Does Insider Trading Law Change Behavior?

By Menesh S. Patel November 15, 2017 by renholding

Despite the extensive scholarship on insider trading, relatively little attention has been directed to a basic but fundamental question: Does insider trading law actually affect the amount of insider trading? In a new article, available here, I seek to …

Wachtell Lipton Discusses Deal Activism and the EQT Proxy Contest

By Edward D. Herlihy and Steven A. Cohen November 15, 2017 by renholding

“Deal Activism,” in which activists invest to oppose announced deals, has become an increasingly frequent component of the activist playbook. While efforts by the target company’s shareholders to oppose a deal to secure a higher bid have received the most …

How Banks Affect Borrowers’ Corporate Governance and Incentive Structures

By Carlo Maria Gallimberti, Richard A. Lambert and Jason J. Xiao November 14, 2017 by renholding

It is well known that banks play an important role in monitoring borrowing firms (e.g., Diamond, 1984). Yet, how banks choose among alternative mechanisms that reduce agency costs with borrowers is not completely understood. In our paper, “Bank Relations and …

Latham & Watkins Discusses How U.S. House Tax Plan Will Affect Renewable Energy

By Eli M. Katz, Julie M. Marion and Eric Kamerman November 14, 2017 by charlesbluesky

House Republicans unveiled a sweeping tax reform bill on Thursday, November 2 that proposed to lower the corporate tax rate and allow companies to immediately deduct the full cost of business assets in the year companies build or acquire them.…

Tracing Equity: How the Bankruptcy Code Respects State Law Entitlements

By Melissa B. Jacoby and Edward J. Janger November 13, 2017 by renholding

Law and economics scholars have long argued that efficiency is best served when a firm’s capital structure is arranged as a single, hierarchical value waterfall. In such a regime, claimants with seniority are made whole before the next-junior stakeholders receive …

Davis Polk Discusses China’s New Rules on International Investment Arbitration

By Martin Rogers, James Wadham, Jonathan K. Chang, Lisa Martin and Jing Kang November 13, 2017 by renholding

On October 1, 2017, new international investment arbitration trial rules (Chinese version) (the “Rules”) issued by the China International Economic and Trade Arbitration Commission (“CIETAC”) became effective. The Rules mark China’s first attempt to establish a domestic arbitral institution for …

How Executive Compensation Affects Firms’ Choice of Financing

By Steven Freund, Saira Latif and Hieu V. Phan November 10, 2017 by renholding

The separation of corporate ownership from control leads to an agency problem caused by the divergent interests of shareholders (the principals) and management (the agent). One area of contention is the level of risk-taking by the firm. Managers’ investment in …

How U.S. and UK Deal Structures Protect Minority Shareholders

By Afra Afsharipour November 9, 2017 by renholding

Takeover transactions are often the most significant activity affecting corporations and their shareholders. Accordingly, there are intense debates about the value and impact of takeovers and the extent to which law should regulate such transactions. One area of focus for …

SEC Chair Clayton Talks SEC and Market Transparency

By Jay Clayton November 9, 2017 by renholding

Thank you, Keith [Higgins], for that gracious introduction.[1] Let me return the sentiment. Keith – you are a member of an esteemed group of Division Directors, some of whom are here today, who have served the Commission and, most …

What Do Corporate Insiders Do with Newly Vested Equity?

By Erik Johannesson and Seil Kim November 8, 2017 by renholding

In a new study, we examine restricted-stock vesting events, through which directors and high-level executives (“insiders”) receive stock but face fewer reporting requirements and selling restrictions than if the stock had been purchased on the open market. Using a detailed …

PwC Discusses SEC’s Increased Scrutiny of Robo-Advisers

By Dan Ryan, Julien Courbe, Adam Gilbert, Mike Alix and Roberto Rodriguez November 8, 2017 by renholding

Earlier this year, the Securities and Exchange Commission (SEC) issued guidance regarding “robo-advisers,” automated investment advice tools accessed via web-based or mobile platforms with minimal human interaction.¹ The guidance is an important reminder to the industry that robo-advisers are …

Admissions and Accountability in Civil Enforcement

By Verity Winship and Jennifer K. Robbennolt November 7, 2017 by renholding

Whether and when targets of civil enforcement admit wrongdoing has been in and out of the public spotlight since the 2007-2008 financial crisis, when the issue seemed tied up in frustrations that suspected wrongdoers—especially banks and corporations—were getting off too …

Cleary Gottlieb Discusses How Tax Plan Would Affect Executive Compensation

By Michael Albano, Arthur Kohn, Mary Alcock, Caroline Hayday and Kathleen Emberger November 7, 2017 by renholding

The recently proposed Tax Cuts and Jobs Act (the “Act”) includes executive compensation tax reforms that, if enacted, would have significant implications for the way in which companies structure their compensation programs.

The Act was introduced in the U.S. House …

Subprime-Mortgage Servicing Regulation and the Financial Crisis

By James E. McNulty November 6, 2017 by renholding

Scholars are attempting to fully understand all the causes of the 2007-09 U.S. financial crisis, hoping their efforts will ensure that something like this will not happen again. Nonetheless, in this research, weaknesses in mortgage servicing regulation have been largely …

Wachtell Lipton Discusses SEC’s Guidance on Shareholder Proposals

By David A. Katz, Trevor S. Norwitz, Sabastian V. Niles and S. Iliana Ongun November 6, 2017 by renholding

The SEC Division of Corporate Finance recently provided useful guidance on excluding certain Rule 14a-8 shareholder proposals (Staff Legal Bulletin No. 14I). While helpful, we hope the SEC will undertake a much-needed comprehensive review of Rule 14a-8, including …

Why Small Firms Peg Executive Compensation to Rivals’ Higher Pay

By Thomas Ian Schneider November 3, 2017 by renholding

In recent years, executive compensation in the U.S. has become a hotly debated issue. A central point of contention is peer benchmarking, an integral part of the pay-setting process in which firms compare their executives’ compensation with that of rivals …

How Do Small Issuers React to Innovation in Securities Offering Methods?

By Anzhela Knyazeva November 2, 2017 by renholding

In 2015 the U.S. Securities and Exchange Commission adopted amendments that significantly expanded Regulation A, a previously little used provision that allows companies to conduct small public securities offerings without having to comply with all the requirements applicable to traditional …

Activism and Informed Trading

By John C. Coffee, Jr. November 1, 2017 by renholding

Hedge fund activism has transformed the corporate governance landscape – possibly for better, possibly for worse. But as activist funds emerge as the newest and most potent players in corporate governance, there is one certainty: New agency costs also arise. …

SEC Enforcement Co-Chief Talks Cybersecurity and Retail Investor Protection

By Stephanie Avakian November 1, 2017 by renholding

Good afternoon and thank you for inviting me to speak today. Before I begin, let me give the required disclaimer that the views I express here today are my own and do not necessarily represent the views of the Commission

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The CLS Blue Sky Blog

Columbia Law School's Blog on Corporations and the Capital Markets

November 2017