William W. Bratton

The Separation of Corporate Law and Social Welfare

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A recent essay of mine reflects on the proposition that corporate law should concern itself with social welfare, taking a historical approach.  The essay begins with the quarter century after World War II, when corporate legal theory pursued an institutional vision in which corporations and the law that creates them protect people from the ravages of volatile free markets.  The institutional vision reflected the practice.  Corporate managers, seeking to avoid confrontation with a powerful regulatory state, cooperated with it, taking the lead in pension and healthcare provision in tandem with a long run of successful financial performance.  Market controls were … Read more

Hedge Fund Activism, Poison Pills and the Jurisprudence of Threat

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Hedge fund activism is to corporate law’s early 21st century what the hostile takeover was to its late 20th century.  Like the hostile takeover, activism threatens incumbent managers and disrupts their business plans by successfully appealing to the shareholders’ interest in immediate returns.  Like the hostile takeover, activism occupies center stage in corporate law policy discussions, posing a choice between short-term gain and long-term investment.  But there is a glaring point of distinction.  Unlike the hostile takeover, activism has precipitated no significant changes in corporate law.  Where the hostile takeover triggered structural changes in state corporate codes and the federal … Read more