Emory Corporate Governance and Accountability Review

ECGAR PerspectivesVolume 3

Don't Be Late to the Party: The Importance of Corporate Social Responsibility and Being More Than a Bottom Line

Tayler Bolton | 3 Emory Corp. Governance and Accountability Rev. Perspectives 2048 (2016)

After taking notice of the increase in social climate, Tayler Bolton sought to determine the role that corporate social responsibility ("CSR") has on companies and the perception of CSR amongst consumers. This topic was tackled by evaluating how important consumers value CSR in supporting a brand, the effect that such value has on revenue, and how companies tackle issues in the evolving social climate. This Perspective informs the reader about CSR by discussing how companies address specific issues like climate change and sexual orientation. This Perspective concluded that consumers value and expect companies to be socially conscious because they will pay more for a brand that they identify with. The furtherance of social consciousness will therefore provide companies with sustainability beyond a bottom line. 

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Securitizing American Justice

Kevin Engelberg | 3 Emory Corp. Governance and Accountability Rev. Perspectives 2052 (2016)

Federal, State, and local governments currently securitize critical infrastructure projects and government contracts. This is an effective tool governments can use to raise funds without having to spend taxpayer dollars. Looking at private-sector involvement in America's justice system, Kevin Engelberg argues America is close to securitizing prisons and legal claims. Engelberg warns that securitizing aspects of the justice system risks creating the image that the justice system is owned or beholden to the private sector. A recent survey has found the public feels the American Justice system is largely ineffective. Engelberg worries securitization will greatly weaken the already cynical public belief about the justice system, and therefore cause the public to go outside of the legal system for justice.

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Who Is Responsible for How Executives Behave?

Sapna Jain | 3 Emory Corp. Governance and Accountability Rev. Perspectives 2058 (2016)

Exploring whether corporate governance requires companies to monitor the ways in which executives increase profits, Sapna Jain examines whether there are solutions to allow rule breaking or policies to deter illegal behavior. She explores how the broad definition of corporate governance may not correlate with the business principles of striving to increase profits and how rule breaking might be allowed. As the boundaries of rule breaking may lead to slippery slopes, Jain analyzes food and drug law policies that could impose criminal and civil penalties on executives. Lastly, Jain investigates the option of reducing profits to ensure complete compliance. After comparing these options, Jain highlights the difficulty in proving inappropriate executive behavior and the issue of enforcement due to increased costs and limited resources. 

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Basic Corporate Governance Pattern in Variable Interest Entities

Zhiyuan Liu | 3 Emory Corp. Governance and Accountability Rev. Perspectives 2063 (2016)

Zhiyuan Liu examines how the structure of Variable Interest Entities ("VIE") under Chinese legal environment operates as a corporate governance mechanism in lieu of the traditional governance structure. Since an off-shore listed company cannot hold equity interests in the operating company in mainland China due to restrictive regulations in foreign investment, the VIE structure utilizes various types of contractual arrangements to gap the loophole where the listed company should play the role of shareholder in the lucrative mainland business. In spite of the complex covenants, this study by analyzing different VIE agreements' function and actual effects finds that listed companies in VIE structures can merely have limited control over profit-transferring process without any decision-making power. The article concludes that the recent legal reform in China might bring changes to VIE structures and substantiate the nominal rights under the typical VIE contracts or rights that investors should have had as shareholders. 

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Low Costs of Oil Prices Impact Energy Decisions: Geopolitics and Investments

Blake Meadows | 3 Emory Corp. Governance and Accountability Rev. Perspectives 2069 (2016)

Using both political sources and economic indicators, Blake Meadows analyzes the current oil market. This article specifically focuses the geopolitical nature of the oil supply and its impact on certain oil assets. The research indicates that difficult to extract oil resources such as fracking and tar sands are taking an economic hit. However, the same research indicates that long-term the oil market will rebound. What that means for difficult to extract resources is that they will not be profitable for immediate production but will be a valuable asset long term as the oil market balances itself out. Thus companies who are involved in energy investments should be careful not to unload these resources but should probably minimize short-term production and avoid bringing new reserves on-line until the market rebounds. 

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Corporate Accountability under the Prospective Trade in Services Agreement: The Global Game Changer

Nicholas Torres | 3 Emory Corp. Governance and Accountability Rev. Perspectives 2074 (2016)

This Perspective analyzes the prospective Trade in Services Agreement ("TiSA"). This agreement seeks to address major barriers to trade in services affecting the United States and its trading partners. Some barriers to trade of services include the need for due process of law and discrimination in obtaining business licenses and permits with foreign governments. However, removing trade barriers equates to deregulation. The TiSA has yet to be released to the general public, but it is presently a major point of controversy. Its terms are expected to heavily favor multinational corporations operating within the borders of the twenty-three economies presently participating in the TiSA negotiations. 

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Enforcement of Human Rights against Transnational Corporations: How Much Does the United States Really Care?

Madeline Kahn | 3 Emory Corp. Governance and Accountability Rev. Perspectives 2025 (2016)

In this Perspective, Madeline Kahn addresses the United States' role in the ability of transnational corporations ("TNCs") to evade responsibility for human rights violations. An examination of international and domestic legislation reveals that the United States is not very committed to enforcing human rights law against TNCs. Kahn's Perspective explains that there is no international law that applies directly to corporations, as the UN lacks the jurisdiction to enforce it. Domestic law does not serve to protect human rights against TNCS either. She looks at one case in particular, Kiobel v. Royal Dutch Petroleum, as an example of how severely outdated domestic law fails to provide justice to victims of TNC abuses. Kahn concludes with the notion that the United States should be a part of creating and enforcing an international treaty in an effort to stop TNCs human rights abuses and offer victims a venue for justice.

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Governing Cybersecurity: The SEC Enters the Ring

Forrest E. Lind III | 3 Emory Corp. Governance and Accountability Rev. Perspectives 2032 (2016)

Using enforcement actions and guidance materials from the Securities and Exchange Commission and the Federal Trade Commission, Forrest E. Lind III compares the agencies' approaches to cybersecurity regulation, forecasts the future of cybersecurity regulation, and discusses how the increase in cybersecurity regulations will affect regulated entities. The adequacy of a company's cybersecurity measures is a growing source of liability because the SEC has begun punishing companies based on how they anticipate, and respond to, cyberattacks. This Perspective analyzes the character of the agencies' actions and finds that the SEC will be a more aggressive enforcer than the FTC. After noting the FTC's history with cybersecurity measures, Lind points out the differences between the SEC and FTC to support his prediction that the SEC will play a prominent role in future cybersecurity regulation. Lind concludes by suggesting governance-based strategies for complying with SEC and FTC cybersecurity regulations.

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Enforcing the Foreign Corruption Practices Act in China

Nicholas Torres | 3 Emory Corp. Governance and Accountability Rev. Perspectives 2041 (2016)

Nicholas Torres analyzes the Foreign Corrupt Practices Act, which the U.S. Securities Exchange Commission and the Department of Justice rely on in investigating securities violations outside the United States. The United States and China are the world's two largest economies. As China continues to open its doors to foreign commerce, more corporations, which are publicly traded within the United States and subject to the Foreign Corrupt Practices Act, are conducting business within the boarders of China. Absence of an enforcement agreement between the U.S. and China's regulatory commissions, which would facilitate the exchange of evidence, the Foreign Corrupt Practices Act is increasingly difficult to enforce. The U.S. and China's regulatory commissions have to advance their cooperation and encourage Chinese whistleblowers to come forward in order to facilitate implication of U.S. securities regulation within China.

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Should Pregnant Workers Always Receive Requested Accommodations From Their Employer?

Karen Kolacinski | 3 Emory Corp. Governance and Accountability Rev. Perspectives 2001  (2015)

Today's employers may struggle to find a balance between fairness to all employees and their obligation to accommodate their pregnant workers.  Karen Kolacinski discusses some of the factors that determine when an employer must accommodate pregnant employees, including the Pregnancy Discrimination Act, the Americans with Disabilities Act, and the employer's collective bargaining agreements.  This perspective highlights the employer's responsibility to provide disabled workers reasonable accommodations, when employers can justify refusal to provide these accommodations, and the dilemma employers may face while trying to balance fairness to all employees.  The author discusses a recent case which illustrates the differing views regarding how the Pregnancy Discrimination Act and the Americans with Disabilities Act should be implemented, as well as some of the controversies that may arise among employees or between an employee and the employer regarding how these laws are to be interpreted.

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Defining Waters of the United States: Economic Burden Attaching to Real Property

Blake Meadows | 3 Emory Corp. Governance and Accountability Rev. Perspectives 2005 (2015)

Using Environmental Protection Agency reports and various business sources, Blake Meadows, examines the impact of the latest EPA definition of Waters of the United States on real estate and land values. Specifically, the impacts of this proposed definition on business decisions relating to land are evaluated in depth. This study also discusses some of the legal arguments playing out in the multi-state litigation revolving around the definition. Ultimately, the paper concludes that by encompassing such a large amount of land to Clean Water Act permitting requirements, the new definition would have a significant potential impact on business. In terms of the litigation, it is likely that the rule will be struck down on procedural grounds but in terms of the merits, it appears to come down to an issue of federalism. Ultimately the courts and the nation will have to decide how much power should be ceded to the EPA.

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Blinded by Dollar Signs: Future Ramifications of Corporate Inversions

Lauren Paine | 3 Emory Corp. Governance and Accountability Rev. Perspectives  2010  (2015)

Corporate inversions are a favorite topic amongst the press and politicians, however, the abundance of articles and commentary on the subject have the tendency to be slightly misleading due to the differing and competing viewpoints of the authors. This perspective seeks to examine corporate inversions without acquiescing to a specific agenda. Instead of focusing on potential tax code reforms that would reduce or eliminate inversions, this perspective focuses on shareholders' concerns when considering the approval of an inversion type deal. This perspective urges shareholders to think more about the long term consequences of an inversion rather than the immediate benefits.

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The PFIC Carve-Out: Hedge Funds and the Tax-Free World of Offshore Reinsurance

Ben Pierce | 3 Emory Corp. Governance and Accountability Rev. Perspectives 2017 (2015)

A hedge fund that establishes itself in an offshore, tax-free jurisdiction receives harsh tax penalties, as  1297 of the Tax Code designates this fund as a passive foreign investment company, or "PFIC." Insurance companies, however, enjoy a special carve-out from the rule, allowing them to escape PFIC classification long as they are predominately engaged in the business of insurance, rather than the business of investing.  Hedge fund managers have utilized the carve-out to establish reinsurers, companies that provide insurance for insurance companies, in offshore jurisdictions.  Some regulators have leapt to the conclusion that these offshore corporations are investment funds "disguised" as legitimate reinsurers.  A recent bill proposed by Senate Finance Committee Ranking Member Ron Wyden targets such hedge fund-backed reinsurers, but the bill¿s bright-line test is an unworkable solution, as it may extend PFIC status to valid insurance companies and undermine the public policy of policyholder protection.

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The Multilevel Marketing Misnomer: How the Federal Trade Commission May Change Network Marketing

Jeremy Pineres | 3 Emory Corp. Governance and Accountability Rev. Perspectives 2021 (2015)

In light of recent litigation against Vemma Nutrition Co. by the Federal Trade Commission, Jeremy Pineres examines the compensation structures of multi-level marketing companies with a focus on the various shortcomings of these companies that lead to quasi-pyramid scheme business practices. During a time where the internet provides consumers instant access to competitive pricing, multi-level marketing companies nevertheless offer products and services that are largely unsellable. Generally, the price and quality of these marketed products and services are unable to compete with store-bought items. When combined with a compensation structure that financially rewards and encourages new member recruitment over bona fide retail sales, the resulting business practice resembles a pyramid scheme in all but its name. After analyzing the various factors that create and encourage the questionable practices of these companies, Pineres forecasts how the court¿s ultimate ruling could form the basis for several changes within the industry.

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