Private Law Theory

ABSTRACT
Under the doctrine of piercing the corporate veil, a court may invalidate limited liability protection and hold parent companies liable for a subsidiary’s debt within a corporate group. This paper develops a model of corporate veil piercing. A court chooses a piercing rate to specify how often the court pierces a corporate veil. A corporate group chooses the length of an ownership chain to specify how many veils the group builds into the chain. The comparative statics of the Nash equilibrium with respect to the bargaining weight predict a hump-shaped relationship between piercing rate and ownership length, consistent with empirical evidence. When courts raise piercing rates from 0.26, as in Maryland, to 0.50, as in New York, corporate groups appear to increase the mean length of ownership chains by 0.56. When courts raise piercing rates from 0.50 to 0.68, as in Tennessee, corporate groups decrease the mean length by 0.51.

Hong, Sunghoon, Piercing Complex Corporate Veils: Theory and Evidence. Posted to SSRN 31 May 2025.

ABSTRACT
Examining how different constitutional systems treat corporations, this work highlights the divergence in their approaches to the corporate form. Corporations wield significant power in modern society, yet constitutional discourse has often overlook them. The authors identify and analyze four ideal types of corporate constitutionalism: liberal, social-democratic, socialist-authoritarian, and postcolonial-transformative. Each model stems from distinct historical origins, conceptual paradigms, and ideological foundations, shaping the varying degrees to which corporations are recognized, regulated, and engaged within different legal frameworks. Finally, contemporary themes such as corporate rights, regulatory approaches, and the challenges posed by the mobility of corporations in a globalized world are explored.

Kroncke, Jedidiah J and Riegner, Michael, Corporations (April 1, 2020), Max Planck Encyclopedia of Constitutional Law, 2020.