Corporate group

About: Corporate group is a research topic. Over the lifetime, 1747 publications have been published within this topic receiving 46868 citations.

Financial Engineering as an Alternative Veil for the Corporate Group

Abstract: This paper analyses the fundamental question of how to identify a corporate group in the era of both organizational-decoupling and equity-decoupling. The modern complexity of corporate structures is facilitated by a web of intermediaries. On the one hand, corporate scandals have shown how the use of organizational structures comprising a web of legal entities and legal arrangements has actively provided a vehicle for regulatory evasion, i.e. Enron, Starbucks and Citibank, to name a few. On the other hand, corporate complexity has been taken to another dimension by the derivative revolution since the 1990s, enabling equity-decoupling of the interconnected entitlements traditionally connected to a share. The decoupling phenomenon provides a new challenge in identifying corporate control and thereby gaining an understanding of where the modern corporate group structure begins and where it really ends. The fundamental question is whether sufficient control as the fundamental criterion for group establishment remains unidentified: in this case, the legal framework would not consider the corporate relation as a corporate group, and hence, no corporate liability claims can be addressed. This situation would imply an additional corporate veil, facilitated by the complexity and opaqueness that can be created by clever consultants. Such a veil would serve as a legal barrier due to the fact that the factual control or influence by one corporate entity over another is concealed through either or both layers of legal entities (subsidiarization in the broad sense of the term), or by financial engineering providing full or partial control through synthetic shareholding.

Wall Street's Corporate Governance Crisis

Abstract: The board of directors of a public company is only responsible for a relatively few of the almost infinite number of decisions that are made at a public company over any period of time. Yet, when a corporate board does make a decision, for example, the appointment of a chief executive officer or the approval and recommendation to shareholders of a merger agreement, the decision can have a major impact on the firm. Now, based on the fallout from the financial crisis of 2008, we can add corporate board approval of company-wide compensation policies to the list of board decisions that are of potentially major significance to the firm, at least for those public companies we can refer to as "Wall Street" firms (financial institutions with large financial trading and investment banking operations whether or not they are based in proximity to lower Manhattan). The significance of these employment policy decisions cannot be overstated. By comparison, what was at stake in the much publicized litigation involving the Walt Disney Company was almost trivial, since the facts of the Disney litigation did not involve a threat to the company's existence or billions of dollars of capital outflows. The elevation of company-wide compensation policies to the fore of corporate governance issues facing Wall Street firms requires both a change in perspective on how these policies should be implemented as well as a reconsideration of whether the protections of the business judgment rule as applied to corporate board decisions under corporate law need to be adjusted accordingly.

Corporate Bankruptcy, Soft Budget Constraints, and Business Group Affiliation: Evidence from Indian Firms

Abstract: We examine the ex-ante performance of 1185 firms that filed for bankruptcy between 1992 and 2009. Evidence suggests that firm specific poor operating performance and industry wide distress are the principal causes (contributing 42% each for cash flow shortfall) of corporate distress. We observe vitiating investment, operating, and financing performance of the sample firms starting from four years prior to their bankruptcy. Further, we report less severe decline in capital expenditure in the case of state controlled firms and business group affiliated firms, indicating the presence of "soft budget constraints" among the sample firms. Logistic regression, estimating firm level distress probabilities offer indirect evidence for "risk sharing argument" among business group affiliates.

An Evolutionary Approach to Comparative Taxation: Theory, Methods and Agenda for Research

Abstract: The aim of the paper is twofold: (i) to lay down theory and methods of comparative tax law, by reviewing how the main approaches generally adopted in comparative legal studies can be used in this new area of research, and (i) to propose perspectives for future comparative tax research on the basis of such theory and methods. As to the theory, the paper adopts as analytical approach to search for a common base of tax concepts by solving certain problems of non-comparability, and presents a model of tax systems which evidences that effective tax rules are created by a dynamic process occurring within each tax system, so that comparative tax analysis should be based on a clear understanding of the structure as well the evolution of tax systems. As to the methods, the paper proposes a functional approach which looks at effective solutions adopted by different tax systems to similar tax problems and discusses on the use of formant approach, common core approach and economic analysis of law in comparative taxation, concluding that an institutional approach should be adopted in which alternative tax solutions are considered in a comparative setting. The paper submits that comparative tax research should be methodologically eclectic and avail itself of all the facets of the functional approach. In this context the legal formants approach shows how effective rules develop at an domestically and diverge/converge at cross-border level, the common core approach reveals the actual patterns of tax convergence, while the institutional approach contributes to the understanding of circulation of tax models on the basis of their comparative efficiency. All these approaches, in turn, contribute to the study of evolution and circulation of tax models among different countries: tax models serve as a paradigm for tax policy discussion, and through the continuous change of statutory law as well of administrative guidelines and case law, circulate among domestic systems. The paper therefore evidences that a functional approach should be adopted in which the functions of tax rules in different systems are revealed and reconstructed in coherent tax models which can be effectively compared showing patterns of divergence or convergence. In terms of perspectives for comparative tax research the paper distinguishes between static versus dynamic comparative taxation. While research in the former field may lead to important insights as to the formation of tax families, research in the latter field opens up a new set of scholarly issues as it focuses on change of regulatory tax patterns, interdependence of tax systems and circulation of tax models. The paper concludes that these issues contribute to set a possible agenda for future comparative tax research and envisages five challenges for comparative taxation: to provide a theoretical basis for comparative evolutionary analysis (CEA); to develop the analysis of tax transplants; to study tax convergence and divergence within a strategic equilibrium framework encompassing the tax policies of different countries; to identify an evolutionary map for EU corporate taxes revealing a common core, and to define a EU common model of tax consolidation of group of companies on which agreement could be reached through reinforced cooperation.

At the Frontiers of Labour Law and Corporate Law: Enterprise Bargaining, Corporations and Employees

Abstract: Corporate law and labor law have traditionally been segregated fields, yet recent developments in corporate governance have brought these two areas of law closer together. There has been an international trend toward decentralization of collective bargaining power in recent years. Mirroring this international trend, a major paradigm shift occurred in Australian labor law during the last decade, with the introduction of an enterprise bargaining regime in the mid-1990s and further major reforms in 2005. These reforms accord virtually no significance to the issue whether an employer is a corporation, continuing the historical segregation between labor law and corporate law. This article attempts to bring these two legal fields into proximity, by arguing that the corporate status of employees is of vital significance. The article examines a range of ways under contemporary corporate governance principles in which employee interests might be protected from within the enterprise - either through the medium of fiduciary duties or through participating rights in the governing of the corporation itself.