Pub Date : 1900-01-01DOI: 10.36639/mbelr.8.1.suitability
Mikovhe Maphiri
South African small- to medium-sized enterprises (“SMEs”) are the bread and butter of our economy. Providing much-needed employment and developing the skills of historically disadvantaged persons formally and informally are some of the most significant benefits of SMEs in a developing country such as South Africa. However, despite these significant contributions to the socioeconomic development of the country, SMEs generally have the lowest survival rates in the world as compared to large enterprises globally, resulting in high rates of business failure and the loss of jobs which these entities create. The Companies Act of 2008 replaces the previous judicial management corporate reorganization procedure for companies in South Africa with the new business rescue model and a compromise between a company and its creditors. Business rescue provides companies in financial distress with the opportunity to reorganize, strategize, and devise reorganization measures that are useful, efficient, and capable of yielding a better return for creditors than liquidation. This Comment comparatively analyzes whether the South African corporate rescue systems, past and present, have developed in line with the needs and interests of South African SMEs in a manner that is efficient and sensitive to the inherent weakness of our economy and the distinctive needs of SMEs in a developing country such as South Africa.
{"title":"The Suitability of South Africa's Business Rescue Procedure in the Reorganization of Small-to-Medium-Sized Enterprises: Lessons from Chapter 11 of the United States Bankruptcy Code.","authors":"Mikovhe Maphiri","doi":"10.36639/mbelr.8.1.suitability","DOIUrl":"https://doi.org/10.36639/mbelr.8.1.suitability","url":null,"abstract":"South African small- to medium-sized enterprises (“SMEs”) are the bread and butter of our economy. Providing much-needed employment and developing the skills of historically disadvantaged persons formally and informally are some of the most significant benefits of SMEs in a developing country such as South Africa. However, despite these significant contributions to the socioeconomic development of the country, SMEs generally have the lowest survival rates in the world as compared to large enterprises globally, resulting in high rates of business failure and the loss of jobs which these entities create. The Companies Act of 2008 replaces the previous judicial management corporate reorganization procedure for companies in South Africa with the new business rescue model and a compromise between a company and its creditors. Business rescue provides companies in financial distress with the opportunity to reorganize, strategize, and devise reorganization measures that are useful, efficient, and capable of yielding a better return for creditors than liquidation. This Comment comparatively analyzes whether the South African corporate rescue systems, past and present, have developed in line with the needs and interests of South African SMEs in a manner that is efficient and sensitive to the inherent weakness of our economy and the distinctive needs of SMEs in a developing country such as South Africa.","PeriodicalId":177599,"journal":{"name":"Michigan Business & Entrepreneurial Law Review","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116026556","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 1900-01-01DOI: 10.36639/mbelr.7.2.shock
Layan Charara
Over the last several decades, the Bretton Woods Institutions have come to be drivers of policy in the realms of economic liberalization and development, exceeding their original mandates of fostering monetary cooperation and facilitating post-war reconstruction. The structural adjustment programs of the World Bank and the International Monetary Fund have engendered mixed results–delivering some countries from financial crises, while inciting riots and compounding state failure in others. Such varied experiences suggest there is some disconnect between the conditions to lending promulgated by these institutions and the realities on the ground. This Note will trace the evolution of high conditionality lending vis-à-vis a number of nations and argue that a relationship between participatory democracy and structural adjustment programs should be forged in the interest of successful lending and authentic national ownership of programs.
{"title":"Shock Therapy, Social Engineering, and Financial Discipline: What Does an Increasingly Financialized World Mean for Democratic Participation?","authors":"Layan Charara","doi":"10.36639/mbelr.7.2.shock","DOIUrl":"https://doi.org/10.36639/mbelr.7.2.shock","url":null,"abstract":"Over the last several decades, the Bretton Woods Institutions have come to be drivers of policy in the realms of economic liberalization and development, exceeding their original mandates of fostering monetary cooperation and facilitating post-war reconstruction. The structural adjustment programs of the World Bank and the International Monetary Fund have engendered mixed results–delivering some countries from financial crises, while inciting riots and compounding state failure in others. Such varied experiences suggest there is some disconnect between the conditions to lending promulgated by these institutions and the realities on the ground. This Note will trace the evolution of high conditionality lending vis-à-vis a number of nations and argue that a relationship between participatory democracy and structural adjustment programs should be forged in the interest of successful lending and authentic national ownership of programs.","PeriodicalId":177599,"journal":{"name":"Michigan Business & Entrepreneurial Law Review","volume":"122 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127067816","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 1900-01-01DOI: 10.36639/mbelr.10.2.considering
Michael Zytnick, Alaina Gimbert
As part of a bank’s financial crime compliance program, it is increasingly common to screen and halt the processing of a payment order for compliance investigation where reference is made to a potential, but unconfirmed, target of United States economic sanctions. This essay discusses challenges under Article 4A of the Uniform Commercial Code concerning the timing of such an investigation and the creation of potential liability where a bank wrongly accepts by execution a previously halted payment order received from a sender following five funds transfer business days after the relevant execution date or payment date of that order. In Part II, this paper presents a brief overview of the use of funds transfers in the United States and reviews the application of Article 4A of the Uniform Commercial Code, including rejection, acceptance, cancellation, and amendment of a payment order. In Part III, the paper overviews United States economic sanctions, the implementation by banks of technology designed to identify and halt the processing of a payment order referencing a potential sanctions target, and the timeframe that may be required to investigate a halted payment order. In Part IV, the paper reviews application of Article 4A’s automatic cancellation and “money back guarantee” provisions where a payment order under its purview is wrongly effected and loss allocation between funds transfer parties for such events. Part V describes possible contractual and legislative changes to address the balance of Article 4A’s automatic cancellation of an unaccepted payment order after five funds transfer business days, sanctions compliance efforts undertaken by banks, and the policy goal of completing funds transfers efficiently.
{"title":"Considering Sanctions Compliance in Light of UCC 4A","authors":"Michael Zytnick, Alaina Gimbert","doi":"10.36639/mbelr.10.2.considering","DOIUrl":"https://doi.org/10.36639/mbelr.10.2.considering","url":null,"abstract":"As part of a bank’s financial crime compliance program, it is increasingly common to screen and halt the processing of a payment order for compliance investigation where reference is made to a potential, but unconfirmed, target of United States economic sanctions. This essay discusses challenges under Article 4A of the Uniform Commercial Code concerning the timing of such an investigation and the creation of potential liability where a bank wrongly accepts by execution a previously halted payment order received from a sender following five funds transfer business days after the relevant execution date or payment date of that order. In Part II, this paper presents a brief overview of the use of funds transfers in the United States and reviews the application of Article 4A of the Uniform Commercial Code, including rejection, acceptance, cancellation, and amendment of a payment order. In Part III, the paper overviews United States economic sanctions, the implementation by banks of technology designed to identify and halt the processing of a payment order referencing a potential sanctions target, and the timeframe that may be required to investigate a halted payment order. In Part IV, the paper reviews application of Article 4A’s automatic cancellation and “money back guarantee” provisions where a payment order under its purview is wrongly effected and loss allocation between funds transfer parties for such events. Part V describes possible contractual and legislative changes to address the balance of Article 4A’s automatic cancellation of an unaccepted payment order after five funds transfer business days, sanctions compliance efforts undertaken by banks, and the policy goal of completing funds transfers efficiently.","PeriodicalId":177599,"journal":{"name":"Michigan Business & Entrepreneurial Law Review","volume":"16 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124414911","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 1900-01-01DOI: 10.36639/mbelr.8.2.whose
Gautam Sundaresh
This Comment looks at the debate as it has played out in the legal jurisprudence of the U.S. and the U.K. The analysis of each considers the three financial stages of a corporation’s existence that are specifically addressed in the debate today, i.e.: (i) solvency; (ii) insolvency; and (iii) the zone of insolvency. After setting out the current position, this Comment specifically addresses the various shortcomings and criticisms of the models adopted by each jurisdiction and offers observations on the status quo and the implementation of these models. On this basis, this Comment goes on to propose a model to be adopted by India, the Indian legal jurisprudence in this respect still being in its evolutionary stages and lacking the depth and the level of analysis found in the West.
{"title":"In Whose Interests Should a Company be Run? Fiduciary Duties of Directors During Corporate Failure in India: Looking to the West for Answers","authors":"Gautam Sundaresh","doi":"10.36639/mbelr.8.2.whose","DOIUrl":"https://doi.org/10.36639/mbelr.8.2.whose","url":null,"abstract":"This Comment looks at the debate as it has played out in the legal jurisprudence of the U.S. and the U.K. The analysis of each considers the three financial stages of a corporation’s existence that are specifically addressed in the debate today, i.e.: (i) solvency; (ii) insolvency; and (iii) the zone of insolvency. After setting out the current position, this Comment specifically addresses the various shortcomings and criticisms of the models adopted by each jurisdiction and offers observations on the status quo and the implementation of these models. On this basis, this Comment goes on to propose a model to be adopted by India, the Indian legal jurisprudence in this respect still being in its evolutionary stages and lacking the depth and the level of analysis found in the West.","PeriodicalId":177599,"journal":{"name":"Michigan Business & Entrepreneurial Law Review","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117328483","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This Article explores how U.S. authorities have enforced the FCPA against non-U.S. companies and tests the perception that the FCPA disproportionately impacts U.S. businesses. After briefly discussing the FCPA, its enforcement, and its reach, this Article examines corporate FCPA enforcement activity since the statute’s enactment in 1977. It finds that foreign firms have actually fared worse under the FCPA despite the fact that DOJ and the SEC have brought more enforcement actions against domestic companies in absolute terms. The average cost of resolving an FCPA enforcement action to non-U.S. corporations of resolving an FCPA enforcement action has been more than four times higher than it has been for domestic corporations: $72.3 million to $17.6 million. In recent years, the difference has been even more pronounced—in 2017, the averages were $150.3 million and $16.1 million, respectively. This Article also explores other ways in which FCPA enforcement has more dramatically affected foreign companies. For instance, U.S. enforcement authorities have more frequently required post-resolution obligations for foreign corporations. Between 2004 and 2018, nearly 60 percent of foreign companies involved in FCPA enforcement actions were subject to post-resolution obligations in the form of an independent compliance monitor, self-reporting, or a combination of the two, compared to only 54 percent of domestic companies. Finally, this Article offers some theories to explain these data.
{"title":"FCPA Enforcement Against U.S. and Non-U.S. Companies","authors":"M. Diamant, C. Sullivan, Jason H. Smith","doi":"10.36639/mbelr.8.2.fcpa","DOIUrl":"https://doi.org/10.36639/mbelr.8.2.fcpa","url":null,"abstract":"This Article explores how U.S. authorities have enforced the FCPA against non-U.S. companies and tests the perception that the FCPA disproportionately impacts U.S. businesses. After briefly discussing the FCPA, its enforcement, and its reach, this Article examines corporate FCPA enforcement activity since the statute’s enactment in 1977. It finds that foreign firms have actually fared worse under the FCPA despite the fact that DOJ and the SEC have brought more enforcement actions against domestic companies in absolute terms. The average cost of resolving an FCPA enforcement action to non-U.S. corporations of resolving an FCPA enforcement action has been more than four times higher than it has been for domestic corporations: $72.3 million to $17.6 million. In recent years, the difference has been even more pronounced—in 2017, the averages were $150.3 million and $16.1 million, respectively. This Article also explores other ways in which FCPA enforcement has more dramatically affected foreign companies. For instance, U.S. enforcement authorities have more frequently required post-resolution obligations for foreign corporations. Between 2004 and 2018, nearly 60 percent of foreign companies involved in FCPA enforcement actions were subject to post-resolution obligations in the form of an independent compliance monitor, self-reporting, or a combination of the two, compared to only 54 percent of domestic companies. Finally, this Article offers some theories to explain these data.","PeriodicalId":177599,"journal":{"name":"Michigan Business & Entrepreneurial Law Review","volume":"3 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130496812","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 1900-01-01DOI: 10.36639/mbelr.8.2.should
Chiara Mosca
Corporate law reveals its democratic background when it comes to the general meetings of shareholders, finding, on both sides of the Atlantic, its most tangible expression in the “one share, one vote” principle. While, in the political landscape, the “one person, one vote” standard is absolute dogma and weighting votes according to people’s preferences and interests has never proved feasible, in the corporate scenario the one share, one vote principle is constantly challenged by the incentives of companies and their shareholders to shape corporate rights according to specific needs. In this respect, some legislators (specifically in France and Italy) have provided mechanisms that allow more loyal shareholders to increase their voting power. Tenured voting (or time-phased voting rights) should be analyzed in light of the modern corporate governance debate, which calls for a stronger role for long-term investors. However, the other side of the coin should be considered: the increase in voting rights broadens the range of control-enhancing mechanisms, although specific sunset clauses (whether provided for by law or voluntarily opted in by companies) may restore the one share, one vote rule. The analysis suggests that the mechanism based on tenured voting is more transparent and potentially less stable than other common control-enhancing mechanisms and deserves to be considered in the debate. At the EU level, the possibility left to the Member States of weighting shareholders’ voting power according to their long-term interests, leads to legislative fragmentation across Europe. Specifically, in Italy, the adoption of tenured voting coupled with a tradition of ownership concentration sharply empowers controlling shareholders. At the same time, European takeover regulation plays an exogenous role in indirectly selecting the companies that adopt time-phased voting rights. The final result is completely mistrusted, as tenured voting rights disappoint their expectations and are rarely used to meet a true need of long termism. The paper describes the paradox that emerges when tenured voting rights interact with the core principles of the EU financial market law system, and it offers various ways to alleviate this difficult coexistence.
{"title":"Should Shareholders Be Rewarded for Loyalty? European Experiments on the Wedge Between Tenured Voting and Takeover Law","authors":"Chiara Mosca","doi":"10.36639/mbelr.8.2.should","DOIUrl":"https://doi.org/10.36639/mbelr.8.2.should","url":null,"abstract":"Corporate law reveals its democratic background when it comes to the general meetings of shareholders, finding, on both sides of the Atlantic, its most tangible expression in the “one share, one vote” principle. While, in the political landscape, the “one person, one vote” standard is absolute dogma and weighting votes according to people’s preferences and interests has never proved feasible, in the corporate scenario the one share, one vote principle is constantly challenged by the incentives of companies and their shareholders to shape corporate rights according to specific needs. In this respect, some legislators (specifically in France and Italy) have provided mechanisms that allow more loyal shareholders to increase their voting power. Tenured voting (or time-phased voting rights) should be analyzed in light of the modern corporate governance debate, which calls for a stronger role for long-term investors. However, the other side of the coin should be considered: the increase in voting rights broadens the range of control-enhancing mechanisms, although specific sunset clauses (whether provided for by law or voluntarily opted in by companies) may restore the one share, one vote rule. The analysis suggests that the mechanism based on tenured voting is more transparent and potentially less stable than other common control-enhancing mechanisms and deserves to be considered in the debate. At the EU level, the possibility left to the Member States of weighting shareholders’ voting power according to their long-term interests, leads to legislative fragmentation across Europe. Specifically, in Italy, the adoption of tenured voting coupled with a tradition of ownership concentration sharply empowers controlling shareholders. At the same time, European takeover regulation plays an exogenous role in indirectly selecting the companies that adopt time-phased voting rights. The final result is completely mistrusted, as tenured voting rights disappoint their expectations and are rarely used to meet a true need of long termism. The paper describes the paradox that emerges when tenured voting rights interact with the core principles of the EU financial market law system, and it offers various ways to alleviate this difficult coexistence.","PeriodicalId":177599,"journal":{"name":"Michigan Business & Entrepreneurial Law Review","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133695648","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 1900-01-01DOI: 10.36639/mbelr.8.2.ever-changing
Sari Rosenfeld
Liability under insider trading law continues to change as federal courts attempt to find new ways to hold insiders liable under the law. As recently as two years ago, the Second Circuit—in analyzing past decisions regarding tipper-tippee insider trading violations—blurred the distinction between legal and illegal insider trading when it fundamentally altered the idea of “personal benefit.” These various decisions provide the basis for antifraud provisions of securities law applying to insider trading, the consequences of which can be detrimental. This Note will discuss the standard that the Second Circuit uses to hold tippees liable for insider trading violations under the Exchange Act Rule 10b-5. It will begin by exploring a line of cases that lead up to the Second Circuit’s decision to alter the personal benefit test, which shifted more responsibility than ever onto the tipper’s state of mind. This Note will analyze that test and discuss the implications and problems that come with it. These include a greater likelihood that tippees will engage in deceptive behavior to extract material, non-public information from tippers. They also increase the potential that more parties caught in the middle of these situations will receive hefty prison sentences. Following that analysis, this Note will suggest an alternative approach—qualifying the personal benefit test to make it depend on more objective factors than it currently does. It will then discuss the court’s decision to amend and supersede its initial holding and replace it with a test which did not have a substantive impact on the outcome. It will ultimately conclude that the same test should apply.
{"title":"The Ever-Changing Scope of Insider Trading Liability for Tippees in the Second Circuit","authors":"Sari Rosenfeld","doi":"10.36639/mbelr.8.2.ever-changing","DOIUrl":"https://doi.org/10.36639/mbelr.8.2.ever-changing","url":null,"abstract":"Liability under insider trading law continues to change as federal courts attempt to find new ways to hold insiders liable under the law. As recently as two years ago, the Second Circuit—in analyzing past decisions regarding tipper-tippee insider trading violations—blurred the distinction between legal and illegal insider trading when it fundamentally altered the idea of “personal benefit.” These various decisions provide the basis for antifraud provisions of securities law applying to insider trading, the consequences of which can be detrimental. This Note will discuss the standard that the Second Circuit uses to hold tippees liable for insider trading violations under the Exchange Act Rule 10b-5. It will begin by exploring a line of cases that lead up to the Second Circuit’s decision to alter the personal benefit test, which shifted more responsibility than ever onto the tipper’s state of mind. This Note will analyze that test and discuss the implications and problems that come with it. These include a greater likelihood that tippees will engage in deceptive behavior to extract material, non-public information from tippers. They also increase the potential that more parties caught in the middle of these situations will receive hefty prison sentences. Following that analysis, this Note will suggest an alternative approach—qualifying the personal benefit test to make it depend on more objective factors than it currently does. It will then discuss the court’s decision to amend and supersede its initial holding and replace it with a test which did not have a substantive impact on the outcome. It will ultimately conclude that the same test should apply.","PeriodicalId":177599,"journal":{"name":"Michigan Business & Entrepreneurial Law Review","volume":"214 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123028400","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 1900-01-01DOI: 10.36639/mbelr.7.2.integrating
D. Crane, M. Kitzmuller, G. Miralles
The 2008–09 Global Financial Crisis originated from a poor incentive structure in the asset market derived from subprime mortgages. The ultimate bursting and unwinding of an asset bubble (here highly overvalued real estate prices woven into a complex multilayer network of securitization, so called collateralized debt obligations or CDOs) put enormous stress on the financial system, spreading through the global network economy and ultimately resulting in the worst economic crisis since the Great Depression. Economists today agree that the severe economic fallout can be largely attributed to the poor systemic performance of international financial markets. Global macroeconomic imbalances, as well as market failures such as excessive risk taking, misaligned incentives of rating agencies, inefficient liquidity provisions within banks and systemic risk or contagion, i.e., the international and inter-sectoral public goods nature of financial stability, were not sufficiently accounted for by regulation and international macroeconomic policy. This combined financial and economic crisis environment not only put the intrinsic connection between the financial and the real economy back into the spotlight, but also opened up a policy debate about how to ensure macroeconomic and financial stability without jeopardizing microeconomic foundations of the real economy such as competition. In sum, the resulting policy challenge is twofold: First, a new and sustainable balance between free markets, macro industrial policies, and governmental regulation needs to be found in the financial sector, and second, strategic interactions between macro and microeconomic policy goals need to be identified, understood, and balanced. This article will focus on the interaction between macroeconomic crisis management and prudential regulatory responses on the one hand, and competition policy and market structure on the other. We provide a simple economic framework for thinking about the relationship between macro and micro policies as a function of the immediate policy environment, i.e., “extraordinary” financial instability and imminent economic crisis versus “ordinary,” stable economic circumstances. Specifically, we claim that— during severe financial crises—the overall success of policy responses depends on the coordination of three related decisional vectors. First, policy makers must coordinate the responses of multiple regulatory and political actors. Second, they need to follow a systematic, rather than ad hoc, approach that diminishes moral hazard and leaves open a reasonable exit strategy. Finally, policy makers need to consider time consistency. In other words, they need to avoid the temptation to excessively discount post-crisis effects. Overall, this work shall add structure to the ongoing policy debate and provide conceptual guidance for lawyers and economists trying to address the challenges of micro and macro policy integration. In Part I, we provide an overview
{"title":"Integrating Micro and Macro Policy Levers in Response to Financial Crises","authors":"D. Crane, M. Kitzmuller, G. Miralles","doi":"10.36639/mbelr.7.2.integrating","DOIUrl":"https://doi.org/10.36639/mbelr.7.2.integrating","url":null,"abstract":"The 2008–09 Global Financial Crisis originated from a poor incentive structure in the asset market derived from subprime mortgages. The ultimate bursting and unwinding of an asset bubble (here highly overvalued real estate prices woven into a complex multilayer network of securitization, so called collateralized debt obligations or CDOs) put enormous stress on the financial system, spreading through the global network economy and ultimately resulting in the worst economic crisis since the Great Depression. Economists today agree that the severe economic fallout can be largely attributed to the poor systemic performance of international financial markets. Global macroeconomic imbalances, as well as market failures such as excessive risk taking, misaligned incentives of rating agencies, inefficient liquidity provisions within banks and systemic risk or contagion, i.e., the international and inter-sectoral public goods nature of financial stability, were not sufficiently accounted for by regulation and international macroeconomic policy.\u0000\u0000This combined financial and economic crisis environment not only put the intrinsic connection between the financial and the real economy back into the spotlight, but also opened up a policy debate about how to ensure macroeconomic and financial stability without jeopardizing microeconomic foundations of the real economy such as competition. In sum, the resulting policy challenge is twofold: First, a new and sustainable balance between free markets, macro industrial policies, and governmental regulation needs to be found in the financial sector, and second, strategic interactions between macro and microeconomic policy goals need to be identified, understood, and balanced.\u0000\u0000This article will focus on the interaction between macroeconomic crisis management and prudential regulatory responses on the one hand, and competition policy and market structure on the other. We provide a simple economic framework for thinking about the relationship between macro and micro policies as a function of the immediate policy environment, i.e., “extraordinary” financial instability and imminent economic crisis versus “ordinary,” stable economic circumstances. Specifically, we claim that— during severe financial crises—the overall success of policy responses depends on the coordination of three related decisional vectors. First, policy makers must coordinate the responses of multiple regulatory and political actors. Second, they need to follow a systematic, rather than ad hoc, approach that diminishes moral hazard and leaves open a reasonable exit strategy. Finally, policy makers need to consider time consistency. In other words, they need to avoid the temptation to excessively discount post-crisis effects.\u0000\u0000Overall, this work shall add structure to the ongoing policy debate and provide conceptual guidance for lawyers and economists trying to address the challenges of micro and macro policy integration. In Part I, we provide an overview","PeriodicalId":177599,"journal":{"name":"Michigan Business & Entrepreneurial Law Review","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130515255","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 1900-01-01DOI: 10.36639/mbelr.8.2.crafting
Lee, B. Graves
The Supreme Court’s 2010 decision in Citizens United v. FEC represented a sea change in the world of corporate citizenship. Although the decision dealt with campaign finance law, it has sparked significant discussion of the concept of corporate personhood more broadly. Corporations have increasingly taken advantage of legal rights previously reserved for individuals. This Note argues that where corporations reap the benefits of constitutional entitlements intended for individuals, they should suffer consequences for malfeasance similar to those imposed on individuals who engage in criminal conduct. Specifically, this Note advocates for limitations on corporate electioneering as a collateral consequence of a corporation’s criminal conviction, just as individuals may forfeit the right to vote following a felony conviction. Such a reform would address common criticisms regarding corporate criminal prosecutions’ lack of deterrent effect. It would also send an important expressive message that corporations do not enjoy more favorable treatment than individuals when facing criminal prosecutions.
{"title":"Crafting a Corporate Analogue to Criminal Disenfranchisement","authors":"Lee, B. Graves","doi":"10.36639/mbelr.8.2.crafting","DOIUrl":"https://doi.org/10.36639/mbelr.8.2.crafting","url":null,"abstract":"The Supreme Court’s 2010 decision in Citizens United v. FEC represented a sea change in the world of corporate citizenship. Although the decision dealt with campaign finance law, it has sparked significant discussion of the concept of corporate personhood more broadly. Corporations have increasingly taken advantage of legal rights previously reserved for individuals. This Note argues that where corporations reap the benefits of constitutional entitlements intended for individuals, they should suffer consequences for malfeasance similar to those imposed on individuals who engage in criminal conduct. Specifically, this Note advocates for limitations on corporate electioneering as a collateral consequence of a corporation’s criminal conviction, just as individuals may forfeit the right to vote following a felony conviction. Such a reform would address common criticisms regarding corporate criminal prosecutions’ lack of deterrent effect. It would also send an important expressive message that corporations do not enjoy more favorable treatment than individuals when facing criminal prosecutions.","PeriodicalId":177599,"journal":{"name":"Michigan Business & Entrepreneurial Law Review","volume":"365 2","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120863072","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 1900-01-01DOI: 10.36639/mbelr.8.1.persistent
Manasi Kumar
This Note will first review the tax preferences for entity choice under the old tax regime for the sake of context. It will then compare the tax benefits of electing to C and S corporation status under the regime created by the Act. The Note will conclude with an analysis of the factors sustaining the tax appeal of pass-through firms for lower-earning businesses with special attention to the largely unaltered state of tax law and business entity choice. It proposes that the Act did not sufficiently reform the Internal Revenue Code to close up the tax advantage that high-earning corporations incur with a Subchapter S election.
{"title":"The Persistent Appeal of S Corporations: How Tax Cuts Might Not Help Small Corporations","authors":"Manasi Kumar","doi":"10.36639/mbelr.8.1.persistent","DOIUrl":"https://doi.org/10.36639/mbelr.8.1.persistent","url":null,"abstract":"This Note will first review the tax preferences for entity choice under the old tax regime for the sake of context. It will then compare the tax benefits of electing to C and S corporation status under the regime created by the Act. The Note will conclude with an analysis of the factors sustaining the tax appeal of pass-through firms for lower-earning businesses with special attention to the largely unaltered state of tax law and business entity choice. It proposes that the Act did not sufficiently reform the Internal Revenue Code to close up the tax advantage that high-earning corporations incur with a Subchapter S election.","PeriodicalId":177599,"journal":{"name":"Michigan Business & Entrepreneurial Law Review","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133855226","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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