have accepted it, that this Court, when it finally gets its hands on the issue, somehow ought to be constrained because people have been conforming their conduct to” comply with the Court of Chancery’s decisions. It is axiomatic, and we recognize, that once a trial judge decides an issue, other trial judges on that court are entitled to rely on that decision as stare decisis. Needless to say, as an appellate tribunal and the court of last resort in this State, we are not so constrained.

Fourth, the merits of the issue whether the LLC statute does—or does not— impose default fiduciary duties is one about which reasonable minds could differ. Indeed, reasonable minds arguably could conclude that the statute—which begins with the phrase, “[t]o the extent that, at law or in equity, a member or manager or other person has duties (including fiduciary duties)”—is consciously ambiguous. That possibility suggests that the “organs of the Bar” (to use the trial court’s phrase) may be well advised to consider urging the General Assembly to resolve any statutory ambiguity on this issue.

Fifth, and finally, the court’s excursus on this issue strayed beyond the proper purview and function of a judicial opinion. “Delaware law requires that a justiciable controversy exist before a court can adjudicate properly a dispute brought before it.” We remind Delaware judges that the obligation to write judicial opinions on the issues presented is not a license to use those opinions as a platform from which to propagate their individual world views on issues not presented. A judge’s duty is to resolve the issues that the parties present in a clear and concise manner. To the extent Delaware judges wish to stray beyond those issues and, without making any definitive pronouncements, ruminate on what the proper direction of Delaware law should be, there are appropriate platforms, such as law review articles, the classroom, continuing legal education presentations, and keynote speeches.

Parts of this passage surfaced on Above the Law and generated a story today in the NYT, but neither story mentioned the underlying dispute between Chief Justice Steele and Chancellor Strine on default fiduciary duties.

Those stories also didn't note that this was not the first time the Delaware Supreme Court had warned Chancellor Strine about dicta. Ironically, the issue in Gotham Partners, L.P. v. Hallwood Realty Partners, L.P., 817 A.2d 160, 167 (Del. 2002) was then-Vice Chancellor Strine's assertion that fiduciary duties could be eliminated in a limited partnership. On that occasion, the Court observed, "we are constrained to draw attention to ... the underlying general principle in our jurisprudence that scrupulous adherence to fiduciary duties is normally expected."

Finally, inspired by the reaction of Brett McDonnell when we discussed this story yesterday, I wonder what Ed Rock thinks of this opinion. See Edward B. Rock, Saints and Sinners: How Does Delaware Corporate Law Work?, 44 UCLA L. Rev. 1009 (1997).

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I recently blogged about my new corporate governance article, A Conflict Primacy Model of the Corporate Board.  Bernie Sharfman posted a thoughtful comment, asking "how do you get around DGCL 141(a) and its judicially interpreted requirement that the board participate in all significant decisions of the corporation?"  The short answer is that "by or under the direction of the board of directors" statutory language, and the longer one is that, after some agonizing, I decided to defer questions of implementation for now.  I often try to cram too much into one article, and rethinking the public board's role as centering on dealing with areas of managerial conflict seemed, upon reflection, to be a lot to bite off in one symposium piece.

Which leads me to the genesis of this particular piece, which I'll explain using a personal anecdote. I sometimes exasperate my husband with my acceptance of the world as it is.  Our classic example involves soon after we started dating, when he visited my parents' house.  There was a wall lamp in the basement that had been hanging from wires for years--indeed, since we had moved in 8 years earlier.  It had been broken during the move-in, but the Rodrigues take was: it still works, so why fix it?  Nathan was horrified, went to a hardware store, and replaced the light fixture in about half an hour.  

My attitude towards the supermajority independent board stems from my familial tendency to accept the world as it is.  Independent public boards aren't going away.  That means that most directors are outsiders, and we have no guarantee that they know anything about the company or even the industry.  So what should we do?  Keep expecting them to manage the corporation in a strategic sense?  I say no, instead use the independent board for what it's good for: areas of conflict with management.  That's where its outsider status serves a useful purpose.  This first piece represents an argument about the ends that we can realistically ask such a board to serve.  Implementation is an important, but separate question.

So it was with sympathy and gratitude that I read Steve Bainbridge's post this summer, explaining his starting point and first premise when articulating his director primacy model (I hereby out myself as the friend whose misreading inspired the post).  Despite what I thought was my familiarity with Steve's position, in the draft I sent to him earlier this summer I mischaracterized the overall nature of his inquiry.  As he put it in his post:

Like most legal theorists who write about the board, both Eisenberg and Blair/Stout are concerned with the uses to which the board puts its powers. Eisenberg wants the board to monitor. Blair/Stout want the board to mediate.

In contrast, I did not approach the board of directors from a perspective framed by the question “what does the board do?” Instead, my inquiry started differently. I looked at the language of the DGCL and the MBCA, which both state that the business and affairs of the corporation shall be managed by or under the direction of the board of directors. And I asked, why? Why a board? Why not shareholders? Or employees? Or an imperial CEO?...

Hence, like the statutes, director primacy is about the allocation of power within the firm, and has little to say about how that power is to be used (other than requiring that it be used to maximize shareholder wealth)...

The statutes are indifferent as to how specific boards allocate their time amongst those functions. And so am I.

Steve and I had a fruitful (from my perspective, at least) email discussion about my draft, which I look forward to continuing at the end of this week, at the UCLA Junior Business Law Faculty Forum.  I'm also looking forward to seeing Lisa, Gordon and and some friends of the Glom there, too. 

 

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As in a bad horror movie (or a great Rolling Stones song), observers of the current crisis may have been disquieted that one of the central characters in this disaster also played a central role in the Enron era. Is it coincidence that special purpose entities (SPEs) were at the core of both the Enron transactions and many of the structured finance deals that fell part in the Panic of 2007-2008?

Bill Bratton (Penn) and Adam Levitin (Georgetown) think not. Bratton and Levin have a really fine new paper out, A Transactional Genealogy of Scandal, that not only draws deep connections between these two episodes, but also traces back the lineage of collateralized debt obligations (CDOs) back to Michael Millken. The paper provides a masterful guided tour of the history of CDOs from the S&L/junk bond era to the innovations of J.P. Morgan through to the Goldman ABACUS deals and the freeze of the asset-backed commercial paper market .

Their account argues that the development of the SPE is the apotheosis of the firm as “nexus of contracts.” These shell companies, after all, are nothing but contracts. This feature, according to Bratton & Levin, allows SPEs to become ideal tools either for deceiving investors or arbitraging financial regulations.

Here is their abstract:

Three scandals have fundamentally reshaped business regulation over the past thirty years: the securities fraud prosecution of Michael Milken in 1988, the Enron implosion of 2001, and the Goldman Sachs “Abacus” enforcement action of 2010. The scandals have always been seen as unrelated. This Article highlights a previously unnoticed transactional affinity tying these scandals together — a deal structure known as the synthetic collateralized debt obligation (“CDO”) involving the use of a special purpose entity (“SPE”). The SPE is a new and widely used form of corporate alter ego designed to undertake transactions for its creator’s accounting and regulatory benefit.

The SPE remains mysterious and poorly understood, despite its use in framing transactions involving trillions of dollars and its prominence in foundational scandals. The traditional corporate alter ego was a subsidiary or affiliate with equity control. The SPE eschews equity control in favor of control through pre-set instructions emanating from transactional documents. In theory, these instructions are complete or very close thereto, making SPEs a real world manifestation of the “nexus of contracts” firm of economic and legal theory. In practice, however, formal designations of separateness do not always stand up under the strain of economic reality.

When coupled with financial disaster, the use of an SPE alter ego can turn even a minor compliance problem into scandal because of the mismatch between the traditional legal model of the firm and the SPE’s economic reality. The standard legal model looks to equity ownership to determine the boundaries of the firm: equity is inside the firm, while contract is outside. Regulatory regimes make inter-firm connections by tracking equity ownership. SPEs escape regulation by funneling inter-firm connections through contracts, rather than equity ownership.

The integration of SPEs into regulatory systems requires a ground-up rethinking of traditional legal models of the firm. A theory is emerging, not from corporate law or financial economics but from accounting principles. Accounting has responded to these scandals by abandoning the equity touchstone in favor of an analysis in which contractual allocations of risk, reward, and control operate as functional equivalents of equity ownership, and approach that redraws the boundaries of the firm. Transaction engineers need to come to terms with this new functional model as it could herald unexpected liability, as Goldman Sachs learned with its Abacus CDO.

The paper should be on the reading list of scholars in securities and financial institution regulation. The historical account also provides a rich source of material for corporate law scholars engaged in the Theory of the Firm literature.

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We have decided to convene a late summer forum of the Conglomerate Masters -- our roster of distinguished corporate and financial law professors -- to discuss the current state of corporate social responsibility.  In particular, we wanted to address the controversy over Chick-fil-A's corporate stance against same sex marriage and to use this Economist blog post as a jumping off-point. 

The Economist blogger contends that Chick-fil-A's culture is in fact a prime example of a firm embracing corporate social responsibility (or "CSR") - albeit not with the politics that one traditionally associates with that movement.  The blogger concludes that the Chick-fil-A example demonstrates that matters of social policy should best be left to democratic institutions.  He or she writes:

Matters of moral truth aside, what's the difference between buying a little social justice with your coffee and buying a little Christian traditionalism with your chicken? There is no difference. Which speaks to my proposition that CSR, when married to norms of ethical consumption, will inevitably incite bouts of culture-war strife. CSR with honest moral content, as opposed to anodyne public-relations campaigns about "values", is a recipe for the politicisation of production and sales. But if we also promote politicised consumption, we're asking consumers to punish companies whose ideas about social responsibility clash with our own. Or, to put it another way, CSR that takes moral disagreement and diversity seriously—that really isn't a way of using corporations as instruments for the enactment of progressive social change that voters can't be convinced to support—asks companies with controversial ideas about social responsibility to screw over their owners and creditors and employees for...what? 

It is a provocative argument.  Although one wonders if the author would have made this same series of arguments in the 1960s: would the author have encouraged civil rights protesters to abandon lunch-counter sit-ins and lobby state legislators instead?

Still, the Chick-fil-A example raises some disquieting questions for CSR, which our Masters may address.  These include:

Is corporate law the most effective or legitimate tool for social change?  If we are worried about environmental degradation, is the solution to broaden the stakeholders to whom a corporation must answer?  Or shouldn't we look instead to environmental law?

Is CSR viewpoint neutral?  When covering CSR in a Corporations course, I ask students whether social activists who are lobbying a corporation to change what they see as immoral employment practices, should be able to put their views to a shareholder vote?  Then I ask whether the answer would or should change based on whether the activists are looking to end racial or gender discrimination or whether they are lobbying a company to stop offering benefits to partners in same sex couples.

At the same time, the current state of legal affairs raises some disquieting questions for opponents of CSR too.  The conclusion in the Economist blog -- leave social policy to democratic institutions and public law -- has a long lineage.  It harkens back to Milton Friedman's arguments that corporations and the states do and should exist in separate spheres; if citizens want to change corporate policy, the argument goes, they should act through the political process and push through public regulation.

But, the separate spheres argument looks more and more outdated, as corporations influence and permeate the sphere of government.  Do arguments to leave regulating the public dimension of corporate behavior out of corporate law and governance -- and leave it to traditional legislative and regulatory bodies -- appear naive in a post-Citizens United (and post-public choice)world?

Also, do these same questions for proponents and critics of CSR apply in equal measure to the growing field of social entrepreneurship?  Can entrepreneurs do well while doing good?  Should we expect them too?  Is social entrepreneurship a workable, stable, and viewpoint neutral concept?  If so, what does it entail?  Does/should CSR apply equally to small businesses and startups as to global corporations?

We look forward to hearing from our Masters...

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The Research Handbook on the Economics of Corporate Law, edited by Claire Hill and Brett H. McDonnell, is out! I contributed Chapter 4 on "The role of shareholders in the modern American corporation," and here is a description of the book:

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.

You can read the introduction by Claire and Brett here. The whole volume is highly recommended. Cite it early and often.

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    Thank you for the introduction, Usha.  I read the Conglomerate as a judicial clerk and as a practitioner; and I have continued reading the blog as a new academic. I appreciate the invitation and opportunity to guest blog.

    As Usha noted, I will be blogging primarily about social enterprise.  A few weeks ago, I presented on one of the main social enterprise forms in the U.S. - benefit corporations - at a wonderful symposium hosted by American University Washington College of Law.

    While benefit corporations have not yet received the same severe beatings that its social enterprise cousin the L3C has in law reviews (see, e.g., Daniel Kleinberger, Carter Bishop and Bill Callison & Allan Vestal), most academics I know express doubt that the benefit corporation form will be significantly useful.  I maintain a healthy skepticism and recognize a number of areas that could use improvement, but I am more optimistic than most.  For readers interested benefit corporations, I recommend Professor Dana Brakman Reiser’s article Benefit Corporations -- A Sustainable Form of Organization?, 46 Wake Forest L. Rev. 591 (2011).

    Currently, I have an extremely rough draft of the article I owe American University’s Business Law Review by July.  I am still making structural changes to the article.  One such change involves my recent decision to tackle the admittedly difficult question of whether benefit corporations will be beneficial.  Originally, I had decided to sidestep this question and focus only on how benefit corporations should be governed and how we might improve on the seven state statutes that have been passed. 

    In subsequent blog posts (and in my forthcoming article), I will examine the purported usefulness of the benefit corporation as outlined in the Benefit Corporation White Paper.  The White Paper states that the benefit corporation legislation was drafted to address, among other things, corporate purpose, accountability and transparency.  I plan to address each part of the trio in separate posts.  

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