ABSTRACT According to the conventional wisdom, “one size does not fit all” in corporate governance. Firms are heterogeneous with respect to their governance needs, implying that the optimal corporate governance structure must also vary from firm to firm. This one-size-does-not-fit-all axiom has featured prominently in arguments against numerous corporate law regulatory initiatives, including the SEC’s failed Rule 14a-11—an attempt to impose mandatory, uniform “proxy access” on all public companies—which the D.C. Circuit struck down for inadequate cost–benefit analysis. This Article presents an alternative theory as to the role of standardization in corporate governance—in which investors prefer standardized terms—and empirical evidence…
Author: Reilly S. Steel
ABSTRACT This Article presents an empirical analysis of the connection between bargaining power and contract design using an original dataset of over 5,500 equity and debt venture financings from 2004–2015. Using the total supply of venture capital in the U.S. as a measure of relative bargaining power between entrepreneurs and investors, this Article finds that venture capital supply has a statistically significant relationship with price and non-price terms in both equity and debt financings. These results contradict one of three theoretical accounts of bargaining power and support the other two. To download a full PDF of this article, click…
ABSTRACT Prior to the global financial crisis, financial innovation was viewed very positively, resulting in a laissez-faire, deregulatory approach to financial regulation. Since the crisis the regulatory pendulum has swung to the other extreme. Post-crisis regulation, plus rapid technological change, have spurred the development of financial technology (FinTech). FinTech firms and data-driven financial service providers profoundly challenge the current regulatory paradigm. Financial regulators increasingly seek to balance the traditional regulatory objectives of financial stability and consumer protection with promoting growth and innovation. The resulting regulatory innovations include RegTech, regulatory sandboxes, and special charters. This Article analyzes possible new regulatory approaches,…
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The development of autonomous vehicles has been steadily progressing in recent years.[1] From advances in collision avoidance systems to the development of self-driving technologies, automakers have been working to increase the automation of cars, leading to a reduction in the risk of car accidents, which are primarily caused by human error.[2] Given the push towards developing self-driving technology in cars, the House of Representatives passed the Safety Ensuring Lives Future Development and Research in Vehicle Evolution (“SELF DRIVE”) Act, with the purpose of helping “ensure the safe and innovative development, testing, and deployment of self-driving cars across the country.”[3] The…
In our ever-expanding technological landscape, regulators and lawmakers often find themselves in the difficult position of creating new policies to keep up with innovative companies and products. One such area of struggle is the new sharing economy. Companies of the sharing economy offer consumers a platform to share products or services, such as a temporary living space, a cab ride, or a workspace. Since this economic model is still developing, the negative consequences of the sharing economy have not been fully evaluated. However, the companies and employees who are being displaced by the sharing economy are voicing a variety of…
The Weinstein case began as a Hollywood movement but has gained the momentum needed to change workplace culture and even corporate governance. Since the New York Times exposé,[1] Weinstein faces over 70 accusations of sexual misconduct, at least 14 police investigations, and a possible indictment.[2] Manhattan District Attorney Cyrus Vance is expected to present his case before a grand jury in the upcoming weeks.[3] The basis for Weinstein’s criminal liability is clear. Weinstein’s criminal liability is clear unlike his corporate liability.[4] Appropriately, the conversation now turns to the institutions that allowed these crimes. Specifically, do corporate directors have a duty…
The rise of automation and artificial intelligence has been revolutionizing industries across the spectrum with increasing speed and breadth. Technological innovation promises massive improvements in efficiency, accuracy and price, but may pose an existential threat to employment by making human labor obsolete. And it appears the financial and investment industries have not escaped this creeping trend towards automation. The exponential rise of “robo-advisors” – algorithm-driven investment advisors – over the past decade has sparked major changes within these industries.[1] In order to survive the “rise of the robots,” it is essential for both humans and the law to understand the…
Throughout history, people have concealed their wealth to evade taxes or avoid confiscation by the government.[1] More recently, organized criminal gangs, drug lords and various terrorist groups have all needed to conceal their illicit gains and move money around the world without the knowledge of the authorities.[2] Enter money laundering—broadly defined as an attempt to obfuscate or “launder” illegally sourced funds, effectively concealing the true source of the money by portraying it as the result of a legitimate business enterprise.[3] With the rise of bitcoin and other cryptocurrencies, many have worried that their seemingly anonymous and decentralized nature would result…
Reports that Amazon obtained pharmacy wholesale licenses in 12 states emerged at the end of last month and caused commotion in the healthcare industry.[1] After the report was released, many pharmaceutical companies’ stock prices dropped.[2] This seems like the beginning of another industry disruption, which Amazon has become very skilled in.[3] Although this has caused an uproar, these wholesale licenses allow Amazon to distribute surgical and medical equipment—not prescription drugs. In order for Amazon to become a threat to this industry, it needs to obtain pharmaceutical licenses, which would enable the company to distribute prescription drugs. Even then, there are…