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All of us here at the Business Law Prof Blog join all those inside and outside the legal blogging community who are today mourning the loss of Dan Markel.  Our thoughts and prayers go out to all the loved ones he left behind. 

From PrawfsBlawg (here):

We Have Lost Our Beloved Friend, Dan Markel

We write this together, all of us, as a community. Our friend Dan Markel has been taken from us, suddenly and terribly. His law school, the Florida State University College of Law, will issue an announcement in due time. We do not have all the details, but our understanding is that Dan was shot and killed. Painful as it is to say that, and as little as we know, the early news reports left enough room for speculation that it seemed necessary to say that much. The terrible, senseless nature of his loss makes it all the harder to bear.

All of us here on Prawfsblawg live in different places and come from different backgrounds. What we have in common, with many others, is Dan. His network of friends and loved ones–and he had a great deal of love for all his many friends…

As Haskell Murray previously noted, after Justice Jack Jacobs of the Delaware Supreme Court announced his retirement, Governor Jack Markell quickly nominated a replacement – Karen Valihura – who would be only the second woman justice in the Court’s history.  Valihura was confirmed on June 25.

But shortly after Justice Valihura’s nomination was announced, Justice Carolyn Berger – Delaware’s first woman justice – announced her own retirement.  Subsequently, Justice Berger stated that she was retiring because Governor Markell had not taken her seriously as an applicant for the Chief Justice slot, which was eventually filled by Leo Strine.  She further stated that women face an uneven playing field in judicial nominations in Delaware.

I won’t even begin to speculate about the truth behind Justice Berger’s comments, but I will say that these issues highlight, for me, the extremely problematic nature of Delaware’s dominance in shaping the nation’s corporate law.  Most public companies are incorporated in Delaware; companies reincorporate in Delaware when they expect to undergo large transactions likely to be challenged by shareholders, and other states tend to follow Delaware’s lead when interpreting their own law.  (In response to a claim that Delaware is only one state, Stephen Bainbridge rejoined…

Anne Tucker recently blogged about the relationship between corporate social performance and corporate financial performance.  She discussed the 2009 article “Does it Pay to Be Good?” in which the authors found a small positive effect on financial performance based upon a meta-analysis of 251 effects in 214 manuscripts.

In the course of my summer research, I came across a 2014 working paper entitled “Everybody’s Talking But is Anybody Listening? Stock Market Reactions to Corporate Social Responsibility Communications.” Professors Kun Yu, Shuili Du and C.B. Bhattacharya assert that theirs is the first to examine whether and how the stock market reacts to voluntary non-financial disclosure, namely stand-alone CSR reports. They conclude that non-financial CSR reports “play a critical role in supplementing firm financial disclosure and enhancing information transparency to investors and other important stakeholders.”

For those who aren’t familiar with CSR reports, they typically include information about firm performance in human resources, the environment, corporate governance, suppliers, customers, community engagement, and other relevant factors.  Examples of some good CSR reports are here. The study’s sample size consisted of Fortune 500 companies that released CSR reports between 2005-2011– 139 firms with 328 release dates during the relevant period.…

Like my co-editor, Haskell Murray, I am participating in an on line symposium on Hobby Lobby over at the Conglomerate.  My piece focuses on the boundaries set (or left open) by the opinion and raises this new issue:

The Court framed the case as an “important question of religion and moral philosophy, namely, the circumstances under which it is immoral for a person to perform an act that is innocent in itself but hat has the effect of enabling or facilitating the commission of an import act by another.”  The corporate plaintiff didn’t have to violate its beliefs (that feels like an absurd statement), but taking an action that permitted a third party employee to possibly violate the beliefs of the corporation was a sufficient burden.  This is also ignores that the contraceptives at issue could be used for medical reasons unrelated to lifestyle choices.  Here is where I struggle the most with the reasoning of the Majority.  Employers pay employees subject to minimum wage laws. Employers have no guarantee that the employees will use the compensation in a manner consistent with the employer’s religious views.  Why is it different when the compensation comes in the form of employer-provided

…

Today I am highlighting a very interesting economics article exploring the relationship between corporate social performance and corporate financial performance.  

Scholars have been searching for a link between corporate social performance (CSP) and corporate financial performance (CFP) for thirty-five years. If only doing good could be connected to doing well, then companies might be persuaded to act more conscientiously, whether in cleaning up their own questionable conduct (Campbell, 2006) or in redressing societal ills (Porter & Kramer, 2006). A positive link between social and financial performance would legitimize corporate social performance on economic grounds, grounds that matter so much these days (Useem, 1996). It would license companies to pursue the good—even incurring additional costs—in order to enhance their bottom line and at the same time contribute more broadly to the well-being of society.

In DOES IT PAY TO BE GOOD?, three economists (Joshua Margolis,  HIllary Anger Elfenbein, and James P. Walsh) perform a meta analysis of 251 effects in over 200 manuscripts to examine the relationship between CSP and CFP.  They find a small positive effect. Most importantly, the articles engages in a rich conversation (and critique) of empirical studies in this area and suggests parameters for future research.  

This paper is accessible for non-economists…

Reason.com has an interesting piece on the use of fallacious or unsupportable economic arguments by politicians.

My favorite economic fallacy, which the Reason article doesn’t discuss, is the use of multipliers to falsely exaggerate the effect of government spending. Universities tend to do this a lot: “Every taxpayer dollar spent at Enormous State University results in a $50 gain to the state economy.” To justify claims like this, you simply trace the dollars spent through multiple levels. If the university spends $100 to repair a window, that’s $100 of additional business for a local company. That company, in turn, uses the $100 to pay an employee. The employee uses the $100 to buy groceries at a local grocery store. The store then pays the $100 to a local farmer for her produce. The farmer then spends the $100 to buy supplies, etc. We’re already up to a $500 effect, and there’s no need to stop there. If you trace it through a sufficient number of transactions, the effect is enormous, even though it’s still only $100.

Using that same reasoning, it’s obvious that the key to economic recovery is to significantly increase my salary. Each dollar I receive…

Since I suspect there is something of an obligation for all corporate law bloggers to weigh in on Hobby Lobby, I offer my thoughts.  I admit to some trepidation posting them because (and I blush to confess it) I haven’t been as immersed in the case as most other corporate professors have, so I feel like a bit of an outsider to the debate.  So, take these thoughts as coming from someone whose knowledge of the case comes chiefly from, well, the Supreme Court’s opinion.

[More under the cut]

Earlier this week, I did an interview for the Corporate Social Responsibility podcast with David Yosifon on the Hobby Lobby case.  We walk through the elements of the ruling and discuss the potential implications.  It may be a little long if you are deeply familiar with the opinion, but it may also be a good overview of the ruling if you are looking to catch up on the issues while giving your eyes a rest.

-Anne Tucker

If copying is the highest form of flattery then re-posting is the blogger’s equivalent.  I got caught up reading this morning and it has left little time for writing.  Here’s what I spent my morning reading. The first two are very powerful and the remainder are practical.

Happy Reading!

-Anne Tucker

I just posted my latest crowdfunding article, Shooting the Messenger: The Liability of Crowdfunding Intermediaries for the Fraud of Others, on SSRN. Here’s the abstract:

The new federal crowdfunding exemption in section 4(a)(6) of the Securities Act requires that securities be sold only through regulated intermediaries—brokers and funding portals. Much of the information appearing on those crowdfunding intermediaries’ platforms will be provided by someone other than the intermediary. Crowdfunding intermediaries must post extensive disclosure provided by issuers of the securities being sold. Under the SEC’s proposed rules, they must also provide communication channels where prospective investors and others may post comments.

Neither the statute nor the proposed rules say much about the intermediary’s obligation to verify the information posted by others or its liability if that information is false or misleading. The result under the securities antifraud rules is unclear. Unless the law is clarified, crowdfunding intermediaries face a significant risk of liability that could make crowdfunded securities offerings unfeasible.

I argue that crowdfunding intermediaries should be liable for information provided by others in only three circumstances: (1) if they knew the posted information was false; (2) if they were aware of red flags that should have alerted them…