Filling the "Hollow Core" of Corporate Law - A New Article from Prof. Dibadj

Professor Reza Dibadj's new article, "Delayering Corporate Law," has just appeared in the latest issue of Hofstra Law Review. Writing in the wake of the recent corporate scandals, Prof. Dibadj offers new ideas for simplifying and revitalizing the core of corporate law.

Here's the abstract:

Corporate law has become unnecessarily complicated. Despite the proliferation of laws, problems fester and scandals erupt. Something is wrong. This Article seeks to delayer corporate law—to strip it down to its essence—and after doing so, offer concrete suggestions for reform. It is a first step toward a new minimalist architecture for corporate law.

The Article begins by arguing that the core of state corporate law—corporation statutes and fiduciary duties—currently offers precious little protection to shareholders. Contractarianism, manifested through enabling statues, reflects weak economics. Existing fiduciary duties are little more than rhetorical flourish. Rather than reexamine why the core of corporate law is empty, policymakers have instead added a series of layers, most notably securities laws. These reforms, however, merely operate as bandages to recover from the most recent scandal and further obfuscate the hollow core of corporate law.

The bulk of the Article offers a fresh path to reform. It draws on emerging paradigms in regulatory theory to argue that substantively, corporate law must reinvigorate fiduciary duties by resetting judicial "standards of review" to match "standards of conduct," while at the same time addressing the behavior of officers, not just directors. Finally, the institutional approach proposed is one of cooperative federalism: the federal government would set minimum standards, but implementation would occur through state courts via a "reverse-Erie" principle.

34 Hofstra L. Rev. 469-470

Dibadj, Reza R., "Delayering Corporate Law." 34 Hofstra Law Review 469 (2005) is available in full (as a PDF file) at the Hofstra Law Review web site. The article is also available in print in most, if not all, U.S. academic law libraries — including the Zief Library (where it's currently at the Circulation & Reserve Desk). In addition, Lexis subscribers can retrieve the article by using "Get a Document" and entering the citation: 34 Hofstra L. Rev. 469. Westlaw subscribers can use "Find by citation" or "Find & Print" and enter: 34 HOFLR 469.

[Other publications by Professor Reza Dibadj are listed on the Zief Library's Faculty Publications page. The USF Law School web site has this profile of Professor Dibadj.]