COMPARATIVE CORPORATE LAW
DECONSTRUCTING THE “ANGLO-AMERICAN” CORPORATE MODEL
Brian R. Cheffins and Bobby V. Reddy
While approaches to corporate law and corporate governance vary globally, the U.S. and the U.K. are often grouped together under the “Anglo-American” corporate model. In this article, we deconstruct that model through the first wide-ranging comparison in decades of fundamental corporate law concepts in the two countries. Our analysis examines both the black-letter “law in books” and the functional “law in action.” We draw on these perspectives to offer new insights into corporate law in the U.S.—focusing on Delaware law, applicable federal regulations, and stock exchange listing rules—and in the U.K.
Our “law in books” analysis demonstrates that the two jurisdictions frequently rely on substantially different corporate law mechanisms, undermining the idea of a single, unified “Anglo-American” approach. At the same time, from a “law in action” perspective, the jurisdictions exhibit many functional similarities. In light of these similarities, we do not contend that either jurisdiction has categorically “better” corporate law than the other. We do argue, however, that policymakers seeking to influence outcomes by transplanting corporate governance features from one jurisdiction to the other may find that such reforms fail to produce the anticipated benefits.
TECHNOLOGY & INNOVATION
CRYPTO LITIGATION AND MARKET EFFICIENCY
Robert E. Bishop, Bradford Levy, Frank Partnoy, Daniel Taylor & Andrew Yeh
This paper investigates, for the first time in the literature, the factors courts should consider in determining whether a crypto market is “efficient,” meaning that prices respond sufficiently to information. Drawing on new empirical evidence and a series of event studies, we propose a new judicial framework for assessing market efficiency in crypto litigation.
Market efficiency tests based on event studies have long played an important role in other areas of litigation, particularly securities litigation, where courts frequently rely on the so-called “Cammer factors.” To date, however, academics have not examined whether the factors relevant to market efficiency should differ for crypto assets as compared to traditional securities. This paper addresses that gap.
First, we provide background on the legal frameworks courts currently use to assess market efficiency. We survey and respond to academic criticism of the Cammer factors and explain why those factors continue to play an important role in judicial analysis.
Second, we conduct 452 event studies involving new cryptocurrency token listings and document the variation in key efficiency-related variables across our sample. We then discuss the implications of these empirical findings for event study methodologies in litigation involving crypto assets.
Finally, we recommend modified factors for courts to apply in crypto cases as distinct from securities cases. We show how an adapted version of the Cammer factors could provide courts with a workable framework for evaluating market efficiency in cryptocurrency litigation. More broadly, our analysis offers insights and a roadmap for researchers and policymakers seeking to assess the role of market efficiency factors in litigation generally.
CORPORATE LAW & GOVERNANCE
STICKY CHARTERS? THE SURPRISINGLY TEPID EMBRACE OF OFFICER-PROTECTING WAIVERS IN DELAWARE
Jens Frankenreiter & Eric Talley
This article examines the response to Delaware’s widely discussed 2022 legal reform permitting corporations, for the first time, to adopt charter provisions exculpating corporate officers from liability for breaches of the fiduciary duty of care. Contrary to widespread predictions that corporations would rapidly adopt officer exculpation provisions, our analysis—using both traditional and generative artificial intelligence (AI) methods—reveals a surprisingly low rate of adoption more than three years after the reform’s enactment.
Our study makes both methodological and substantive contributions. Methodologically, we introduce a novel application of large language models (LLMs) to identify and interpret technical clauses in corporate charters. This approach substantially reduces the time and resources required for manual review and labeling. Moreover, unlike earlier machine learning tools, we demonstrate empirically that LLMs can achieve highly accurate results without the need for specialized training datasets.
Substantively, our findings offer a cautionary account of how the rhetoric surrounding corporate law reform can outpace practical reality. Despite significant enthusiasm—and concern—regarding Delaware’s officer exculpation experiment, only a small minority of eligible firms have adopted such provisions. This reluctance persists even among companies going public after the reform, suggesting that transaction costs alone cannot explain the limited uptake. In addition, muted stock market reactions to reform-related events indicate that investor pressure is not deterring firms from embracing officer-focused liability waivers.
We suggest that two alternative explanations provide more persuasive accounts of the phenomenon: first, that the reform may ultimately prove to be of limited practical significance; and second, that managers may be exercising caution while awaiting reactions from courts and stakeholders. Taken together, these explanations suggest that Delaware’s statutory reform may have generated substantially more attention than practical effect.
CORPORATE LAW & GOVERNANCE
PEER GROUP GOVERNANCE
Yaron Nili
Corporate America increasingly shapes everyday life. Yet “Corporate America” is not merely an abstract concept; it is the aggregate of thousands of corporations, each operating independently and guided by its own policies. From political donations to diversity initiatives, corporations—and the governance policies that drive them—possess significant power to influence society. But how do corporations adopt these policies? Existing scholarship has identified several channels through which governance practices spread across corporate America. This Article is the first to identify an important and previously overlooked channel: peer corporations.
Over the last fifteen years, corporations have increasingly designated other corporations as their peers. These designations largely emerged in response to investor concerns regarding executive compensation, particularly the benchmarking of executive pay against comparable firms. As this Article demonstrates, however, peer groups serve purposes beyond compensation benchmarking. Corporations also rely on peer groups to identify policies and practices to emulate in areas ranging from governance and diversity initiatives to environmental protection. This Article describes this phenomenon as “peer group governance.”
Despite the growing use of peer groups and their influence on corporate conduct, scholars have not examined in depth how corporations select their peers or how peer groups function over time. This Article provides new insight into the use of peer groups among public corporations and makes three principal contributions to the literature.
First, drawing on a first-of-its-kind hand-collected dataset of all peer group designations among S&P 1500 companies from 2005 to 2021, the Article offers the first detailed empirical account of the increasing use, characteristics, and composition of peer groups. Second, using data on the governance attributes of S&P 1500 corporations, together with interviews with directors and general counsels of public companies, the Article identifies peer groups as an important mechanism for the diffusion of corporate governance policies and practices. Third, the Article explores the broad implications of peer group governance for SEC disclosure rules, investor policies, and shareholder advocacy efforts.