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Steve Bainbridge
Interests: Law, corporate governance, economics, politics, religion, education, books, food, and wine
Recent Activity
In my book, Corporate Governance after the Financial Crisis , I wrote that: ... the federalization of corporate governance has resulted in rules that were wrong from the outset or may quickly become obsolete, but are effectively carved into stone with little prospect for change. In sum, the federal role in corporate governance appears to be a case of what Robert Higgs identified as the ratchet effect. Higgs demonstrated that wars and other major crises typically trigger a dramatic growth in the size of government, accompanied by higher taxes, greater regulation, and loss of civil liberties. Once the crisis ends,... Continue reading
Posted 2 days ago at
As a supplement to the previous post on Florida's decision to adopt the Trulia standard government settlements of M&A litigation, I offer a compilation of prior posts on Trulia: Will Trulia Drive “Merger Tax” Suits Out Of Delaware? Anthony Rickey and Keola Whittaker tackle the titular question in a WLF Backgrounder. It concludes: While there are some preliminary indications of a short-term decline in merger litigation, this may not last. Trulia’s influence... Posted at 05:39 PM in Mergers and Takeovers | Permalink The effect of the Zillow/Trulia decision Congratulations to Fordham Law Professor Sean Griffith, whose outstanding crusade against the... Continue reading
Posted 2 days ago at
My congratulations to the indefatigable Sean Griffith, who has fought the good fight against frivolous M&A litigation and the especially pernicious phenomenon of disclosure-only settlements. In Griffith v. Quality Distribution, Inc., Sean and his counsel persuaded the Florida Court of Appeals to adopt the Delaware rule laid out in In re Trulia: In In re Trulia, the Delaware Court of Chancery discussed the proliferation of "disclosure settlements" and the problems associated with a request to approve such a settlement. 129 A.3d at 887, 891-99. The court was asked to approve a proposed settlement of a class action brought by shareholders... Continue reading
Posted 2 days ago at
As regular readers know, I am currently at work on a project dealing with corporate purpose in a populist era. I've spent much of the last year immersed in the populist literature ranging from that of the People's Party era through the Southern Agrarians and into the modern tea party and Trump populists. There is a great deal of discussion in that literature about the need to reform big business. When one turns to the specific issue of corporate purpose, however, there is relatively little discussion of it in the populist literature. One important exception was the early 20th Century... Continue reading
Posted 3 days ago at
It seems increasingly clear that Delaware courts are punting key corporate decisions to the shareholders. Ron Gilson made this point about hostile corporate takeovers 15 years ago, arguing that Delaware law on point had "developed into an unexplained and likely inexplicable preference that control contests be resolved through elections rather than through market transactions." We see the same shift these days with respect to mergers and acquisitions generally, as well as a variety of shareholder transactions. In Corwin v. KKR Fin. Holdings LLC, 125 A.3d 304, 314 (Del. 2015), Delaware Chief Justice Leo Strine wrote that "where the stockholders have... Continue reading
Posted 4 days ago at
German scholar Thilo Kuntz has published a fairly lengthy essay reviewing my book with Todd Henderson, Limited Liability: A Legal and Economic Analysis . See Thilo Kuntz, Asset Partitioning, Limited Liability and Veil Piercing: Review Essay on Bainbridge/Henderson, Limited Liability. 19 European Business Organization Law Review 439-463 (2018), which unfortunately is not open access and is available to non-subscribers as a preview only. Fortunately, however, a working draft is available on SSRN: Kuntz, Thilo, Asset Partitioning, Limited Liability and Veil Piercing - Review Essay on Bainbridge/Henderson, Limited Liability (March 14, 2017). European Business Organization Law Review, Forthcoming. Available at SSRN:... Continue reading
Posted 6 days ago at
For dinner last night, I made two recipes from Chef John of the Food Wishes You Tube channel: Beef Medallions with Caramelized Tomato Mushroom Pan Sauce (like Chef John I used an All-Clad skillet without a nonstick coating; it develops great fond) and Broken Spaghetti Risotto. I also made a chopped Caprese salad from a Food Network recipe. I couldn't get the cut spaghetti locally and although I could have just cut up some regular spaghetti, I bought some Barilla Cut Spaghetti from Amazon. All three were delicious. I poured a 2011 Fattoria di Fèlsina Berardenga Fontalloro. Still very young... Continue reading
Posted Jul 7, 2018 at
I've posted to SSRN a new paper:Book Review Essay: Conservatives Against Capitalism: From the Industrial Revolution to Globalization by Peter Kolozi (July 2, 2018). American Affairs, Forthcoming; UCLA School of Law, Law-Econ Research Paper No. 18-06. Available at SSRN: In Conservatives Against Capitalism, Peter Kolozi, an associate professor with the Department of Social Sciences at the City University of New York, discusses the long tradition of skepticism about—and sometimes outright hostility to—capitalism among important strains of American conservative thought. Kolozi takes a chronological approach focusing on key thinkers representative of the prevailing conservative school of thought in each of... Continue reading
Posted Jul 6, 2018 at
In his book Corporate Friction @DavidYosifon invokes the Sermon on the Mount to rebut the "two masters" argument for shareholder primacy. But what about the Parable of the Talents, which approves of capital accumulation? — Professor Bainbridge (@ProfBainbridge) July 4, 2018 Continue reading
Posted Jul 4, 2018 at
I'm reading David's new book. And so should you. I disagree with a lot of the normative conclusions @DavidYosifon reaches in his new book, Corporate Friction But I commend him for his excellent analysis of the state of Delaware law on corporate purpose, which is extended, complete, and compelling.— Professor Bainbridge (@ProfBainbridge) July 4, 2018 In his book Corporate Friction @DavidYosifon cites something I wrote 21 years ago about corporations standing between people and the state. If I were writing it today, I'd slather on a bunch of qualifiers. But that's a future project.— Professor Bainbridge (@ProfBainbridge)... Continue reading
Posted Jul 3, 2018 at
My friend and colleague Jim Barrall has a new blog post on the need for companies to reconsider their director compensation plans. Recommended reading. Continue reading
Posted Jul 3, 2018 at
I've been thinking a lot about populism lately, both for professional reasons (see forthcoming projects to be announced shortly) and personal ones. Having imbibed the heady nectar of traditional conservatism from Edmund Burke and his great American interpreter Russell Kirk, I once looked down on populism. Indeed, back in 2010, I quoted Kirk on populism: Populism is a revolt against the Smart Guys. I am very ready to confess that the present Smart Guys, as represented by the dominant mentality of the Academy and of what the Bergers call the Knowledge Class today, are insufficiently endowed with right reason and... Continue reading
Posted Jul 2, 2018 at
You could hardly call the Southern Agrarians leftists. Yet, as I recently learned while researching a project on populism and corporate governance, the Southern Agrarians shared with modern left-wing Occupy-style populists a disdain for the idea of corporate personhood. For example, in an essay entitled The Foundations of Democracy, Frank Owsley complained that the Supreme Court had erected the 5th and 14th Amendments "into bulwarks of human freedom, but into impregnable fortresses of corporate wealth." The usual arguments in favor of corporate personhood apply, of course. One might also note that the New Deal, during which Owsley was writing, proved... Continue reading
Posted Jul 2, 2018 at
Merritt B. Fox, Lawrence R. Glosten, Gabriel V. Rauterberg, Informed Trading and Its Regulation, 43 J. Corp. L. 817 (2018): 2 For just a sampling of seminal early work in this area, see Henry Manne, Insider Trading and the Stock Market 131-45 (1966) [hereinafter Manne, Insider Trading] (arguing that insider trading is efficient because it promotes pricing accuracy and entrepreneurialism); Stephen M. Bainbridge, Insider Trading Under the Restatement of the Law Governing Lawyers, 19 J. Corp. L. 1, 21 (1993) (arguing that the prohibition on insider trading is best justified as a property right protection for information); Victor Brudney, Insiders,... Continue reading
Posted Jul 2, 2018 at
In an earlier post, I mentioned that James Cox has a new paper on the famous Texas Gulf Sulphur decision, in which he explores various rationales for regulating insider trading that can be discerned from the factual background of the opinion (as opposed to the legal analysis in the opinion, which I have demonstrated elsewhere is completely bogus, as the court hopelessly misrepresented the precedents on which it relied). One concerned delayed disclosure, which I discussed in a prior post. The other one he advances is potential interference with corporate plans: The employee defendants in TGS did not reveal to... Continue reading
Posted Jul 2, 2018 at
James Cox has a new paper on the famous Texas Gulf Sulphur decision, in which he explores various rationales for regulating insider trading that can be discerned from the factual background of the opinion (as opposed to the legal analysis in the opinion, which I have demonstrated elsewhere is completely bogus, as the court hopelessly misrepresented the precedents on which it relied): ... in TGS, two of the major defendants traded in the interval between the misleading April twelfth press release and the corrective April sixteenth press release. To be sure, each had purchased TGS shares before the misleading press... Continue reading
Posted Jul 1, 2018 at
From Kaiser Health News: McClellan is director of the Margolis Center for Health Policy at Duke University, the academic position by which he’s commonly identified. But he frequently has not disclosed another position he’s held since late 2013: He earned $285,000 last year on the board of pharmaceutical giant Johnson & Johnson, a company accused of blocking the sale of Pfizer’s Inflectra biosimilar, which competes against J&J’s blockbuster Remicade, a rheumatoid arthritis drug. ... As a board member to these for-profit health care companies, McClellan has a fiduciary obligation “not to injure them” when writing articles and speaking, said Stephen... Continue reading
Posted Jul 1, 2018 at
Universities are in many ways the worst run institutions in our society, with basically lousy governance.We see this in the way administrative bloat drives university tuition increases at well above inflation rates. We see it in the way the inmates are all too often allowed to run the asylum. We see it in how hiring emphasizes every kind of diversity except for ideological and intellectual diversity. Maybe the answer has been staring us in the face; namely, bringing corporate governance reform to the university. In today's Wall Street Journal, Paul S. Ivey explains that he resigned from the University of... Continue reading
Posted Jun 11, 2018 at
US Third Circuit Senior Judge Jane Richards Roth issued a bizarre pronouncement in a recent veil piercing opinion: ... it is unclear that merely using a corporation to limit personal liability rises to the level of fraud required to pierce the corporate veil. Indagro SA v. Nilva, 16-3226, 2018 WL 2068660, at *3 (3d Cir. May 3, 2018). (HT: Joshua Fershee) As Todd Henderson and I point out in our treatise on limited liability, ... the law allows entrepreneurs and investors to incorporate their businesses for the purpose of obtaining the benefit of limited liability. Indeed, the law allows one... Continue reading
Posted Jun 5, 2018 at
Bloomberg reports: Big investment managers such as BlackRock Inc., Vanguard Group, and State Street Corp. have too much sway over the companies they hold and are using it to “play politics” with other people's money, according to a new campaign launched by members of Washington's business lobby. The National Association of Manufacturers (NAM) and other trade associations that make up the Main Street Investors Coalition are billing themselves as advocates for individuals saving for retirement. The coalition is taking on top mutual fund managers and the nation's largest public pension funds for becoming more vocal on issues from climate change... Continue reading
Posted Jun 5, 2018 at
Back in 2015 Presidential election former National Review writer Kevin Williamson (he of the 30-second Atlantic career) wrote a piece that basically said rural American just needs to get off its collective ass and move for opportunity: ... the best thing that people trapped in poverty in these undercapitalized and dysfunctional communities could do is — move. Get the hell out of Dodge, or Eastern Kentucky, or the Bronx. And then during the presidential election, he doubled down: If you spend time in hardscrabble, white upstate New York, or eastern Kentucky, or my own native West Texas, and you take... Continue reading
Posted May 31, 2018 at
UCLA Chancellor Gene Block is making a huge deal out of a program UCLA and The Atlantic sponsored a "conversation" about the state of the American republic: America is at a crossroads. Internal political strife has caused a reckoning — a rethinking of who we are and what we are about. Is the United States still the beacon of freedom and hope? Is the American Dream still alive? And, perhaps most crucial: Is the American Idea working for everyone? The Atlantic explored the state of America and pondered its future. At the core, we asked: Who are we and who... Continue reading
Posted May 31, 2018 at
Bankman, Joseph and Gamage, David and Goldin, Jacob and Hemel, Daniel Jacob and Shanske, Darien and Stark , Kirk J. and Ventry, Dennis J. and Viswanathan, Manoj, Federal Income Tax Treatment of Charitable Contributions Entitling Donor to a State Tax Credit (January 8, 2018). UCLA School of Law, Law-Econ Research Paper No. 18-02; UC Hastings Research Paper No. 264. Available at SSRN: or This paper summarizes the current federal income tax treatment of charitable contributions where the gift entitles the donor to a state tax credit. Such credits are very common and are used by the states to... Continue reading
Posted May 24, 2018 at