Monday, 28 July 2014

‘Civilising’ the UK Companies Act?

It's good to see the publication of Schall (ed.) on the UK Companies Act 2006 (with me contributing two chapters).
  This is a German-language 'Commentary', ie an annotated guide to the Companies Act written in a 'civil law style'. This is meant to say that it discusses each section of the Act but a bit differently than the 'common law style' annotated guides. The latter books tend to be 'only' a useful resource that collects the relevant case law. But a civil law commentary has a more ambitious aim to conceptualise the law, also trying to explore topics that have not yet been the subject of case law.
  How successful have we been? Or, more fundamentally, is it really possible to treat the UK Companies Act as akin to a civil law code – and therefore to make it the subject of such a Commentary? I think we'll leave this for the readers to judge.
  PS: it may seem a bit unusual to write this book in German. But in today's EU businesses can choose the legal form of any of the Member States anyway – thus, it's not really that different from a book on Delaware corporate law written by legal scholars from New York (etc).

Monday, 21 July 2014

Hobby Lobby: a view from Europe (mainly from a German corporate law perspective)

The US Supreme Court decision in Hobby Lobby has received a lot of attention in US blawgs (see eg here and here). Based on the Religious Freedom Restoration Act (RFRA), it allowed ‘closely held for-profit corporations to be exempt from a law its owners religiously object to’, namely ‘a regulation adopted by the US Department of Health and Human Services (HHS) requiring employers to cover certain contraceptives for their female employees’ (as summarised here).
   This blog post aims to go through some of its core statements focussing on the corporate aspects of the decision, with some rough comparative reflections from a European (mainly German) perspective. So:
pp. 18, 20: ‘[Congress] included corporations within RFRA’s definition of “persons…. The term “person” sometimes encompasses artificial persons (as the Dictionary Act instructs), and it sometimes is limited to natural persons. But no conceivable definition of the term includes natural persons and nonprofit corporations, but not for-profit corporations’.
In general, most other legal systems would agree that the term ‘person’ would usually refer to both natural and legal persons. However, it may also depend on the specific law in question. In Germany a common phrase is that of the ‘Relativit├Ąt der Rechtsbegriffe’ meaning that legal terms (‘Rechtsbegriffe’) are ‘relative’, ie they may have completely different meanings in different areas of law. Thus, it would not be impossible that a particular law excludes for-profit corporations. Also note that the German constitution specifically states in Art 19(3) that humans rights also ‘also apply to domestic artificial persons [ie legal persons] to the extent that the nature of such rights permits’; thus, here too it depends.
pp. 22-23: ‘Some lower court judges have suggested that RFRA does not protect for-profit corporations because the purpose of such corporations is simply to make money. This argument flies in the face of modern corporate law. “Each American jurisdiction today either expressly or by implication authorizes corporations to be formed under its general corporation act for any lawful purpose or business”…  So long as its owners agree, a for-profit corporation may take costly pollution-control and energy-conservation measures that go beyond what the law requires.’
That’s also the case in Europe: the articles of association can specify any legal purpose of the company. Even more so, there is the well known discussion (eg see Ch 5 II of my Convergence book) to what extent stakeholder and other non-economic interests can, or even need to be, considered, in particular, as far as public companies are concerned. This leads to:
pp. 29-31: ‘… HHS has not pointed to any example of a publicly traded corporation asserting RFRA rights, and numerous practical restraints would likely prevent that from occurring. For example, the idea that unrelated shareholders—including institutional investors with their own set of stakeholders—would agree to run a corporation under the same religious beliefs seems improbable. .. The companies in the cases before us are closely held corporations, each owned and controlled by members of a single family, and no one has disputed the sincerity of their religious beliefs…. The owners of closely held corporations may—and sometimes do— disagree about the conduct of business. ... State corporate law provides a ready means for resolving any conflicts by, for example, dictating how a corporation can establish its governing structure….’
These statements, making a distinction between public and closed companies, are somehow puzzling. Following-up from the previous comment, it may be said that non-economic considerations are even more relevant for public than for closed companies because the greater economic power of the former companies has to go hand in hand with a greater sense of responsibility for non-economic considerations (at least that’s the European perspective). Since the final sentence of the quote refers to means of how corporate law can solve conflicts, it also seems to me that this could, in principle, equally work for public companies.
   But some parts of Hobby Lobby also very much focus on the shareholders of the close corporation. The quoted paragraph refers to their interests as the ‘owners’ of the corporation. Thus, what we really have here may be (as US scholars discussed) a ‘reverse veil piercing’. Veil piercing also exists in other countries (see eg ch 6 in Siems & Cabrelli), but it is really the rare exception in all countries (as far as I’m aware); thus why allow ‘reverse veil piercing’ here? In this respect, it is interesting to quote an earlier statement of the decision:
p. 18: A corporation is simply a form of organization used by human beings to achieve desired ends. An established body of law specifies the rights and obligations of the people (including shareholders, officers, and employees) who are associated with a corporation in one way or another. When rights, whether constitutional or statutory, are extended to corporations, the purpose is to protect the rights of these people.’
Here, from a comparative perspective, the problem is that no country (as far as I’m aware) just defines a company as ‘human beings achieving desired ends’. Such a definition would be too wide as it would also embrace many other organisations (associations, clubs, partnerships etc). Rather, in Europe, it’s usually debated whether the company is an institution, fiction or real person (cf my Convergence book p. 47) in order to explain why companies are distinct ‘persons’.
   A possible way to support the argumentation in Hobby Lobby may be that, in order to protect shareholders, the German Constitutional Court (BVerfG) has referred to the constitutional protection of private property in a number of occasions; eg, as a way of assessing the introduction of co-determination, ie its inherent reduction of shareholder participation rights. Or to put it more generally, this ‘German’ reasoning says that the protection of shareholders is not only a matter of company law but that there are also individual constitutional rights that shareholders may have.

Monday, 14 July 2014

Is it good to have an international team (eg, in the World Cup)?

A recent UK newspaper article had the title "English footballers all too rarely venture abroad but the national team as well as the players would benefit from wider horizons". It explained that the English World Cup team of 2014 only had one player who did not play in England – as contrasted with the World Cup teams of most other countries. Apparently, such isolation can be a problem – and one may be tempted draw a similar conclusion for other fields (eg, academia).
  But what do the actual data tell us? Of course, it'd not be a valid test to simply count the number of players abroad and correlate those with the World Cup performance since the former data may only reflect the size of the country, the quality of its national league, political factors etc (eg, compare France v Belgium; North v South Korea)
  Thus, the following tries to control for the country in question by way of examining the 24 countries that took part in both the World Cup 2010 and 2014. It compares the change in performance of countries in the both World Cups (total points, data from here and here) with the change in foreign-based players for each country (data from here and here). This leads to the following:


In short, there isn't a significant correlation. For Spain in particular the effect of having more foreign-based player (from 3 to 10) seems to be a negative one (of course they won the cup in 2010). For Germany (from 0 to 7) and France (from 12 to 15), however, there seems to be a positive relationship. For England, things are fairly flat (from 0 to 1 foreign-based player; with mixed success in both years).
  Further notes: in some of the countries the causal relationship may be a bit messy, eg, the Spanish change may be due to the fact that Spain won in 2010 and its players could get lucrative jobs in top leagues abroad in the subsequent years. Interestingly, there is also an overall trend because the majority of countries have more foreign-based players than four years ago (see figure; average rise of 1.54).

PS: for something similar (though with data from football clubs) see here (and the actual paper here).

Monday, 7 July 2014

Do only my friends ever cite me?

Using Google Scholar (and Westlaw etc), it is useful to keep track of citations to your publications – and thus to find out how well your research has been received. It’s also just a bit about vanity, but in any case I do regularly check my citations! Occasionally, what strikes me is that many of those are from scholars who I know personally; thus, the question in the title of this blog post.
   For the following I considered citations (excluding self-citations) to my English-language single-authored journal publications since 2006, and classified them according to three categories (PS: multi-authored papers were excluded since I don’t know exactly who my co-authors know or don’t know). In total, this led to 135 citations in the following three categories:
  • 43 = 31.9% are by people who I met and who would recognise me on the street.
  • 13 = 9.6% are by people who I only met briefly (eg, quick hand-shake at a conference), ie they would presumably not recognise me on street.
  • 79 = 58.5% are by people who I have never met.
So the answer to the question is ‘no’ (and I hope that it may also be the case that some of my friends would also have cited me if they had not known me – at least, I’m not part of any arranged citation networks; it may also just be the case that in my core field of research, comparative company law, I happen to know many of the UK-based scholars).
  What I’m still wondering is whether my numbers are somehow typical or not? Is there any research on this issue? And if one were to do a comparison, presumably a lot would depend on the field in question (narrow, broad), the citation style (selective, comprehensive) and individual characteristics (junior, senior) etc.

Tuesday, 1 July 2014

My network-based taxonomy: the next step?

As mentioned in the previous post I was at a conference in Taiwan last week. I presented my working paper on 'A Network-Based Taxonomy of the World’s Legal Systems'. The slides are here and the actual paper is here.
   Now the question is: shall I change the paper? I have presented it twice and on both occasions my choice of variables (see slide 9) raised many critical comments. And if I had to comment on such a paper, presumably I'd raise similar points as well. But is this fair? Yes, any selection of such variables is somehow subjective and therefore contentious, but that's not different from selections we make in non-quantitative research (eg, as one provides examples for particular phenomena; as one refers to historical precedents for certain causal relationships etc).
   Ok, actually, I still have two more conferences, both in September, where I'll present the paper. So, after all of those conferences, I may revisit my list of variables – and perhaps increase it from 12 to 18 (adding: eg, WTO membership, judicial review of primary legislation, availability of floating charge, prohibition of homosexuality). In the meantime, any further suggestions (also, on other parts of the paper), please let me know.

Wednesday, 25 June 2014

Analogies to the Taiwan/China relationship?

ICL
I just return from the Xth Annual Conference of the Asian Law and Economics Association, this year hosted by the National Taiwan University in Taipei. I used this occasion to learn a bit about the island: eg, reading the excellent book by Jonathan Manthorpe, Forbidden Nation: A History of Taiwan.
   In particular, I was wondering whether and how the Taiwan/China relationship may be an analogy to other current and past conflicts (as well as more non-conflictual relationships), such as: Russia v Ukraine; Ukraine v Crimea; Europe v UK; UK v Scotland; UK v Ireland; Iraq v ISIS occupied territories; West v East Germany; Germany v Austria; Malaysia v Singapore; Australia v Tasmania; Australia v New Zealand.
   As always with analogies, there are both similarities and differences – indeed, one could do a table showing how each of the country pairs of the previous paragraph may in some respects be similar but in others different from the China v Taiwan pair. Moreover, it can be seen that the results differ sharply: in some of these instances the separateness is or was accepted, while in others it was a temporary one. Thus, if anything, this reflection may illustrate the limits to draw policy conclusions from analogies.

Tuesday, 10 June 2014

Which university rankings get most attention in the UK?

To start with, which rankings do we have? A first group only ranks UK universities: the Complete University Guide, the Guardian University Guide, and the Sunday Times / Times (Good) University Guides (which now have been merged into one ranking). Second, there are a number of international rankings (overview here), the most well-known being the QS World University Rankings and the Times Higher Education World University Rankings.
   To determine ‘attention’, I used Google trends (not perfect but convenient). The ‘UK only rankings’ have developed as follows:
It can be seen that the Times guides started as the most popular ones (note: I used a wide search term to cover both the Times and the Sunday Times ones; I also considered that sometimes but not always the word ‘good’ is added), but are now a bit behind the two other ones – presumably due to the fact that since 2010 The (Sunday) Times is no longer freely available to read online (though since last year the actual rankings are now freely accessible again). Note also the peaks when the respective guides were published (eg, the Guardian one for this year was just published last week).
    
Adding the international rankings, the second figure shows that recently they have become a bit more important (see eg the peaks for the QS ranking; click on figure to enlarge), but overall they still get less attention than the UK ones (to clarify, I also tried some of the other global rankings as well as abbreviations such as THE for Times Higher Education but this didn’t change things). To check this result, I also looked at the data for the last twelve months only - and here the 'ranking of the rankings' in terms of 'google attention' is: (1) complete university guide, (2) guardian university guide, (3) times university guide, (4) QS world rankings, (5) THE world rankings.
   This final point is a crucial aspect to observe since in the actual rankings there are some notable discrepancies between the UK and the global university rankings, discussed in a previous blog post (where I also expressed a preference for the UK rankings to compare UK universities).

Friday, 6 June 2014

Comparative Law - published!

Just published with Cambridge University Press - see their websites, eg, here for the UK or here for the US. 

Or, see, Amazon.comAmazon.co.uk, Amazon.de, Amazon.fr, etc.

In addition, another blogspot site provides further information about the themes of the book.

Sunday, 1 June 2014

Can the “deep state” analogy be applied to corporate governance?

Sunday afternoon post with a rough idea. The "deep state" refers to the situation that elections and other changes of personnel don't really matter since deeper power structures of the state are unaffected. Thus, emphasising that there is something like the "deep state" means that one should not simply focus on surface changes in politics.
   Could there be something similar in corporate governance? Here too there is a strong focus on visible changes and powers: eg, frequent topics are hostile takeovers, activist investors, dismissal of directors, powers of the general meeting, voting rights of shareholder etc. But, in firms too, could there not also be powers underneath the surface that are largely independent? To research this properly one would presumably start with role of company secretaries, in house lawyers and other employees; or perhaps there may be internal structures (committees, divisions, guidelines etc) that are unaffected by any change of corporate control, any powers of the general meeting etc.
   If this sounds plausible, the next question is whether this should be seen as a problem. In the political debate the "deep state" is often regarded as something negative. Yet, stability can also be valuable (cf. Egypt with Syria). And in the corporate governance context it may be argued that organically grown "deep" corporate governance structures may have some legitimacy, perhaps somehow akin to the well-known team production theory of the corporation. So, presumably, here too there is not really an easy answer.