The Deregulation of Private Capital and the Decline of the Public Company

Elisabeth de Fontenay

Volume 68, Issue 3, 445-502

From its inception, the federal securities law regime created and enforced a major divide between public and private capital raising. Firms that chose to “go public” took on substantial disclosure burdens, but in exchange were given the exclusive right to raise capital from the general public. Over time, however, the disclosure quid pro quo has been subverted: Public companies are still asked to disclose, yet capital is flooding into private companies with regulators’ blessing.

This Article provides a critique of the new public-private divide centered on its information effects. While regulators may have hoped for both the private and public equity markets to thrive, they may instead be hastening the latter’s decline. Public companies benefit significantly less from mandatory disclosure than they did just three decades ago, because raising large amounts of capital no longer requires going and remaining public. Meanwhile, private companies are thriving in part by freeriding on the information contained in public company stock prices and disclosure. This pattern is unlikely to be sustainable. Public companies have little incentive to subsidize their private company competitors in the race for capitaland we are already witnessing a sharp decline in initial public offerings and stock exchange listings. With fewer and fewer public companies left to produce the information on which private companies depend, the outlook is uncertain for both sides of the securities-law divide.

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“Strangers in a Strange Land”: Chinese Companies in the American Tax System

Ji Li

Volume 68, Issue 3, 503-540

Foreign direct investment (“FDI”) from emerging economies generally exhibits two distinct characteristics: (1) most of the investors thrive in poor regulatory environments, and (2) the visible hand of the state exerts a powerful influence. Due to these two features, emerging market FDI poses novel questions to tax law scholars and U.S. policymakers. For instance, will the investors import noncompliance practices? Or will they adapt to the complex and stringent regulatory regime of the host country? To answer these questions, this Article presents the first empirical study of Chinese multinational companies operating in the U.S. tax system. Despite wide gaps between the two countries in terms of tax administration and compliance, Chinese investors in the United States generally appear to have adapted to U.S. tax law. In terms of tax audits and disputes with the Internal Revenue Service (“IRS”), this study finds preliminary evidence that distinguishes between the investments of state-owned companies and those of privately owned companies. Overall, the findings contribute to several important policy and theoretical debates and have significant, practical implications.

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Law in Hiding: Market Principles in the Global Legal Order

Odette Lienau

Volume 68, Issue 3, 541-608

Standing in the background of the global legal order are a range of what might be called “market principles” or “market givens”collective presentations or beliefs about how markets workwhich are treated as objective descriptions at a particular time and place. This Article argues that such market givens should be understood as a kind of “law in hiding,” shaping the policy space available to states and other actors and affecting global legal developments in important but unrecognized ways. Drawing on examples from global financial law, rules on capital mobility, and sovereign debt practices, I demonstrate how market principles can provide the real substantive content for conventionally recognized law, effectively counter official law, and act as powerful rules in the absence of clear legal standards. I further consider why “law” is a suitable categorization for these market principles, adopting a broad definition that derives from and pushes forward recent international legal scholarship. I contend that deliberately incorporating market principles into our understanding of the global legal order would be not only theoretically plausible but also productive, especially by expanding the field of legal work and activism and by raising important questions about lawmaking mechanisms, accountability, and norm coherence. I also suggest that market principles have thus far escaped attention from lawyers in part because of tendencies and assumptions in multiple variants of international legal scholarship itself.

In highlighting how market principles play a role in the global legal order, I do not intend to grant them the legitimacy or presumptive obedience sometimes associated with the label “law.” Indeed, my motivation draws in part from a concern with the capacity of these market principles to effectively undermine policy options that may lead to better outcomes. My goal, instead, is to place them as squarely as possible at the center of legal analysis and critiqueand therefore to level the playing field between these market principles and other types of principles and values we may care about.

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Migration Emergencies

Jaya Ramji-Nogales

Volume 68, Issue 3, 609-656

Migration emergencies are a commonplace feature in contemporary headlines. Pundits offer a variety of causes provoking these emergencies. Some highlight the deadly risks of these journeys for the migrants. Many more express alarm at the potential threats these mass influxes pose to their destination countries. But few question whether these migrant flows are, as commonly portrayed, unexpected and unpredictable. This Article asks whether these migration emergencies are surprising events or the logical and foreseeable outcomes of the structural failures of the global migration system. In particular, it interrogates the architecture of international migration law, arguing that the current framework is unsustainable in today’s globalized world.

This is a story about the legal construction of crisis. Several literatures offer compelling insights into the construction of migration crises, but fail to explore the crucial role of international migration law. Scholars of forced migration view the legal framework as an inadequate response to crises but not as a root cause. Others have highlighted the role that crises play in the development of international law, demonstrating how crises impact law, but failing to examine how law helps to construct those crises.

This Article begins to unpack the role of international migration law in constructing migration “crises.” International migration law, because it is codified in written instruments and nearly impossible to alter, entrenches sociocultural frames that might otherwise be substantially more flexible. International law has constructed a deeply path-dependent approach to international migration that not only obscures systemic inequality but also consumes alternate conceptions of morality. In response to this critique, this Article suggests a new approach to global migration law that aims to govern migrant flows more effectively. In short, it aims to establish international migration law as a separate subfield of international law rather than the afterthought that it currently represents.

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Making It Up: Lessons for Equal Protection Doctrine from the Use and Abuse of Hypothesized Purposes in the Marriage Equality Litigation

Steve Sanders

Volume 68, Issue 3, 657-710

To survive rational basis scrutiny under the Equal Protection Clause, a law must serve a governmental purpose which is at least legitimate. It is well established that legitimate purposes can sometimes be found through speculation and conjecturethat is, they may be hypothesizedin order to avoid the difficulties of identifying actual purpose or the specter of courts second-guessing legislative judgments. But hypothesized purposes can be abused, and such abuse was rampant in the states’ defenses of their bans on same-sex marriage, bans which were ultimately invalidated in Obergefell v. Hodges.

This Article draws on the federal marriage litigation as a lens for thinking critically about hypothesized purposes. It suggests several lessons about hypothesized purposes that should guide courts in the future. In particular, I discuss (1) the differences between hypothesized purposes, which are grounded in facts and concerns that were conceivably before a legislature, and post-hoc rationalizations, which I define as pretexts that have been manufactured to satisfy rational basis scrutiny but which could not plausibly have been a legislative purpose; (2) how courts should approach hypothesized purposes when there is evidence that a law was impelled by animus; and (3) why hypothesized purposes are inappropriate and should receive skeptical scrutiny when they are offered in support of measures enacted through direct democracy.

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The Modern Legal Status of Frozen Embryos

Alyssa Yoshida

Volume 68, Issue 3, 711-730

With the help of modern technology, people today have more flexibility than ever before in the realm of family planning and conceiving children. An increasing amount of
couples are opting to go through in vitro fertilization to create and then freeze embryos for use at a later date. However, problems arise when these people no longer want to have children together.

Our courts are still grappling with the issue of what happens to these embryos in the event of separation, and various theories of the legal status of an embryo have emerged in response, to try to shed light on the complex arguments for each side. This Note argues that the unique class occupied by the frozen embryothat of not quite person and not quite propertyshould be embraced. This Note further proposes a new statutory scheme that would provide courts with a straightforward framework to guide their analysis in separation or divorce proceedings.

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