{"title":"Rebooting the Community Reinvestment Act","authors":"Lindsay Sain Jones, Goldburn Maynard Jr.","doi":"10.1111/ablj.12247","DOIUrl":"10.1111/ablj.12247","url":null,"abstract":"<p>The Community Reinvestment Act (CRA) was passed in 1977 as a response to redlining, the systemic discrimination against loan applicants who resided in predominantly Black neighborhoods. In enacting the CRA, Congress found that banks have a “continuing and affirmative obligation” to help meet the credit needs of the communities in which they are chartered. To that end, the CRA requires bank regulators to rate the record of each bank in fulfilling these obligations. While much has changed since 1977, some things have not. Financial services are now provided by a much broader set of entities including financial technology (fintech) firms, yet the CRA's mandates still just apply to banks. In addition, while the demographic compositions of neighborhoods have changed since 1977, Black applicants are still 2.5 times more likely than White applicants to be rejected for a home loan. On October 24, 2023, the banking agencies jointly issued final rules to “strengthen and modernize” the agencies' CRA regulations. While the updated rules do inject more objectivity in order to address persistent concerns about CRA ratings inflation, we contend that further amendments are needed to account for what has changed and what has not changed since its original enactment. In this article, we argue that the CRA continues to be a worthwhile endeavor, as it addresses gaps left by fair lending laws. To further its impact and address its many shortcomings though, we contend the CRA should be amended to also apply to nonbanks that provide financial services, to counter discrimination more directly, and to calculate CRA ratings more objectively.</p>","PeriodicalId":54186,"journal":{"name":"American Business Law Journal","volume":"61 3","pages":"167-190"},"PeriodicalIF":1.3,"publicationDate":"2024-07-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/ablj.12247","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141775397","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Innovation stakeholders: Developing a sustainable paradigm to integrate intellectual property and corporate social responsibility","authors":"David Orozco","doi":"10.1111/ablj.12249","DOIUrl":"10.1111/ablj.12249","url":null,"abstract":"<p>Innovation is usually framed in terms of expanding the knowledge frontier or the commercialization of new ideas. However, it is much more than that. Innovation is also about providing greater well-being for society and the various stakeholders that support a firm's efforts to innovate. This article examines the paradoxical status of innovation and its related legal domain of intellectual property rights, which largely exists beyond the purview of corporate social responsibility (CSR) theory, practice, and discourse. To address this conceptual deficiency, this article interlinks intellectual property, innovation, and CSR to offer three contributions. First, this article provides a working definition of the various stakeholders that must be identified to define CSR goals related to innovation. A critical aspect of CSR is the identification of relevant stakeholders. Second, this article discusses how established CSR approaches will accommodate these innovation stakeholders. Third, this article introduces and positions the managerial strategy of open innovation as a feasible and desirable approach that ethically recognizes, engages, and balances the interests of innovation stakeholders with the interests held by the firm and society. The normative argument made is that the firm's fiduciary leaders have an ethical obligation to pursue open innovation practices as a default norm to achieve the best CSR results for the firm and its various innovation stakeholders.</p>","PeriodicalId":54186,"journal":{"name":"American Business Law Journal","volume":"61 3","pages":"211-237"},"PeriodicalIF":1.3,"publicationDate":"2024-07-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141745898","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"High-status versus low-status stakeholders","authors":"H. Justin Pace","doi":"10.1111/ablj.12248","DOIUrl":"10.1111/ablj.12248","url":null,"abstract":"<p>The literature on stakeholder theory has largely ignored the difficult and central issue of how judges and firms should resolve disputes among stakeholders. When the issue is addressed, focus has largely been on the potential for management to use stakeholder theory as cover for rent-seeking or on disputes between classes of stakeholders. Sharply underappreciated is the potential for disparate interests within a stakeholder class. That potential is particularly acute due to a (largely education-driven) stark and growing class divide in the United States. There is a substantial difference between the interests of a highly educated professional and managerial elite and a pink-collar and blue-collar working class who mostly do not hold 4-year degrees. Despite their smaller numbers, the professional and managerial elite will frequently win out in intra-stakeholder disputes with working-class stakeholders due to their greater status, power, and influence. Because this class divide is cultural, social, and political, as well as economic, these disputes will go beyond financial pie-splitting to culture war issues. This threatens to be destabilizing for both the republic and individual firms and undermines both the practical and ethical arguments for the stakeholder theory.</p>","PeriodicalId":54186,"journal":{"name":"American Business Law Journal","volume":"61 3","pages":"191-209"},"PeriodicalIF":1.3,"publicationDate":"2024-07-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/ablj.12248","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141740876","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"What is the impact of legal strategy?","authors":"Robert C. Bird, Justin W. Evans","doi":"10.1111/ablj.12241","DOIUrl":"https://doi.org/10.1111/ablj.12241","url":null,"abstract":"<p>Law and strategy (LAS)—the study of the law's role in competitive advantage—has developed rapidly and with substantial promise for over 20 years. However, at this critical juncture in its development, the LAS literature lacks both a systematic review of its impact and an organized call for future research. To fill this scholarly gap, this article reports two citation analysis studies that identify the overall impact of the literature as well as the specific influence of seminal articles in the field. We find that LAS is widely cited, has a substantial and diverse disciplinary reach, and, crucially, that the influence of its seminal works has not faded over time. Building on these findings, we recommend pathways for future LAS research, including more cross-disciplinary scholarship, a closer engagement with the related stream of proactive law, a deeper inquiry into ethics, more systematic theory-building and empirical work, and a global perspective that tests the boundaries of LAS beyond fully developed markets. We conclude that LAS has a promising future with the potential for a wide range of applications that address significant challenges facing law and business.</p>","PeriodicalId":54186,"journal":{"name":"American Business Law Journal","volume":"61 2","pages":"113-133"},"PeriodicalIF":1.2,"publicationDate":"2024-05-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140949187","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Anticontract","authors":"D. P. Waddilove","doi":"10.1111/ablj.12242","DOIUrl":"https://doi.org/10.1111/ablj.12242","url":null,"abstract":"<p>Should a court ever second-guess a contract, ignoring what the parties said and imposing something different? Contractual purists insist that the answer is no. But the messy nature of reality counsels otherwise. We have long appreciated that creating a “complete” contract, one that efficiently treats every potentially relevant contingency, is impossible. In particular, systematic risks that affect the entire economy fall beyond contract's realistic reach. When such events occur, they upset contractual frameworks, leaving parties shackled with obligations suited to a world that never came to be. At least in that context, second-guessing is vital. And that second-guessing can be understood according to a concept called anticontract. When systematic risks fundamentally upend contractual frameworks, this inversion of contract's basic principles paradoxically fulfills contract's goals. Anticontract does the opposite of all that contract law does: it adjusts rather than enforces; it looks ex post rather than ex ante; it prioritizes the public rather than the parties; and it provides no general rules, only particular results. It operates, in short, irregularly rather than regularly. In the face of realized systematic risks, anticontract thus paradoxically fulfills contract's goals by doing contract's opposite. In so doing, it redistributes losses to those most able to bear them at the microlevel, curing macroeconomic ills at their source. In essence, it creates social insurance for systematic risks that private contract cannot manage. In all this, anticontract can be understood as an instance of a broader phenomenon, the completion of law through equity. Anticontract thus represents an important way to understand the limits of contract and when to violate the principles of contract law.</p>","PeriodicalId":54186,"journal":{"name":"American Business Law Journal","volume":"61 2","pages":"135-161"},"PeriodicalIF":1.2,"publicationDate":"2024-05-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140949185","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Decentralized credit scoring: Black box 3.0","authors":"Nizan Geslevich Packin, Yafit Lev-Aretz","doi":"10.1111/ablj.12240","DOIUrl":"10.1111/ablj.12240","url":null,"abstract":"<p>Much like traditional credit scoring, decentralized credit scoring calculates a borrower's creditworthiness, but the fully automated process is executed on the blockchain by Decentralized Finance (DeFi) platforms. Originally, DeFi emerged as an alternative to the centralized traditional finance (TradFi) system; however, decentralized credit scoring combines DeFi data and traditional data that include a wide range of information sources, from traditional credit reports to social media information. Despite their fairness-oriented narrative, an examination of the business models of the protocols and entities operating in this space reveals that these hybrid scores are subject to the same algorithmic distortions that have been observed in traditional and alternative credit scoring models. Moreover, decentralized credit scores present their own distinctive set of fairness issues. Particularly, both upgrade to smart contracts and their reliance on external algorithms, known as oracles, which feed outside data, introduce heightened potential for error and bias in the credit scoring process. These “black box 3.0” issues can result in opaque automation of biased processes and perpetuate social injustices, requiring regulatory intervention to strengthen the linkage points between DeFi and TradFi and better protect consumers from the black box 3.0 consequences of decentralized credit scores.</p>","PeriodicalId":54186,"journal":{"name":"American Business Law Journal","volume":"61 2","pages":"91-111"},"PeriodicalIF":1.2,"publicationDate":"2024-04-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140833773","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Unwinding NFTs in the shadow of IP law","authors":"Runhua Wang, Jyh-An Lee, Jingwen Liu","doi":"10.1111/ablj.12237","DOIUrl":"https://doi.org/10.1111/ablj.12237","url":null,"abstract":"<p>Amid the surge of intellectual property (IP) disputes surrounding non-fungible tokens (NFTs), some scholars have advocated for the application of personal property or sales law to regulate NFT minting and transactions, contending that IP laws unduly hinder the development of the NFT market. This Article counters these proposals and argues that the existing IP system stands as the most suitable regulatory framework for governing the evolving NFT market. Compared to personal property or sales law, IP laws can more effectively address challenges such as tragedies of the commons and anticommons in the NFT market. NFT communities have also developed their own norms and licensing agreements upon existing IP laws to regulate shared resources. Moreover, the IP regimes, with both static and dynamic institutional designs, can effectively balance various policy concerns, such as innovation, fair competition, and consumer protection, which alternative proposals struggle to provide.</p>","PeriodicalId":54186,"journal":{"name":"American Business Law Journal","volume":"61 1","pages":"31-55"},"PeriodicalIF":1.2,"publicationDate":"2024-02-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/ablj.12237","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139916807","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Text, tone, and legal language: Analyzing mutual fund disclosure sentiment","authors":"Anne M. Tucker, Yusen Xia, Susan Navarro Smelcer","doi":"10.1111/ablj.12239","DOIUrl":"10.1111/ablj.12239","url":null,"abstract":"<p>Mutual fund disclosures must include information about a fund's strategies and risks to comply with the letter of the law. But funds should also honor the spirit of Securities and Exchange Commission (SEC) regulations, including informing ordinary investors. Disclosure language creates impressions that can be just as important as the content. But evaluating these soft aspects of disclosures is hard. In this article, we propose using disclosure tone—how positive or negative the language is—to empirically capture these impressions. This measure provides an additional tool to assess compliance with the spirit of disclosure laws. Building on finance research on company disclosures, we develop customized dictionaries specific to mutual fund disclosures. We then introduce a novel sentiment-scoring framework that generates transparent sentence- and disclosure-level scores for our sample of 164,602 mutual fund summary prospectuses (497k) from 2010 to 2020. Our descriptive analysis validates our dictionary by showing meaningful and statistically significant differences across disclosure sections, fund type, and time. Funds' statements of their principal risks are more negative (and uniformly so) across time than funds' descriptions of their investment strategies. We further explore these relationships using a fixed-effects regression model. These analyses reveal statistically significant relationships between mutual fund disclosure tone and fund attributes, performance, and disclosure characteristics. These relationships are consistent with SEC requirements that anchor risk discussions in more negative language than strategy discussions. The findings also highlight the role of legal language in setting the overall disclosure tone. Our context-sensitive approach provides a path to regulate compliance more effectively with both the letter and the spirit of the law. Our framework, which we have made publicly available, provides a robust tool to allow researchers and regulators to assess not only what funds say, but how they say it.</p>","PeriodicalId":54186,"journal":{"name":"American Business Law Journal","volume":"61 1","pages":"57-86"},"PeriodicalIF":1.2,"publicationDate":"2024-02-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139759982","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Janine Hiller, Kathryn Kisska-Schulze, Scott Shackelford
{"title":"Cybersecurity carrots and sticks","authors":"Janine Hiller, Kathryn Kisska-Schulze, Scott Shackelford","doi":"10.1111/ablj.12238","DOIUrl":"10.1111/ablj.12238","url":null,"abstract":"<p>In an unsustainable trend, each year is touted as the worst on record for data and system breaches. 2020's dubious top distinction was exceeded across numerous metrics in 2021, and 2022's numbers set another unwanted record. The growing epidemic of ransomware, data breaches, and cyber-enabled attacks pushes policymakers and business leaders to consider what can be done to reverse the cyber-insecurity spiral. Amidst the current cybersecurity landscape fraught with regulatory gaps, dependence on self-regulation, and resource constraints of small- and medium-sized businesses, policymakers should seize opportunities to reward reasonable cybersecurity postures and disincentivize underinvestment in cybersecurity best practices. Bold and coordinated actions are needed to dislodge the unsustainable trend of increasingly damaging cyberattacks, and to create a more holistically secure digital future. To move the needle toward a more robust cybersecurity ecosystem, this article proposes an incentive-based strategy that breaks the mandate-versus-self-regulation dichotomy, leveraging a carrots and sticks tax approach to spur stronger cybersecurity postures across the ecosystem. Such proposal outlines a framework for a Federal Cybersecurity Investment Tax Credit, tailored and mapped to select entity types, combined with a cyberinsecurity tax, thus promoting the principle that businesses have basic cybersecurity responsibilities and fundamental duties to operate securely in a digital society. In addition, this article introduces supplementary tools as part of an enhanced cybersecurity tax policy toolkit. Given pressing national and global cyber risks, this article continues a long-standing conversation about the operative use of tax policy as part of a holistic approach to reaching a secure and sustainable digital future.</p>","PeriodicalId":54186,"journal":{"name":"American Business Law Journal","volume":"61 1","pages":"5-29"},"PeriodicalIF":1.2,"publicationDate":"2024-01-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/ablj.12238","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139587381","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Future of Work and U.S. Public Opinion on Noncompete Law: Evidence from a Conjoint Experiment","authors":"Christopher P. Dinkel","doi":"10.1111/ablj.12234","DOIUrl":"https://doi.org/10.1111/ablj.12234","url":null,"abstract":"<p>Although policymakers have recently shown a keen interest in noncompete reform, a gap exists in the literature concerning what the U.S. public's preferences are regarding noncompetes. Therefore, this article presents the empirical findings of a nationally-representative survey of the American public on the noncompete law governing employees. Based on the results of a conjoint experiment within the survey, this article finds that the U.S public prefers that noncompetes be used to protect any types of confidential information, rather than simply customer lists or employee training investments. Additionally, the findings do not show clear support either for or against noncompete exemptions based on an employee's earnings level. However, this article finds that the U.S. public prefers a noncompete exemption for physicians, a shorter maximum duration for the noncompete period, and a legal mandate that departing employees subject to noncompetes receive some compensation from the employer during the noncompete period. Consequently, this article argues that employers should engage in greater self-regulation if they would like to mitigate the risk not only that legislators will respond to public sentiment favoring more employee-friendly policies by enacting a total or near-total ban on noncompetes, but also that judges will find the noncompetes to be unreasonable.</p>","PeriodicalId":54186,"journal":{"name":"American Business Law Journal","volume":"60 4","pages":"749-792"},"PeriodicalIF":1.2,"publicationDate":"2023-11-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138432382","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"社会学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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