Abstract

http://ssrn.com/abstract=1714591
 


 



Self-Dealing by Corporate Insiders: Legal Constraints and Loopholes


Vladimir A. Atanasov


College of William and Mary - Mason School of Business

Bernard S. Black


Northwestern University - School of Law; Northwestern University - Kellogg School of Management; European Corporate Governance Institute (ECGI)

Conrad S. Ciccotello


Georgia State University - Department of Finance

March 6, 2011

RESEARCH HANDBOOK ON THE ECONOMICS OF CORPORATE LAW, Chapter 22, Brett McDonnell and Claire Hill, eds., Forthcoming
Northwestern Law & Economics Research Paper No. 11-07

Abstract:     
Insiders (managers and controlling shareholders) can extract (tunnel) wealth from firms using a variety of methods. This article examines the different ways in which U.S. law limits, or fails to limit, three types of self-dealing transactions – cash flow tunneling, asset tunneling, and equity tunneling. We examine how U.S. corporate, securities, bankruptcy, and tax law, accounting rules, and stock exchange rules impact each form of self-dealing, and identify weaknesses in these rules. We argue that a variety of complex asset and equity transactions, as well as equity-based executive compensation, can escape legal constraints. We propose changes in corporate, disclosure, and shareholder approval rules to address the principal gaps that emerge from our analysis.

For an extended version of this article, including case studies illustrating how these loopholes are exploited, see Atanasov, Black, and Ciccotello, Law and Tunneling (2011), 37 Journal of Corporation Law 1-49, available at http://ssrn.com/abstract=1444414.

Number of Pages in PDF File: 44

Accepted Paper Series





Download This Paper

Date posted: April 8, 2011 ; Last revised: December 2, 2011

Suggested Citation

Atanasov, Vladimir A. and Black, Bernard S. and Ciccotello, Conrad S., Self-Dealing by Corporate Insiders: Legal Constraints and Loopholes (March 6, 2011). RESEARCH HANDBOOK ON THE ECONOMICS OF CORPORATE LAW, Chapter 22, Brett McDonnell and Claire Hill, eds., Forthcoming ; Northwestern Law & Economics Research Paper No. 11-07. Available at SSRN: http://ssrn.com/abstract=1714591

Contact Information

Vladimir A. Atanasov
College of William and Mary - Mason School of Business ( email )
P.O. Box 8795
Williamsburg, VA 23187-8795
United States
Bernard S. Black (Contact Author)
Northwestern University - School of Law ( email )
375 E. Chicago Ave
Unit 1505
Chicago, IL 60611
United States
512-503-2784 (Phone)

Northwestern University - Kellogg School of Management
2001 Sheridan Road
Evanston, IL 60208
United States
847-491-5049 (Phone)
European Corporate Governance Institute (ECGI)
Brussels
Belgium
Conrad S. Ciccotello
Georgia State University - Department of Finance ( email )
University Plaza
Atlanta, GA 30303-3083
United States
404-651-1711 (Phone)
404-651-4219 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 1,345
Downloads: 321
Download Rank: 54,260

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo2 in 0.344 seconds