Showing 9 of 130 Publications in Corporate Governance

English Company Law: Legal Architecture for a Global Law Market

Scholarship Abstract English-architecture company law describes the distinct and diverse group of company or corporate law used in more than 60 jurisdictions worldwide. English-architecture company law . . .

Abstract

English-architecture company law describes the distinct and diverse group of company or corporate law used in more than 60 jurisdictions worldwide. English-architecture company law provides a robust platform for innovation and development due to its permissive structure, opportunity for choice of law in an entity’s internal governance, and scalability permitting variation for small and large entities. It is the dominant form among International Financial Centers (IFCs), many of which have legal systems with a British connection. This body of law responds to competition and maintains dynamism by engaging its practice community through “learning by doing” and “frictioneering.” An architecture approach permits a broader review of developments in company law that more closely captures the reality of global law practice. The IFC experience of climbing the value chain from tax arbitrage to provide solutions for entities or structures left out in the corporate law of larger jurisdictions provides a useful global governance model to maintain normative, jurisprudential, and regulatory coherence even as it responds to more specialized and unanticipated needs. This Article explores what makes English-architecture company law so successful and how IFCs use it to compete in the global law market.

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Financial Regulation & Corporate Governance

A Decade of Corporate Governance in Brazil: 2010-2019

Scholarship Abstract We take advantage of the Brazilian mandatory corporate governance (CG) reporting system to build an overall Brazil Corporate Governance Index (BCGI) and subindices (CGIs), . . .

Abstract

We take advantage of the Brazilian mandatory corporate governance (CG) reporting system to build an overall Brazil Corporate Governance Index (BCGI) and subindices (CGIs), and track changes in firms’ scores over the 10-year period from 2010-2019. We show that overall CG level improved significantly between 2010 and 2019, with most of the improvement over the first part of this period. The improvement has two sources: an increase in the proportion of high-standard listings (Novo Mercado and Level 2, NML2) versus low-standard listings (Level 1 and regular, L1R), and within-firm improvement in CG practices. In the first half of the sample period, both NML2 and L1R firms improved CG practices considerably. Overall improvement in the second half of the sample period reflects an increasing proportion of NML2 firms, plus gradual improvement in L1R CG levels; with nearly constant NML2 levels. Improvements were stronger for Board Procedure and Disclosure. Firms in both listings improved their CG. Overall improvement was stronger in NML2 than in L2R, but was concentrated in the period from 2010-2015.

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Financial Regulation & Corporate Governance

The Dynamics of Corporate Governance: Evidence from Brazil

Scholarship Abstract We study the evolution of corporate governance (CG) practices in Brazil over 2010-2019, using a country-specific Brazil Corporate Governance Index (BCGI) validated in prior . . .

Abstract

We study the evolution of corporate governance (CG) practices in Brazil over 2010-2019, using a country-specific Brazil Corporate Governance Index (BCGI) validated in prior work. We study separately firms in high-governance and low-governance legal regimes, in a single country. CG improved considerably in Brazil over 2010-2015, with much smaller changes over 2015-2019. Positive CG changes are much more common than negative changes. Some firms made only minimal changes, despite low initial CG levels. We also study which firm financial factors predict both CG levels and changes in levels. None of the firm financial variables we study consistently predicts CG levels. However, for CG changes, a measure of equity financing need predicts CG improvements in the first half of the sample period, but only for firms in the lower governance regime, not for firms in the higher regime. This is the first article to find evidence for firm financial characteristics predicting CG changes, consistent with theoretical predictions, including stronger effects for firms in the lower governance regime.

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Financial Regulation & Corporate Governance

Nearer to Thee: Cy Près and Religious Discrimination

Scholarship Abstract In the law of charitable trusts, courts wield exceptional power with respect to two equitable remedies—cy près and the closely related doctrine of deviation—they . . .

Abstract

In the law of charitable trusts, courts wield exceptional power with respect to two equitable remedies—cy près and the closely related doctrine of deviation—they can confer on trusts that have purposes or terms rendered ineffectual. Either doctrine allows the court to prolong the trust’s life, perhaps forever. Historically, the invocation of these remedies was anathema to American courts. But increasingly, they have contemplated the possibility of extending the life of charitable trusts through application of these doctrines. In many ways, the evolution of these doctrines is owing to the jurisprudence involving trusts created for the benefit of a religious congregation or charity. Yet, this connection and the implications of judicial decisions regarding the right to these remedies has not garnered academic attention until now.

In this study, I analyze the extent to which courts have applied these equitable remedies to religious purpose charitable trusts via an econometric analysis of a universe of cases with a published opinion from an American court from the nation’s founding through 2019. This study provides a novel analysis of these equitable remedies and the history of religious purpose charitable trusts along a considerable timeline in American history. First, it explores how the equitable remedies of cy près and deviation were shaped by and shaped the caselaw around religious purpose charitable trusts, elucidating the simultaneity of the recognition of each as valid remedy and trust. Second, it examines the possible bias of the courts in awarding these remedies to certain religious groups but not others, ultimately finding that trusts created for the benefit of Catholic churches and charities were deemed less worthy of these remedies by the courts, all else equal. These findings have implications not only for understanding the application of these equitable remedies more deeply but also for uncovering the implicit and overt bias of the courts in cases where it has no actual basis.

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Financial Regulation & Corporate Governance

Broadband Deployment, Pole Attachments, & the Competition Economics of Rural-Electric Co-ops

TOTM In our recent issue brief, Geoffrey Manne, Kristian Stout, and I considered the antitrust economics of state-owned enterprises—specifically the local power companies (LPCs) that are government-owned . . .

In our recent issue brief, Geoffrey Manne, Kristian Stout, and I considered the antitrust economics of state-owned enterprises—specifically the local power companies (LPCs) that are government-owned under the authority of the Tennessee Valley Authority (TVA).

While we noted that electricity cooperatives (co-ops) do not receive antitrust immunities and could therefore be subject to antitrust enforcement, we didn’t spend much time considering the economics of co-ops. This is important, because electricity co-ops themselves own a large number of poles and attaching to those poles at reasonable rates will be important to effectuate congressional intent to deploy broadband quickly in the rural areas those co-ops generally serve.

Read the full piece here.

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Telecommunications & Regulated Utilities

Common Ownership, Competition, and Corporate Governance

Scholarship Abstract This paper presents a theoretical framework for determining the ownership stakes held by financial investors in companies competing in the same product market, or, . . .

Abstract

This paper presents a theoretical framework for determining the ownership stakes held by financial investors in companies competing in the same product market, or, in other words, the level of common ownership. In our model, the primary motivation for these investors is the anticipation of capital gains resulting from the impact of common ownership on product market competition, which leads to increased profitability for the firms involved. On the other hand, common ownership undermines effective corporate governance by reducing monitoring, increasing extraction of private benefits by the manager, and inhibiting investments that contribute to firm value. These negative effects on corporate governance act as limiting factors, ultimately determining the equilibrium level of common ownership.

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Financial Regulation & Corporate Governance

The Court in the Boy Scouts Bankruptcy Fails to Do Its Duty

Popular Media The traditional Boy Scout oath was that each scout should “do his duty.” Unfortunately, in the bankruptcy case dealing with the fallout from the horrendous . . .

The traditional Boy Scout oath was that each scout should “do his duty.” Unfortunately, in the bankruptcy case dealing with the fallout from the horrendous sexual abuse scandal, the bankruptcy court failed to do its duty. Instead of looking out for those who were victimized, the case has turned into another feeding frenzy by class action lawyers. To rectify this miscarriage of justice, appeals courts should take a second look.

Read the full piece here.

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Financial Regulation & Corporate Governance

Stakeholder Capitalism: Theft, Path to Central Planning, or Both?

Scholarship Abstract Stakeholder capitalism is being pushed both by ideological partisans who have little respect for ownership rights and, perhaps worse, by those who would benefit . . .

Abstract

Stakeholder capitalism is being pushed both by ideological partisans who have little respect for ownership rights and, perhaps worse, by those who would benefit financially from more exclusionary capital markets. Moreover, the managerial incentives created by environmental, social, and governance (ESG) initiatives are likely to hurt all constituencies to the benefit of managers who are charged with overseeing their implementation. Still further, the ESG movement is poised to create a toxic mix of government and business, the end result of which will be the broad destruction of social value and a decline in human flourishing.
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Financial Regulation & Corporate Governance

Has Sarbanes-Oxley Made Insurance Riskier?

Popular Media The Sarbanes-Oxley Act of 2002 (SOX)—named for its chief sponsors, former Sen. Paul Sarbanes (D–Md.) and former Rep. Mike Oxley (R–Ohio)—was intended to restore trust . . .

The Sarbanes-Oxley Act of 2002 (SOX)—named for its chief sponsors, former Sen. Paul Sarbanes (D–Md.) and former Rep. Mike Oxley (R–Ohio)—was intended to restore trust in the transparency of publicly traded companies after the collapses of WorldCom and Enron Corp. revealed that their auditors had certified financial reports that overstated the firms’ assets and massively understated their liabilities.

But, of course, “transparency” isn’t quite the same thing as prudential safety and soundness. In the insurance space, more specifically, transparency doesn’t necessarily equal solvency.

Read the full piece here.

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Financial Regulation & Corporate Governance