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Law Quadrangle (formerly Law Quad Notes)

Abstract

How do legal, regulatory, and organizational systems affect the emergence and development of corporate extortion? The question arises whether the extortionist is a potential plaintiff seeking settlement, a labor uniion threatening to strike, or the lucky finder of the mouse-in-the-soda-bottle of urban legend. In each case, including those in which extortion may be lawful and even desirable, the extortionist's threat and the corporation's response depend on the institutional context in which the extortion take place.

In the Japanese system, corporate extortion by sokaiya (literally, "general meeting operators") take several forms, a sokaiya typically is defined as a nominal shareholder who either attempts to extort money from a company to suppress opposition at the meeting. Surprisingly, Japanese executives pay sokaiya despite the fact that payment can result in civil and criminal liability not only for sokaiya, but for the executive as well.

The following article is excerpted from "Information, Institutions, and Extortion in Japan and the United States: Making Sense of Sokaiya Racketeers," which will appear in its complete form in 93 Northwestern University Law Review this summer. Publication is by permission.

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