The Essential Role of Organizational Law
Article The Essential Role of Organizational Law Henry Hansmannt and Reinier Kraakmant* CONTENTS I. INTRODUCTION ................................................................................ 390 II. FIRMS AND LEGAL ENTITIES ........................................................... 391 III. FORMS OF ASSET PARTITIONING ..................................................... 393 A. Affirmative Asset Partitioning................................................. 394 B. Defensive Asset Partitioning................................................... 395 C. Patterns of Partitioning.......................................................... 396 D. Partitioningwith Respect to a Firm'sManagers .................... 398 IV. BENEFITS OF AFFIRMATIVE ASSET PARTITIONING .......................... 398 A. Reducing Monitoring Costs .................................................... 399 1. SubpartitioningAssets Within a Single Firm: CorporateSubsidiaries ................................................... 399 t Sam Harris Professor of Law, Yale Law School. tt Ezra Ripley Thayer Professor of Law, Harvard Law School. For helpful discussions and comments we would particularly like to thank Barry Adler, William Allen, John Armour, Lucian Bebchuk, John Coates, Marcus Cole, Richard Craswell, Robert Ellickson, Wolfgang Fikentscher, Jesse Fried, Antonio Gambaro, Zohar Goshen, Christopher Harrison, Howell Jackson, Louis Kaplow, Michael Klausner, Paul Mahoney, Ronald Mann, Yoshiro Miwa, Peter Muelbert, Eric Orts, Larry Ribstein, Roberta Romano, Michael Whincop,
[Show full text]