Issue 3 · March 2011

Two Faces of Janus in the District Courts: Is Liability for Securities Fraud Under Section 17(a) Limited to Actors with “Ultimate Authority” over Untrue Statements?

By Andrew P. Arnold

This Recent Development argues that limiting section 17(a) liability for untrue statements to individuals with “ultimate authority” over those statements is not supported by the Supreme Court’s reasoning in Janus. The Court provided three justifications for imposing an ultimate authority requirement. First, the Court pointed to the use of the word “make” in the text of Rule 10b-5, but this word “is absent from the operative language of Section 17(a).” Second,… READ MORE

91 N.C. L. Rev. 1049 (2013)

Diversity and Corporate Performance: A Review of the Psychological Literature

By Jennifer K. Brooke & Tom R. Tyler

This Review examines two approaches to diversity management in the context of procedural justice theory: 1) maximizing the benefit of diversity in the workplace and 2) minimizing any potential harm. With regard to the former, this Review argues that the application of procedural justice theory will create conditions under which employees of all backgrounds feel comfortable contributing their unique perspectives, thus maximizing the benefits of diversity. Applying procedural justice theory… READ MORE

89 N.C. L. Rev. 715 (2011)

The Milieu of the Boardroom and the Precinct of Employment [Commentary]

By Deborah A. DeMott

This Commentary explores differences between employer-employee relationships and service on a board of directors. Against this backdrop, this Commentary argues that the research findings surveyed by Brooke and Tyler, although specific to the employment context, may be salient in assessing the impact of diversity among members of a board of directors.

89 N.C. L. Rev. 749 (2011)

Dangerous Categories: Narratives of Corporate Board Diversity

By Lissa L. Broome, John M. Conley, and Kimberly D. Krawiec

In this article, we report the results of a series of interviews with corporate directors about racial, ethnic, and gender diversity on corporate boards. On the one hand, our respondents were clear and nearly uniform in their statements that board diversity was an important goal worth pursuing. Yet when asked to provide examples or anecdotes illustrating why board diversity matters, many subjects acknowledged difficulty in illustrating theory with reference to… READ MORE

89 N.C. L. Rev. 759 (2011)

Corporate Board Gender Diversity and Stock Performance: The Competence Gap or Institutional Investor Bias?

By Frank Dobbin & Jiwook Jung

Women now make up a sixth of corporate board members in the Fortune 500. Some scholars suggest that women board members boost financial performance, and thus stock price, by making boards more effective.  Indeed, early studies showed a correlation between women on boards and both profits and stock price.  But more rigorous studies have suggested that women have little effect on profits and may have negative effects on stock price. In a… READ MORE

89 N.C. L. Rev. 809 (2011)

Board Diversity Revisited: New Rationale, Same Old Story?

By Lisa M. Fairfax

Recently, board diversity advocates have relied on market- or economic-based rationales to convince corporate America to increase the number of women and people of color in the boardroom, in lieu of moral or social justifications. This shift away from moral or social justifications has been deliberate, and it stems from a belief that corporate America would better respond to justifications that centered on the corporate bottom line. However, recent empirical… READ MORE

89 N.C. L. Rev. 855 (2011)

Commentary: Puzzles About Corporate Boards and Board Diversity [Commentary]

By Donald C. Langevoort

Those who seek greater gender or ethnic diversity on corporate boards of directors work under the self-imposed burden to show that board-level diversity adds value to the firm in some tangible way. In a perfect world, board diversity follows naturally from the fair distribution of talent and skill between the genders and among ethnicities when selection is based on merit. But our world is grossly imperfect, with residual bias (conscious… READ MORE

89 N.C. L. Rev. 841 (2011)

Diversity on Corporate Boards—Limits of the Business Case and the Connection Between Supporting Rationales and the Appropriate Response of the Law [Commentary]

By Thomas Lee Hazen

Some observers suggest that diversity on corporate boards of directors will lead to new perspectives and hence better decision-making by the board. It would seem to follow that improved decision-making will lead to better corporate performance and thus presents a “business case” for increasing diversity on corporate boards. This essay explores the limits of the business case, some of the alternative rationales for increasing diversity on corporate boards, and the… READ MORE

89 N.C. L. Rev. 887 (2011)

Justifying Board Diversity

By James A. Fanto, Lawrence M. Solan, and John M. Darley

In this Article, we point out that advocates for board diversity in public companies feel pressure to justify it in terms of its contribution to shareholder value. This pressure is not surprising, insofar as the dominant social identity of boards, which itself is partly a creation of the discipline of finance, views shareholder value as the ultimate criterion for any company action, including eligibility for the board. We observe, however,… READ MORE

89 N.C. L. Rev. 901 (2011)

The Diversity Double Standard

By Sung Hui Kim

In Grutter and Gratz (2003), the twin cases that challenged the University of Michigan’s affirmative action programs, corporate America praised educational diversity as a compelling interest. But as is well known, they did so not on social justice grounds but on the empirical claim that “diversity is good for business.” In particular, education in a diverse environment would produce better workers for an increasingly global and competitive economy. This position… READ MORE

89 N.C. L. Rev. 945 (2011)

The Mismatch Critique: Comment on Fanto, Solan, & Darley [Commentary]

By Jerry Kang

James Fanto, Lawrence Solan, and John Darley build their paper, Justifying Board Diversity, on the basis of two essential claims—one legal, the other empirical. The legal claim is that existing law does not much constrain how corporate boards address the (lack of) diversity of their membership. The empirical claim is that board diversity doesn’t increase shareholder value. Based on these two claims, Fanto et al. criticize “diversity advocates” for making… READ MORE

89 N.C. L. Rev. 937 (2011)

Different Strokes for Different Folks: A Different Standard is not Inherently a Double Standard [Commentary]

By James E. Coleman, Jr.

During the Senate’s closed confirmation hearings on President Dwight D. Eisenhower’s nomination of George E. Wilson, President of General Motors, to be Secretary of Defense, a senator asked Wilson if he would be able to make decisions as Secretary of Defense that were adverse to General Motors’ interest. Wilson replied that he would, but added he could not imagine having to make such a choice because “[f]or years I thought… READ MORE

89 N.C. L. Rev. 1003 (2011)

Showcasing Diversity

By Patrick S. Shin & Mitu Gulati

Diversity initiatives are commonplace in today’s corporate America. Large and successful firms frequently tout their commitments to diversity, sometimes appointing women and racial minorities to highly visible posts, including seats on their boards of directors. Why would a profit-minded firm engage in such behavior? One frequently voiced explanation is that by creating such diversity, firms send out a positive signal about their attributes: a firm’s willingness to expend resources on… READ MORE

89 N.C. L. Rev. 1017 (2011)

Showcasing: The Positive Spin [Commentary]

By Katharine T. Bartlett

What do companies signal when they showcase female and minority members of their corporate boards? Not necessarily more, say Patrick Shin and Mitu Gulati, than that they understand that diversity is a socially significant issue, and that they can attract members of the showcased individual’s minority group, against whom they are then probably disinclined to discriminate. While this may be important information to convey, Shin’s and Gulati’s focus is on… READ MORE

89 N.C. L. Rev. 1055 (2011)