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Sarah Haan recently posted a new detailed and meticulously documented draft article that we’ll likely be talking about for years to come.  In it, she presents a forgotten history of an era when women came to outnumber men as the stockholders of public corporations.  At the time, many corporations disclosed the gender breakdowns for their stockholders.  Early on, the Wall Street Journal covered the rise of women as shareholders, revealing that more women than men held stock in American Express, Western Union, and Eastman Kodak as of 1916.  Women bought stock at a robust clip for years afterward as well and gained clear per capita majorities at many public companies.

Haan points out that women likely sought stock ownership and participation earnestly because it allowed them a much greater measure of equality than the labor market.  Each share received the same dividend, regardless of the owner’s gender.  In contrast, the labor markets reduced (and continue to reduce) women’s returns.

Women began to outnumber men as shareholders around the time Berle and Means shaped the course of corporate law and theory with their distinction between dispersed, uninformed, and passive shareholders and active management.  Haan explains that modern scholars have largely forgotten…

Via Forbes:

The world lost an intellectual giant this week when the economist Walter E. Williams passed away. Williams was the John M. Olin Distinguished Professor of Economics at George Mason University, an economist’s economist, a scholar’s scholar, and an unparalleled communicator of economic wisdom and ideas. He loved liberty, defended it eloquently, and went to great lengths to show how good intentions don’t readily translate into good outcomes.

Thomas Sowell, as quoted by his Twitter tribute account:

There was a time when the black conservative community would have consisted of me and Walter Williams. I know Walter used to say the two of us should never fly on the same plane otherwise the whole movement will disappear if the plane goes down. 

But see:

Here are some prominent Conservative Black Intellectuals who have written extensively on race/ethnic relations. Many have argued, with evidence, that affirmative action does not largely help its intended beneficiaries, and that statistical disparities do not imply discrimination[: Thomas Sowell, Walter E. Williams, Shelby Steele, Jason Riley, Candace Owens, Clarence Thomas, Ben Carson, John McWhorter, Larry Elder, Star Parker.] Will any of their books and articles be included in the enhanced efforts…

Over the summer, I had the good fortune of hearing Professor Christina Parajon Skinner present her important and timely work on Central Banks and Climate Change.  I was thrilled to see that this article was recently posted to SSRN (here) and I’m reading it now!  Here’s the abstract:

Central banks are increasingly called upon to address climate change. Proposals for central bank action on climate change range from programs of “green” quantitative easing, to increases in risk-based capital requirements to deter banks from lending to climate-unfriendly business. Politicians and academics alike have urged climate risk as both macroeconomic and financial stability risk. Nevertheless, in the U.S., the Federal Reserve has been measured in its response to climate change.

This article considers the scope of the Fed’s policy and legal authority to address climate change. Drawing on insights from corporate finance and macroeconomics, the article first considers how climate risk presents risks that are policy problems for the Fed. From that policy basis, the article constructs a legal framework — stitching together a variety of Fed laws, regulations, and precedents of practice — to discern where the Fed can legitimately move forward on climate change and the areas…

Came across the abstract below as part of my WestClip Alerts, you can find the SSRN version here.

The approaching anniversary of E.I. duPont deNemours & Co. v. Christopher is the impetus for this exploration and evaluation of the role of “commercial morality” in trade secret misappropriation doctrine. Christopher is the well-known industrial espionage case in which the U.S. Court of Appeals for the Fifth Circuit held that flying an airplane over an under-construction manufacturing facility to take photos of briefly-but-inevitably exposed trade secrets was an “improper means” of accessing a trade secret and was contrary to standards of “commercial morality.”

Commercial morality has played a significant but shifting role in trade secret law over the past seven decades and has become an important part of the contemporary trade secret doctrine lexicon, yet courts and commentators have not explored the meaning of this term. This study fills that gap in the literature by analyzing the origins of the commercial morality doctrine and its proper application in trade secret law. The development of U.S. commercial morality doctrine breaks down into four distinct time periods that illustrate the evolution of the doctrine in trade secret law over time, including the shift…

This holiday weekend, I continue my blog series on the March of Litigation Limits in Corporate Constitutive Documents (most recent prior posts here, here, and here – and those link back to earlier entries).

In Salzberg v. Sciabacucchi, 227 A.3d 102 (Del. 2020), the Delaware Supreme Court held that corporate charters may contain provisions selecting federal courts as the forum for Securities Act/Section 11 claims under the federal securities laws.  That, of course, raised the question whether non-Delaware courts would treat these provisions as enforceable.

We have two rulings on that so far: In September, there was Wong v. Restoration Robotics, Case No. 18CIV02609 (Cal. Sup. Ct. Sept. 1, 2020), and then, earlier this month, we got In re Uber Technologies Securities Litigation, Case No. CGC19579544 (Nov. 16, 2020) (more details on the Uber case available at Kevin LaCroix’s blog post).

Both courts, correctly in my view, recognized that the enforceability, or not, of these provisions is not a matter of internal affairs and is therefore not governed by Delaware law.  Instead, both applied California law.  After that, both courts examined California contract doctrine and concluded that the provisions were not unconscionable…

Dear BLPB Readers:

The Department of Finance, Insurance, Real Estate and Law, at the University of North
Texas G. Brint Ryan College of Business, invites applications for the appointment of Lecturer
in Business Law starting in the spring 2021 semester or possibly fall 2021. The lecturer will
teach four business law courses per semester, advise students and provide service to the
department, college and university. Teaching will be at the Denton main campus and Frisco
branch campus (face-to-face and/or online/remote) and will include courses such as the
Legal Environment of Business, International Business Law, Real Estate Law, Corporation
Law, and Law for Accountants and Managers.  Complete announcement is here: Download UNT lecturer job ad

For the one BLPB reader who doesn’t also check in on The CLS Blue Sky Blog:

Based on an analysis of public communications around earnings announcements, we find that managers are 34 to 43 percent more likely to cite stakeholder value maximization during periods following earnings announcements that fall short of market expectations. This finding is consistent with concerns that the inability to measure stakeholder value may reduce managers’ accountability for firm performance….

Managers seem to be aware that stakeholder-oriented goals may reduce their accountability for performance, but does the manager’s push for stakeholder objectives sway the board’s evaluation of an underperforming manager? We use CEO turnover-performance sensitivity, a measure used in numerous prior studies of CEO evaluation, to determine whether this behavior produces any observable benefit to the manager. Indeed, we find that it does; CEOs that cite stakeholder value maximization as an objective are less likely to see turnover following poor performance.

https://clsbluesky.law.columbia.edu/2020/11/25/is-stakeholder-value-an-excuse-for-underperfoming-managers/

The Securities and Exchange Commission today voted to propose rules that, on a temporary basis and subject to percentage limits (no more than 15% of annual compensation), dollar limits (no more than $75,000 in three years) and other conditions, would permit an issuer [to] provide equity compensation to certain “platform workers” who provide services available through the issuer’s technology-based platform or system.

The proposed rules reflect the significant evolution that has taken place in the composition and participation of the workforce since the Commission last substantively amended Rule 701 or Form S-8, particularly the development of the so-called “gig economy,” which has resulted in new work relationships.

https://www.sec.gov/news/press-release/2020-293

On November 6, I had the privilege of participating in Case Western Reserve Law School’s George A. Leet Business Law Symposium, “Equity Holdings in the Three Index Funds: Anti-Competitive Effects, Fiduciary Duties and Environmental, Social and Governance Issues.”  The agenda for the full symposium is here; I spoke on the first panel, “Fiduciary Obligations of Index Fund Managers,” alongside Jill Fisch, Darren Rosenblum, and Bernard Sharfman (moderated by Anat Beck).  The entire symposium is now online at YouTube, so you can watch and, in particular, admire the care I took with my Zoom background:

Carlos Berdejó recently posted a fascinating new article to SSRN, entitled Financing Minority Entrepreneurship.  In it, he examines the reasons why minorities struggle to access capital when starting businesses and takes a close look at how existing programs have not succeeded at increasing access to capital.  He argues that a successful program will increase equity and hybrid investment while also addressing informational asymmetry issues.  

He proposes that a new type of Small Business Investment Company (SBIC) — a Local Impact Small Investment Company (LISBIC) might offer a way to address many of the barriers faced by minority-owned businesses.  A LISBIC would do much of what a SBIC does, but with a more localized focus.  This local focus would allow the LISBIC to better evaluate soft-information about investment opportunities while its structure and design would generate credibility with investors.

The article also explores many practical and technical challenges to implementing such a program.  It left me with the sense that this sort of program would be achievable and might even pass through a divided Congress.  Hopefully, policymakers and legislators will consider this approach to increase access to capital.