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So, Halliburton Co. v. Erica P. John Fund, Inc. (2014) (“Halliburton II”)  came down, and to call it a change in the law is too generous – at best, it might qualify as a “clarification.”  After all of the angst  over the possibility that the Court might give plaintiffs the burden of proving the price impact of a particular misstatement, the Court soundly rejected that argument, reaffirmed Basic, Inc. v. Levinson (1988), and instead merely allowed defendants to rebut the fraud on the market presumption.  Because demonstrating a lack of price impact is as difficult as showing price impact in the first place, I don’t expect Halliburton II to change much in existing law – if anything, some of the rhetoric may make matters easier for plaintiffs.

[More under the cut]

For those of you needing a repreive from the breaking SCOTUS opinions this week and the rush to digest the latest in a string of controversial cases (and Hobby Lobby still hasn’t come down), I come bearing gifts in the form of a classic:  Margaret Blair & Lynn Stout’s A Team Production Theory of Corporate Law.  

I am home from a lovely conference at Seattle University School of Law’s Adolf A. Berle Jr. Center on Corporations, Law & Society.  The conference (Berle VI)  focused on the team production theory as it was originally conceived, its role in scholarship over the last 15 years, and how it is an integral component of emerging scholarship.  Most of us are familiar with the seminal paper and its conceptualization of the firm as creating situations where different stakeholders invest team-specific resources creating nonseparable gains that aren’t easily addressed by contract.  As most readers will know, Blair and Stout theorized that in this situation where various stakeholders make different types of investment (capital, human/labor, etc.) and where it is hard to tell what is earned from each separate contribution, that the stakeholders leave decisions up to the board of…

Happy summer! Now that the summer solstice has passed, if you’ve ever wondered about language choice and the effects it might have on corporate behavior and objective, I invite you to check out an essay I recently made public. Spoiler Alert: I am a Seuss fan – the essay was written in conjunction with a symposium on Dr. Seuss™ and Civil Society so it requires some willing suspension of disbelief… although not entirely because I do believe that the core proposition made is sound. Here’s a short abstract:

While sustainability proponents have been building their case for why corporations should care about more than profits, this essay argues that the case for sustainability or “CSR” cannot be successfully made without engaging with the entrenched norm of shareholder primacy. This essay makes the modest yet underexplored claim that any attempt to amend, rewrite, interrogate, or, at the extreme, debunk the shareholder primacy/private purpose view of the corporation must successfully counter the “framing effect” and “framing bias” that shareholder primacy enjoys.

The full essay is available here. And if you’re in the mood for something even more off the beaten path, there is a poem in the addendum. I invite you…

I hope you will excuse some self-promotion, but the third edition of my book Basic Accounting Principles for Lawyers is now available.

For those of you who aren’t familiar with the book, it’s a short, introduction to accounting principles and the accounting environment. It’s aimed at students (and lawyers) who know nothing about accounting; I try to keep the discussion as light and non-technical as possible, with a little humor sprinkled here and there. It’s intended to be used as a supplement in courses that draw on accounting, but you can also use it to pick up some accounting on your own without falling asleep. (No guarantees.)

Support a starving artist and buy a copy.

Professor Urska Velikonja has just published a new article arguing that the trend toward corporate boards with a “supermajority” – not merely a majority – of independent directors is part of a strategy by large institutional investors and corporate managers to fend off more substantive forms of corporate regulation that would reduce shareholder wealth.  Her thesis is that when corporations engage in risky and illegal behavior, they – and their shareholders – capture gains while externalizing losses; thus, large shareholders and managers have an interest in staving off real regulation.  The easiest way to do that is by advocating for greater board independence – it’s functionally a call for self-regulation. 

I think the thesis has an intuitive appeal – similar to, for example, The Failure of Mandated Disclosure, which, as Steven Bradford pointed out, argues that we too often default to additional and wasteful disclosures as a substitute for substantive regulation (see also Joan Heminway’s post on disclosure creep).

In the case of Professor Velikonja’s argument, though, I think the picture is slightly more complicated.  Many institutional investors are employee or union pension funds – in other words, their beneficiaries are exactly the third parties to whom corporate misbehavior is…

The Investment Company Institute released its annual factbook (summarizing data trends for 2013) in May.  The full report is available for download here, and chapter overviews are available here.  

Like many others, I discovered the ICI factbook when I first started researching mutual funds.  I have cited to the annual reports extensively in three subsequent papers.  Finding this source was, and continues to feel like a stroke of really good luck because it can provide numbers to back an assertion and is a excellent source for describing current market trends.  The graphs are also excellent visual aids for presentations and class (with attribution, of course).

I plan to highlight a few sections of the report over the next several weeks.  This week’s installment will focus on trends of mutual fund investment.  The academic debate about indirect ownership long ago peaked, but the trend hasn’t.  To my mind, understanding the ways in which how people invest in the market (through funds) changes or exerts pressure on our corporate governance model and the role that funds play in our securities market are two of the biggest challenges of corporate law.  More on this topic later.  For now, feast on…

So, I’ve been thinking a lot about “happiness” lately. Not just because of Pharrell’s catchy tune, but more so because I am at the beginning of a project where I am questioning whether there is room for happiness and well-being in corporate law (both in theory and in practice).

First, what do I mean by happiness? To be honest, I am not quite sure yet and that may be part of my search and exploration.  Happiness can be thought of in terms of “raw subjective feeling”, where a happy life is one that “maximizes feelings of pleasure and minimizes pain” (the Hedonism Theory). It can also be thought of in terms of fulfilling whatever it is you desire (the Desire Theory) and yet still, happiness could also be viewed as consisting of achieving “things” (for lack of a better word) that are “objectively valuable” – for example, having financial security, love, a better education, and good health (the Objective List Theory). Additionally, happiness could be thought of as encompassing all three of these theories. For example the Authentic Happiness Theory developed by Martin E.P. Seligman and Ed Royzman, views happiness as consisting of “three distinct kinds of happiness:…