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Edited by Claire A. Hill and Steven Davidoff Solomon

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Claire A. Hill and Brett H. McDonnell

In this chapter, we discuss how to reconcile orthodox theory’s tenet that markets correctly value a company’s prospects, no matter how far in the future they are, so that short- and long-term shareholders’ interests should be the same, with the contrary view, held by many commentators, that the interests are in conflict, and that short-term investors have pressured companies to take actions that further the short term at the expense of the long term. We consider reasons why that theory might be wrong, and make some suggestions for ways to proceed. In our view, there is plausible, and perhaps sufficient, evidence of a problem from shareholders’ perspective – corporations may indeed be shunning some potentially higher-yielding long-term strategies, emphasizing instead the short-term strategies that yield cash and savings in the short term. There may be a problem from the societal perspective as well, which is separate from but related to the question of short-term strategies. The market may be addressing the shareholder problem, although perhaps not sufficiently, and probably not sufficiently quickly. The societal problem, the underprovision of public goods, and the imposition of negative externalities, is far trickier to address. We offer some suggestions which might help on both fronts. That being said, in some cases, the conflict between a shareholder value maximization perspective and a societal perspective may be intractable.

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Edited by Claire A. Hill and Steven Davidoff Solomon

Global in scope and written by leading scholars in the field, the Research Handbook on Mergers and Acquisitions is a modern-day survey of the state of M & A. Its chapters explore the history of mergers and acquisitions and also consider the theory behind the structure of modern transaction documentation. The book also address other key M & A issues, such as takeover defenses; judges and practitioners' perspectives on litigation; the appraisal remedy and other aspects of Federal and state law, as well as M & A considerations in the structure of start-ups. This Handbook will be an invaluable resource for scholars, practitioners, judges and legislators.
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Claire A. Hill and Brett H. McDonnell

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Edited by Claire A. Hill and Brett H. McDonnell

Comprising essays specially commissioned for the volume, leading scholars who have shaped the field of corporate law and governance explore and critique developments in this vibrant and expanding area and offer possible directions for future research.
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Claire A. Hill and Brett H. McDonnell

Structural bias has traditionally been a significant obstacle to adequate director monitoring. For a period of time early this century, the development of a fiduciary duty of good faith suggested that the Delaware courts were becoming serious about addressing structural bias, something we celebrated in previous work. In this chapter, after reviewing the concept of structural bias, we consider how Delaware’s corporate fiduciary duty law has evolved relevant to the concept. We find that recent case law calls into question how much force the duty of good faith has to address structural bias. That may be a serious problem, or it may not. Fiduciary duty law is not the only way to address structural bias. Other legal and non-legal mechanisms may address the problems that structural bias creates, and those mechanisms have evolved significantly. We ask whether other developments in this century have affected whether directors will be subject to structural bias, and whether, if they are so subject, they will be able to act on it. These developments include: the well-known monitoring failures at Enron, WorldCom, and Adelphia, proxy access, say on pay, independent director requirements, increasing diversity on boards, the increasing role of government in monitoring companies when Deferred and Non-Prosecution Agreements are entered into, and the rise of economic activism by hedge funds and corporate social responsibility. We conclude by pondering (inconclusively) what all of this may entail for future development of corporate fiduciary duties.

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Claire A. Hill and Brett H. McDonnell

Scholarly analysis of corporate law in the United States has come to be dominated by an economic approach. Professor Hill and Professor McDonnell here discuss seminal articles which represent major milestones along the road that economics has traveled in coming to play this central role in corporate law scholarship. The focus is on the analysis of corporate law, drawing mainly upon legal scholarship and particularly on US scholarship, which is the originator of the application of modern economic analysis to corporate law and has had much influence in other countries. Beginning with several of the key works on the economics of the firm which have most heavily influenced legal scholarship, the review explores the central legal role of the board of directors and state competition for corporate charters. It further considers the role of hostile takeovers and board defenses against them and the effectiveness of shareholder suits and other agency mechanisms.
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Claire A. Hill and Brett H. McDonnell

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Claire A. Hill and Brett H. McDonnell