{"id":5247,"date":"2025-02-15T20:20:07","date_gmt":"2025-02-16T01:20:07","guid":{"rendered":"https:\/\/journals.law.harvard.edu\/hblr\/?page_id=5247"},"modified":"2025-08-19T12:44:49","modified_gmt":"2025-08-19T16:44:49","slug":"business-corporations","status":"publish","type":"page","link":"https:\/\/journals.law.harvard.edu\/hblr\/business-corporations\/","title":{"rendered":"Business & Corporations"},"content":{"rendered":"\n
VOLUME 14 \u2022 ISSUE 1 \u2022 PRINT<\/h5>\n\n\n\n

RETHINKING COMMERCIAL LAW’S UNCERTAIN BOUNDARIES<\/a><\/h3>\n\n\n\n
Steven L. Schwarcz<\/strong><\/em><\/h6>\n\n\n\n

Although it is an essential part of business law, commercial law has uncertain boundaries. That uncertainty creates significant legal ambiguities and inconsistencies, confusing lawyers and courts and causing misinterpretations that disrupt commerce and reduce efficiency. This Article hypothesizes and tests possible explanations for the uncertainty, including that commercial law\u2019s development has been path dependent, ad hoc, and lacking well-defined normative purposes. The Article then analyzes what those boundaries should be, arguing that commercial law should cover all business-related transfers of property, subject to exceptions needed to reduce transaction costs and otherwise increase economic efficiency. The Article also compares its proposed boundaries to the scope of commercial law under the Uniform Commercial Code, both to test whether those boundaries are tethered to reality and to examine whether the scope of the UCC itself should be modified.<\/p>\n\n\n\n

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VOLUME 13 \u2022 ISSUE 1 \u2022 PRINT<\/h5>\n\n\n\n

IS \u201cPUBLIC COMPANY\u201d STILL A VIABLE REGULATORY CATEGORY?<\/a><\/h3>\n\n\n\n
George S. Georgiev<\/em><\/h6>\n\n\n\n

This Article suggests that the ubiquitous \u201cpublic company\u201d regulatory category, as currently constructed, has outlived its effectiveness in fulfilling core goals of the modern administrative state. An ever-expanding array of federal economic regulation hinges on public company status, but \u201cpublic company\u201d differs from most other regulatory categories in that it requires an affirmative opt-in by the subject entity. In practice, firms today become subject to public company regulation only if they need access to the public capital markets, which is much less of a business imperative than it once was due to the proliferation of private financing options. Paradoxically, then, public company regulation is both more important than ever and easier than ever to avoid.<\/p>\n\n\n\n

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VOLUME 11 \u2022 ISSUE 1 \u2022 PRINT<\/h5>\n\n\n\n

THE FUTURE OR FANCY? AN EMPIRICAL STUDY OF PUBLIC BENEFIT CORPORATIONS<\/a><\/h3>\n\n\n\n
Michael B. Dorff, James Hicks, & Steven Davidoff Solomon<\/strong><\/em><\/h6>\n\n\n\n

The public benefit corporation (\u201cPBC\u201d) is one of the most hyped developments in corporate law, due to the PBC\u2019s unique social purpose. Unlike the traditional corporation, directors of PBCs are required under their fiduciary duties to con- sider the impact of their decisions on a range of stakeholders and communities. This new form is hailed by many as a framework for a reformed capitalism. Critics, on the other hand, have assailed PBCs as unworkable, at best allowing corporations to \u201cgreen wash,\u201d or providing a thin disguise for ordinary corporate profit-seeking behavior.<\/p>\n\n\n\n

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VOLUME 10 \u2022 ISSUE 1 \u2022 PRINT<\/h5>\n\n\n\n

SELF-DRIVING CORPORATIONS?<\/a><\/strong><\/h3>\n\n\n\n
John Armour & Horst Eidenm\u00fcller<\/em><\/strong><\/h6>\n\n\n\n

What are the implications of artificial intelligence (AI) for corporate law? In this essay, we consider the trajectory of AI\u2019s evolution, analyze the effects of its application on business practice, and investigate the impact of these develop- ments for corporate law. Overall, we claim that the increasing use of AI in corporations implies a shift from viewing the enterprise as primarily private and facilitative, towards a more public, and regulatory, conception of the law governing corporate activity. Today\u2019s AI is dominated by machine learning applications which assist and augment human decision-making. These raise multiple challenges for business organization, the management of which we collectively term \u201cdata governance.\u201d The impact of today\u2019s AI on corporate law is coming to be felt along two margins. First, we expect a reduction across many standard dimensions of internal agency and coordination costs. Second, the oversight challenges\u2014and liability risks\u2014at the top of the firm will rise significantly. Tomorrow\u2019s AI may permit humans to be replaced even at the apex of corporate decision-making. This is likely to happen first in what we call \u201cself-driving subsidiaries\u201d performing very limited corporate functions. Replacing humans on corporate boards with machines implies a fundamental shift in focus: from con- trolling internal costs to the design of appropriate strategies for controlling \u201calgorithmic failure,\u201d that is, unlawful acts by an algorithm with potentially severe negative effects (physical or financial harm) on external third parties. We discuss corporate goal-setting, which in the medium term is likely to become the center of gravity for debate on AI and corporate law. This will only intensify as technical progress moves toward the possibility of fully self-driving corporations. We outline potential regulatory strategies for their control. The potential for regulatory competition weakens lawmakers\u2019 ability to respond, and so even though the self-driving corporation is not yet a reality, we believe the regulatory issues deserve attention well before tomorrow\u2019s AI becomes today\u2019s.<\/p>\n\n\n\n

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VOLUME 9 \u2022 ISSUE 1 \u2022 PRINT<\/h5>\n\n\n\n

RISING TO THEIR FULL POTENTIAL: HOW A UNIFORM DISCLOSURE REGIME WILL EMPOWER BENEFIT CORPORATIONS<\/a><\/h3>\n\n\n\n
Brent J. Horton<\/strong><\/em><\/h6>\n\n\n\n

Today\u2014perhaps more than at any other time in history\u2014investors want to achieve two things: a positive financial return on their investment and the \u201cwarm glow\u201d that comes from doing good. And the number of investors looking for that \u201cwarm glow\u201d is increasing.<\/p>\n\n\n\n

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VOLUME 9 \u2022 COLUMNS<\/h5>\n\n\n\n

BEYOND THE BOARD: ALTERNATIVES IN NONPROFIT CORPORATE GOVERNANCE<\/a><\/strong><\/h3>\n\n\n\n
William M. Klimon<\/em><\/h6>\n\n\n\n

The diversity of the nonprofit sector is manifold. There is great variety in organizational form; nonprofit organizations have long been structured as corporations, charitable trusts, and unincorporated associations. Now the Internal Revenue Service (IRS) has recognized the exempt status of standalone limited liability companies.1<\/a><\/sup>See Instructions for Part II, line 2 of IRS Form 1023.<\/span> Likewise, the range of activities across the sector is stunning: healthcare, education, welfare, religion, the arts, and the environment. And even within those fields the diversity astounds: from a tiny free clinic to the Adventist Health System; from a new public charter school to Harvard University; from a Primitive Baptist chapel to the thousands of Roman Catholic congregations, orders, and organizations; from a community theater to the Metropolitan Opera. That immense diversity has affected even the relatively uniform world of nonprofit corporate governance.2<\/a><\/sup>See William M. Klimon, Recent Developments in Nonprofit Corporate Governance, in National Business Institute,Tax Exempt Organizations Boot Camp283, 303-04 (2016).<\/span><\/p>\n\n\n\n

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VOLUME 6 \u2022 ISSUE 1 \u2022 PRINT<\/h5>\n\n\n\n

WHERE HAVE ALL THE IPOS GONE? THE HARD LIFE OF THE SMALL IPO<\/a><\/h3>\n\n\n\n
Paul Rose and Steven Davidoff Solomon<\/strong><\/em><\/h6>\n\n\n\n

We examine firm lifecycles of 3,081 IPOs from 1996\u20132012. We find that small IPOs have a different lifecycle than other, larger companies. Within five years of an IPO, only 55% of small capitalization companies remain listed on a public exchange, compared to 61% and 67% for middle and large capitalization companies, respectively. Small capitalization companies generally delist either voluntarily or involuntarily, while mid and large capitalization companies largely exit the public market through takeover transactions. Those small companies that remain listed largely fail to grow, remaining in the small capitalization category. We use our findings to examine various theories explaining the decline of the small IPO. We find only minor evidence that regulatory changes caused the decline of the small IPO. The decline appears instead to be more attributable to the historical unsuitability of small firms for the public market. Absent economic or market reforms that change small firm quality, further regulatory reforms to enhance the small IPO market are thus unlikely to be effective or bring firms into the public market that have the horsepower to remain publicly listed.<\/p>\n\n\n\n

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VOLUME 5 \u2022 ISSUE 2 \u2022 PRINT<\/h5>\n\n\n\n

FIFTY-YEARS OF CORPORATE LAW EVOLUTION: A DELAWARE JUDGE’S RETROSPECTIVE<\/a><\/h3>\n\n\n\n
Jack B. Jacobs<\/strong><\/em><\/h6>\n\n\n\n

It may surprise you to learn that fifty years ago, many of the topics you have covered in this and your business organizations course did not even exist. Moreover, and critically important, what has been presented as the current state of corporation and M&A law was not preordained and, but for some historical accidents, could easily have come out very differently from how it actually did.<\/p>\n\n\n\n

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VOLUME 4 \u2022 ISSUE 2 \u2022 PRINT<\/h5>\n\n\n\n

PHARMACEUTICAL PUBLIC-PRIVATE PARTNERSHIPS: MOVING FROM THE BENCH TO THE BEDSIDE<\/a><\/h3>\n\n\n\n
Constance E. Bagley & Christina D. Tvarn\u00f8<\/em><\/strong><\/h6>\n\n\n\n

This article provides a game theory and law-and-management analysis of for- profit pharmaceutical public-private partnerships, a complex type of legal arrangement in the highly regulated pharmaceutical industry. A pharmaceutical public-private partnership (PPPP) agreement is a legally binding contract be- tween a private pharmaceutical enterprise and a public research university (or a private university conducting publicly funded research) to support research leading to new commercial pharmaceutical and biologic products. The key purpose of this article is to provide a theoretical explanation and a practical perspective on how properly crafted PPPP arrangements can promote innovation more efficiently than traditional self-optimizing contracts. In particular, a properly framed binding contract, coupled with respect for positive incentives, can move the parties away from an inefficient prisoners\u2019 dilemma Nash equilibrium to the Pareto Optimal Frontier and thereby increase both the overall size of the pie and the value of the share retained by each participant. To deliver an efficient framework for collaboration, the PPPP contract must include mechanisms for encouraging cooperative behavior, leading to a win-win approach rather than a traditional competitive perspective. Thus, this article discusses how the PPPP contract should encourage the parties to collaborate with a strong focus on attaining common goals by sharing gains or losses and information, and by instituting risk and reward systems to build and share innovation. When coupled with appropriate attention to the difficult task of coordinating the actions of interdependent actors, a PPPP arrangement can enhance the likelihood of successful commercialization of pharmacological discoveries by flipping the par- ties\u2019 incentives as compared with a more traditional contract.<\/p>\n\n\n\n

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VOLUME 2 \u2022 ISSUE 1 \u2022 PRINT<\/h5>\n\n\n\n

LAWYERS, IGNORANCE, AND THE DOMINANCE OF DELAWARE CORPORATE LAW<\/a><\/h3>\n\n\n\n
William J. Carney, George B. Shepherd, and Joanna Shepherd Bailey<\/strong><\/em><\/h6>\n\n\n\n

Why does Delaware continue to dominate the market for incorporations even though recent research has shown that the quality of Delaware corporate law has declined substantially? In this Article, we focus on one possible explanation: the rational ignorance of lawyers and investors. Using the results of our survey of lawyers involved in initial public offerings (IPOs) as well as our analysis of companies involved in IPOs, we conclude that lawyers recommend Delaware because they are ignorant about other states\u2019 laws. Because Delaware is so dominant, law schools focus on Delaware corporate law, and a lawyer rationally learns the corporate law of only Delaware and his home state. Regardless of the quality of the laws of other states, lawyers will not recommend incorporating outside of Delaware because they are unfamiliar with those laws. Likewise, lawyers recommend only Delaware law because they believe that investors are ignorant of other states\u2019 laws.<\/p>\n\n\n\n

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VOLUME 1 \u2022 COLUMNS<\/h5>\n\n\n\n

LLCS AND CORPORATIONS: A FORK IN THE ROAD IN DELAWARE?<\/strong><\/a><\/h3>\n\n\n\n
Joshua P. Fershee<\/em><\/h6>\n\n\n\n

The limited liability company (LLC) has evolved from a little used entity option to become the leading business entity of choice. The primary impetus for this change was an Internal Revenue Service (IRS) determination in 1988 that permitted pass-through tax status for a Wyoming LLC. Then, in 1997, the IRS passed its check-the-box regulations permitting LLCs (and other non-corporate entities) to simply opt-in to the benefits of partnership tax treatment. These two rulings have been viewed as having \u201chad a profound, unprecedented, and perhaps unpredictable impact on the future development of unincorporated business organizations.\u201d Since that time, some scholars argued that the LLC should be treated as a third, and separate, entity unto itself with its own developing body of law. Nonetheless, many courts have applied corporate law to LLCs with seemingly little appreciation of the differences between LLCs and corporations. That may be about to change.<\/p>\n","protected":false},"excerpt":{"rendered":"

VOLUME 14 \u2022 ISSUE 1 \u2022 PRINT RETHINKING COMMERCIAL LAW’S UNCERTAIN BOUNDARIES Steven L. Schwarcz Although it is an essential […]<\/p>\n","protected":false},"author":109,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"class_list":["post-5247","page","type-page","status-publish","hentry"],"jetpack_shortlink":"https:\/\/wp.me\/PgKEUK-1mD","jetpack-related-posts":[{"id":4892,"url":"https:\/\/journals.law.harvard.edu\/hblr\/volume-14-issue-1\/","url_meta":{"origin":5247,"position":0},"title":"Volume 14, Issue 1","author":"wgu","date":"December 17, 2021","format":false,"excerpt":"BUSINESS & CORPORATIONS RETHINKING COMMERCIAL LAW'S UNCERTAIN BOUNDARIES Steven L. 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