Emory Corporate Governance and Accountability Review

Volume 3Issue 3
Articles

What Can We Do?

Jonathan D. Karmel | 3 Emory Corp. Governance & Accountability Rev. 107 (2016)

What can be done to better protect American workers? Jonathan Karmel argues that various measures designed to protect American workers are inadequate and proposes solutions to deter safety violations. Karmel discusses some of the failures of the legal and Workers Compensation systems. In his criticism of the Workers Compensation system, Karmel argues that the system is deeply flawed and explains why it requires a national overhaul. He also advocates for enhanced civil penalties and criminal prosecutions to protect American workers and discusses how the civil penalties in OSHA and the possible criminal sentences are inadequate as a meaningful deterrence of safety violations. To illustrate this point, Karmel discusses a high profile case involving an explosion in a West Virginia coal mine that killed 29 workers and led to the subsequent prosecution of the company’s CEO.

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Fiduciary Incongruity: Open Questions Arising from Ascribing Identical Fiduciary Duties to Corporate Directors and Officers

Darren C. Skinner | 3 Emory Corp. Governance & Accountability Rev. 133 (2016)

Should non-director corporate officers owe identical fiduciary duties as the fiduciary duties of directors? Darren C. Skinner discusses the 2009 case of Gantler v. Stephens which held in “a matter of first impression” the fiduciary duties owed by corporate officers are identical to the duties owed by the directors of the corporation. He illustrates how application of this decision can have confounding and disharmonious results and discusses unanswered questions in the application of this decision. The author discusses who qualifies as an officer for the purpose of fiduciary duties, Delaware case law on this issue and he offers a solution for defining which employees of a corporation are employees for the purposes of fiduciary equivalency. He discusses whether directors and officers should have identical “Caremark Duties.” The author also discusses opposing views regarding whether the Business Judgment Rule should protect officers the same way it protects directors.

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Essays

Reining in a Culture of Fraud: Adopting Incentive-Based Regulations to Reform Corporate Governance in Japan

Kevin Engelberg | 3 Emory Corp. Governance & Accountability Rev. 145 (2016)

In light of the 2015 Toshiba accounting scandal, Kevin Engelberg examines why Japanese companies frequently engage in massive accounting fraud. Engelberg uncovers that these accounting scandals are the result of deeply held Japanese cultural beliefs about harmony and a deep respect for authority. These cultural beliefs cause Japanese corporate employees to follow their company’s CEO at all costs, even if it means fraudulently inflating company profits. Despite the passage of Japan’s first ever comprehensive corporate governance code, Engelberg argues little has been done to incentivize good corporate practices. Engelberg suggests the most effective to clean up Japanese corporate culture is to align employee incentives with the financial success of their corporate employers. This can be done by effectively tying executive compensation to company performance; strengthening current whistleblower laws; and creating clear enforcement procedures for companies caught of wrong-doing.

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Can We Keep Meatpacking Companies Accountable for Hiring Undocumented Immigrants?

Sapna Jain | 3 Emory Corp. Governance & Accountability Rev. 157 (2016)

Sapna Jain explores the meatpacking industry’s dependence on undocumented workers and the problem of accountability and business ethics that stems from industry practices. After analyzing a shift in demographics and an increase in non-unionized workers, Jain suggests various options to curb the meatpacking industry’s reliance on undocumented workers such as raising wages or lobbying for a path to legal status. These options are contrasted with the current model of paying fines for employed undocumented immigrants. By comparing the meatpacking industry to the pharmaceutical industry, Jain provides illustrations where fines are simply assumed as a cost of doing business. The conclusion suggests consumers become more active and push the meatpacking industry to reform its methods.

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Defending the D.C. Circuit’s Hard-Look Review

Forrest E. Lind III | 3 Emory Corp. Governance & Accountability Rev. 171 (2016)

Forrest E. Lind III rebuts criticisms of the D.C. Circuit for its decisions in recent cases involving successful challenges to SEC corporate governance rules. Using a Chevron Analysis, Lind argues that the D.C. Circuit followed well-settled precedent and applied the proper standard of review. Lind first establishes the Proper Standard of Review for administrative action by combining precedent from the administrative law cases that developed the modern Chevron Analysis. Lind then provides a thorough walkthrough of each criticized D.C. Circuit opinion before rebutting the critics’ arguments point by point. Lind compares the D.C. Circuit’s methods and reasoning with established Supreme Court precedent and finds that the D.C. Circuit, contrary to its critics’ view, applied the Proper Standard of Review. Lind concludes with the reminder that it is the SEC’s responsibility, not the courts, to provide the agency with the proper justifications for its actions.

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Unfetter the Shackle: Promoting Shareholder Involvement in Corporate Governance through Proxy Mechanism

Zhiyuan Liu | 3 Emory Corp. Governance & Accountability Rev. 199 (2016)

Zhiyuan Liu examines how proxy access rules can be reformed to promote shareholders’ involvement in publicly traded companies’ corporate governance. Current legal regime, mainly Section 14 of the Securities Exchange Act, confers the incumbent board members wide discretionary authority to exclude from proxy materials shareholders’ proposals regarding board nomination. Shareholders have to wage costly proxy contest to achieve their goals. Although SEC attempted to propose a new rule that required companies to include shareholders’ nominees of the board directly in the proxy materials, D.C. Circuit Court struck down such attempt on the ground that it was arbitrary and capricious. Without risking being nullified, the essay suggests that the new proposal should consider the impact of modern market forces and propose a rule that lessens the burden of proxy access and empower shareholders to exercise their own choices.

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Are Daily Fantasy Sports Companies Playing the Odds against Future Regulations?

Lauren Paine | 3 Emory Corp. Governance & Accountability Rev. 213 (2016)

Daily Fantasy Sports companies have captured the attention of consumers through elaborate advertising and marketing campaigns. But the increased publicity came at a cost. Nearly every State’s government has begun calling into question the legality of sites like DraftKings and FanDuel. The threshold issue is whether or not Daily Fantasy Sports constitutes a game of skill or is merely a game of chance. If Daily Fantasy Sports is found to be based in chance, rather than skill, it would constitute gambling and create a serious issue of legality. However, escaping the definition of gambling is the just the tip of the iceberg for Daily Fantasy Sports companies. This essay seeks to explain the concept of Daily Fantasy Sports, the controversy surrounding Daily Fantasy Sports and possible regulatory and compliance solutions.

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The “Too Big to Fail” Penalty: A New Era of Insurance Regulation in the Wake of the Financial Crisis

Ben Pierce | 3 Emory Corp. Governance & Accountability Rev. 225 (2016)

The Dodd-Frank Act is one of the most far-reaching efforts in financial reform since the Great Depression. The Dodd-Frank Act’s new regulatory regime seeks to rein in “systemically important financial institutions,” or “SIFIs,” which are financial institutions so large that their downfall would cause wide-ranging damage throughout the entire American economy. The Financial Stability Oversight Council (“FSOC”), one of the agencies created by the Dodd-Frank Act, has the authority to label non-bank financial companies, such as insurance companies, as SIFIs. This Essay argues that the Dodd-Frank Act’s new regulatory regime has reduced systemic risk in the financial services industry. This Essay also argues that the Dodd-Frank Act and the Federal Reserve’s intervention in the insurance industry may signal the beginning of a new era of regulation: one where federal regulators take a more active role in the state-dominated insurance regulatory system.

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