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34 J. Corp. L. 409 (2008-2009)
Bridging the Gap between Ownership and Control

handle is hein.journals/jcorl34 and id is 413 raw text is: Bridging the Gap Between Ownership and Control Edward S. Adams* I. IN TRO DU CTION ....................................................................................................... 4 10 II. TRADITIONAL CORPORATE GOVERNANCE AND SARBANES-OXLEY ....................... 410 A. Problems in Corporate Governance ................................................................ 411 B. Historical Approaches to Curb Corporate Malfeasance ................................. 413 1. D uty of C are ................................................................................................ 4 14 2. D uty of L oyalty ............................................................................................ 4 16 3. M arket F orces ............................................................................................. 4 17 4. Contractual Arrangem ents .......................................................................... 418 C . Sarbanes-O xley ................................................................................................ 4 19 III. ALTERNATIVE APPROACHES TO CURB CORPORATE GOVERNANCE PROBLEMS ..... 422 A. Increased Individual Shareholder Activism ..................................................... 422 B. Institutional Investors Must Lead the Charge .................................................. 424 IV. A NEW SOLUTION: FULL-CIRCLE EVALUATIONS AND THE INSTITUTIONAL IN V E STO R .............................................................................................................. 4 2 8 A . F ull-C ircle E valuations ................................................................................... 428 1. Critiques of Top-D own Systems .................................................................. 429 2. The Full-Circle Structure and the Ability to Implement .............................. 430 3. The General Benefits of Full-Circle Evaluations ........................................ 433 4. Full-Circle Problems and Solutions ............................................................ 435 B. A Potential Legal Requirement for Full-Circle Evaluations ............................ 440 1. The D uty of C are ......................................................................................... 440 2. The D uty of Loyalty ..................................................................................... 442 C. Company-Implemented Evaluation Systems .................................................... 443 D. Full-Circle Evaluations, Institutional Investors, and Fraud Prevention ......... 444 V . C ON C LU SIO N .......................................................................................................... 445 * Howard E. Buhse Professor of Finance and Law, University of Minnesota; Co-Director of Kommerstad Center for Business Law and Entrepreneurship at the University of Minnesota Law School; M.B.A. 1997, Carlson School of Management, University of Minnesota; J.D. 1988, University of Chicago; B.A. 1985, Knox College.

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