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Dual-Class Contracting--A Response to Roberto Tallarita
No full textRoberto Tallarita\u27s Dual-Class Contracting confronts a question that scholars and policymakers have largely overlooked: once a firm opts out of one-share, one-vote, how does it determine the degree and duration of voting inequality? This is not a binary choice between single- and dual-class structures, but a continuum with infinitely many possible configurations. To investigate this question, Tallarita assembled a dataset of 293 corporate charters from dual-class IPOs completed between 1996 and 2022. Despite the wide lati- tude finms have to tailor these arrangements, he finds that most converge on strikingly similar terms-granting holders of high-vote stock majority control with just 9-10% of the equity. This clustering is difficult to reconcile with traditional theories of contractual op- timization, which predict that firms will select governance structures that reflect their unique characteristics. Instead, Tallarita argues that issuer counsel-serving as custodians of prevailing market norms -are the primary drivers of this result. In his account, varia- tion in dual-class structures arises not from bespoke negotiation, but from occasional mu- tations introduced by norm entrepreneurs (such as Google\u27s dual-class IPO in 2004) that rapidly diffuse across law firm networks. The remainder of this response is organized as follows. First, I describe the Article\u27s contribution to empirical scholarship on dual-class structures. Second, I examine two sources of unobserved heterogeneity that complicate Tallarita\u27s argument: (i) differences between firms that adopt a dual-class structure and those that do not, and (ii) variation in the percentage of equity retained by founders at the time of the IPO. To supplement Tal- larita\u27s findings, I draw on data from my recent study of CEO turnover at dual-class firms, which reveals greater variation in actual voting control than the charter terms alone would suggest. Third, I explore when we should expect lawyer-driven norms, as opposed to mar- ket forces, to be the primary driver of contractual standardization. Specifically, I argue that dual-class voting arrangements appear to have no clear effect on shareholder value at the IPO stage, creating space for lawyer-driven norms to influence governance terms
Ethical sourcing in the context of health data supply chain management: a value sensitive design approach
No full textAbstract Objective
The Bridge2AI program is establishing rules of practice for creating ethically sourced health data repositories to support the effective use of ML/AI in biomedical and behavioral research. Given the initially undefined nature of ethically sourced data, this work concurrently developed definitions and guidelines alongside repository creation, grounded in a practical, operational framework. Materials and Methods
A Value Sensitive Design (VSD) approach was used to explore ethical tensions across stages of health data repository development. The conceptual investigation drew from supply chain management (SCM) processes to (1) identify actors who would interact with or be affected by the data repository use and outcomes; (2) determine what values to consider (ie, traceability accountability, security); and (3) analyze and document value trade-offs (ie, balancing risks of harm to improvements in healthcare). This SCM framework provides operational guidance for managing complex, multi-source data flows with embedded bias mitigation strategies. Results
This conceptual investigation identified the actors, values, and tensions that influence ethical sourcing when creating a health data repository. The SCM steps provide a scaffolding to support ethical sourcing across the pre-model stages of health data repository development. Ethical sourcing includes documenting data provenance, articulating expectations for experts, and practices for ensuring data privacy, equity, and public benefit. Challenges include risks of ethics washing and highlight the need for transparent, value-driven practices. Discussion
Integrating VSD with SCM frameworks enables operationalization of ethical values, improving data integrity, mitigating biases, and enhancing trust. This approach highlights how foundational decisions influence repository quality and AI/ML system usability, addressing provenance, traceability, redundancy, and risk management central to ethical data sourcing. Conclusion
To create authentic, impactful health data repositories that serve public health goals, organizations must prioritize transparency, accountability, and operational frameworks like SCM that comprehensively address the complexities and risks inherent in data stewardship
How can policy balance the goals of transition acceleration and justice? Permitting reform, large-scale renewable energy, and host communities in the United States
No full textImplementing energy-transition policies requires building new infrastructure, but the result is often opposition from host communities and associated actors. An important research and policy problem emerges over how to balance two goals that can be in tension: rapidly implementing energy-transition policies and addressing the needs and concerns of local communities, including diverse justice-related issues. This study adopts the perspective that the analysis of this problem benefits from opening the black box of permitting policy reform. The research contributes to the literature on siting conflicts by shifting the focus from explaining conflicts or suggesting targeted policy reforms such as improved engagement to the analysis of the diverse field of policy instruments that can balance the two goals. The study is based on a detailed analysis of eight US states that have approved permitting reform legislation since 2020. Analysis focuses on the features of the enacting legislation and associated statutory code with attention to how the two goals are addressed. The research develops a composite analysis of the states’ permit application and decision requirements, and it reviews specific suggestions from local governments for next steps in ongoing policy reform. The study contributes to the energy social science and policy literature by providing a detailed analysis that addresses the theoretical problem of how to balance the goals of transition acceleration and transition justice. The study also offers practical guidance on the design problem of improving permitting policy that can balance the goals
On Entityness and Takeovers: Acquisition Valuation, Theory of the Firm, and Coase’s Error
Full text linkThis Article advances a theory of entityness that theorizes the firm and its relationship to the acquisition premium. This theory is the first scholarly analysis to construct a general model of takeover valuation by integrating the modern finance theory of asset value and a corrected Coasean theory of the firm. The acquisition premium is an enigma. Acquirers must pay it. But why? Isn’t the market price tethered to fundamental value through an efficient market? This enigma reveals a key insight about firms. The theory of entityness postulates that the acquisition premium is compensation for a capitalized asset intrinsic in the firm structure. This Article’s core idea is that Coasean transaction cost incurred in firm creation is not really a “cost” as Coase and economists assert and have long believed as axiomatic. They are wrong. Coasean “transaction cost” begets entityness, the state of high, durable order and organization of factors of production within the legal boundary of the firm.
Coasean “transaction cost” converts into a form of capitalized asset that impounds the value of entityness. If an acquirer seeks a corporate asset, it must unavoidably invest resources to organize factors of production since these things do not self-order in a world of free resources. This Article constructs a formal arbitrage argument that proves an acquirer cannot arbitrage away the need for this investment through an election of the form of acquisition (i.e., a strategic “buy” or “build” decision), and the law of one price must hold under both choices. The acquisition premium is payment for the precondition of a firm structure that is necessary to venture in a firm—that is, the firm’s entityness. The value of this capitalized asset is monetized not in the capital market among traders of individual shares valued only on expectation of discounted free cash flow under the modern theory of asset value, but in the market for corporate control by acquirers of whole corporate assets who must give value to entityness because the market does not permit acquisition arbitrage. The theory of entityness has important implications for merger law
Doctors Playing Lawyers: Lessons for Professional Regulation in Crisis
Full text linkWhen someone gets in legal trouble in America, their case is almost invariably decided by a lawyer (a judge), lay people (a jury), or a combination of the two. Professional discipline, however, is a giant unexplained exception. In professional discipline matters, accusations of dangerous or incompetent practice are decided, usually in the first instance but always in the last, by state licensing boards composed of other members of the accused’s profession. These licensing boards wield immense power as labor regulatory institutions, covering ten times as many American workers as the minimum wage and more workers than private and public sector unions combined.
Given how unusual this setup is, there has been surprisingly little study of professional discipline within any academic field—and virtually none within law. This inattention is troubling not only because of professional discipline’s immense footprint, but also because of the potential for widespread social harm. That potential is most obvious in health care, which accounts for approximately two-thirds of licensed professionals. But even in professions outside of health care, like engineering and accountancy, unethical or incompetent practice can cause wide-spread social harm. The decision-makers controlling whether bad actors can continue to practice have no experience in policy, regulation, or adjudication. They are playing lawyers without really knowing how.
This article is the first comprehensive assessment of professional discipline’s regulatory design. It argues that the busy volunteer professionals who handle disciplinary matters lack the regulatory expertise, training, and standards necessary to ensure public safety and provider competence. Fortunately, other jurisdictions offer promising models for reform. We compare the American system to that in the United Kingdom, which demands more legal expertise, decision guidance, and non-professional perspectives. To add rigor to the comparison, we provide two new hand-coded datasets—one from a US state and one for the UK, showing that disciplinary outcomes are more appropriately harsh in the UK. We argue, in conclusion, that a similar model in the United States would be promising step forward
Congress’s Power Over the Electoral Count
Full text linkDoes Congress have authority to pass legislation regulating the counting of electoral votes? This is a consequential question for the legal framework governing presidential elections. In 2022, Congress passed the Electoral Count Reform Act (“ECRA”), which overhauled the statutory regime governing the counting of electoral votes. The ECRA’s predecessor statute, which had been in place since 1887, had long been criticized as ambiguous and unnecessarily convoluted. Those deficiencies were widely seen as a contributing cause of the January 6, 2021, attacks on the Capitol, and a rare bipartisan majority in Congress passed the ECRA to address the earlier statute’s shortcomings. Yet it did so against a backdrop of criticism from some scholars questioning Congress’s authority to legislate in this area. The scholarly literature, however, lacks a sustained defense of Congress’s power to regulate the counting of electoral votes. This Article aims to fill that gap. It does so in two ways. First, it engages with the skeptics of Congress’s authority on their traditional terrain, locating ample congressional authority grounded in the text, structure, and history of Article II, the Necessary and Proper Clause, and the Twelfth Amendment. The Article then seeks to expand the analytic framework by focusing on a constitutional provision that tends to stay out of the limelight: the Twentieth Amendment, which reconfigures the period between Election Day and Inauguration Day. In defending Congress’s authority to pass laws regulating the counting of electoral votes, this Article provides the first scholarly treatment of the Twentieth Amendment’s significance in this area
Information for Environmental Governance: The Value of State of the Environmental Reports in a Polarized Era
No full textThe increasingly dysfunctional federal democratic process poses chal- lenges to effective, consistent responses to the most important environmental risks. Information about the state of the environment and the performance of environmental protection measures can play a surprisingly important role by providing the information necessary for the public and decision-makers to resist disinformation efforts and prioritize the responses to these threats. Until 1997 the White House Council on Environmental Quality (CEQ) produced annual State of the Environment (SOE) reports as required by Section 201 of the National Environmental Policy Act of 1969. In response to paperwork reduc- tion legislation adopted in 1995, though, the CEQ interpreted the paperwork legislation to require termination of the SOE reports, and no comprehensive alternative has filled the gap. In the absence of these reports, federal agencies, members of Congress, and the public lack a national assessment of the greatest environmental risks and data on progress toward addressing them. Congress and the White House are unlikely to require development of SOE reports in the near term, but this Article outlines a viable alternative: regional, state, and local SOE initiatives. The Article draws on a state-specific case study that included development of an SOE report via a collaborative, multi-scalar, and data-driven approach. The case study demonstrates how an open-source, iterative process can serve as an example for other states and local governments and can improve environmental governance in the United States even in this polarized era
Improving Distributional Analysis in Regulatory Evaluation: An Assessment of the 2023 Circular A-4
No full textThe November 2023 revision to OMB Circular A-4 expands upon past guidance on distributional assessment in regulatory impact analysis and adds new options for conducting it, such as the use of distributional weights based on the marginal utility of income. This note explores the implications of key changes suggested in the 2023 guidelines and addresses modeling and data challenges that could yield recommendations for future revisions. We suggest that progress in improving distributional assessment in regulatory impact analysis is most likely if federal agencies collaborate with the National Science Foundation to produce model distributional analyses for different types of regulations
Is There Life in the Ruins? A Look at Post-Sveen Contract Clause Jurisprudence
No full textSeven years ago, in Sveen v. Melin, the Supreme Court applied the prevailing multipart test and rejected a contract clause claim. The result was hardly a surprise. The Court has not invoked the contract clause to invalidate a state law in more than forty years. The decision broke no new ground and seemingly signaled that the Court was content with the current multipart test, one that appears calculated to uphold state regulatory authority rather than vindi- cate the rights of contracting parties. Justice Neil Gorsuch force- fully dissented in Sveen, insisting that the multifactor test seems hard to square with the Constitution\u27s original public meaning and reduces the protection afforded agreements to a dubious balancing exercise.\u27 He appeared receptive to a fundamental reconsideration of contract clause jurisprudence
Race, the Academy, and the Constitution of the War on Drugs
No full textThe war on drugs is widely viewed as a policy failure. Despite massive government intrusions on personal liberty, drug addiction, overdoses, and drug-related violence have only in- creased since the war was declared in 1971. David Pozen\u27s new book, The Constitution of the War on Drugs, reveals a constitutional failure as well. Pozen chronicles a host of constitutional arguments that American litigants deployed to protect a right to use drugs with surprising, if fleeting, suc- cess. Pozen asks what might have been, exploring why the courts backtracked and effectively re- moved the Constitution as a meaningful obstacle to drug prohibitions. This Review highlights, supplements, and critiques Pozen\u27s important contribution to our understanding of the war on drugs. We begin with a look in the mirror, acknowledging the legal academy\u27s own role in enabling the drug war. Next, we introduce alternate explanations for the judicial passivity that Pozen criticizes. Chief among these is race-making: the drug war helped its proponents shape the evolving meaning of race. We also challenge Pozen\u27s nuanced explanations for judicial resistance to substantive consti- tutional challenges. The constitutional terrain where litigants most frequently challenged the drug war was procedural: the Fourth Amendment. And in those battles, the Supreme Court proved to be an eager drug warrior, not an ambivalent conscript. The same pattern repeats itself throughout federal and state courts and across the broader war on crime. Our critiques do not take away from Pozen\u27s contribution -the unearthing of a forgotten history of early battles in the drug war where litigants and judges briefly pushed back on the now widely accepted notion that drug use and possession could be criminalized. But we situate his findings within a broad backdrop of race, crime, and, above all, the judiciary\u27s eagerness to just say yes to the war on drugs