Economic Consequences of Corporate Governance Disclosure

Related party transactions (RPTs) refer to a transfer of resources, services, or obligations between a reporting entity and a related party and usually offer insiders a way to expropriate wealth from other investors via self-dealing. Both the Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC) require detailed disclosure of material RPTs in annual reports and proxy statements. However, none of these regulators provided specific guidance on firms’ corporate governance related to ensuring that RPTs work in the best interest of the firm and its stakeholders. Investors were often kept in the dark on whether the firm … Read more

Economic Consequences of Hiring Wall Street Analysts as Investor Relations Officers

Investor relations (IR) connects the preparers of financial information with its users, aiming to facilitate efficient and effective interaction between the firm and the investment community. Historically, the IR function has been viewed as a communications role, and the investor relations officer (IRO) has had a background or training in communications and public relations. Recently, however, more companies turn to Wall Street to fill IR positions. For example, in a recent step toward a much-anticipated IPO, Spotify hired a former Wall Street veteran who had run the internet and media research groups at Barclays as head of IR.[1] A … Read more