Does Firing a CEO Pay Off?

By George Alexandridis, John A. Doukas and Christos Mavis June 14, 2018 by renholding

The chief executive officer (CEO) and the top management team are typically viewed as critical to the success or failure of companies. As it is not uncommon for top executives to make value-destroying decisions, the role of internal control mechanisms, …

Kirkland & Ellis Discusses CFIUS Reform

By Mario Mancuso, Sanjay Mullick, H. Boyd Greene IV and Lucille Hague June 14, 2018 by renholding

On May 22, 2018, the Senate Committee on Banking, Housing, and Urban Affairs held a hearing to mark up its draft proposed amendment to the Foreign Investment Risk Review Modernization Act (“FIRRMA”). Initially introduced on November 6, 2017, with strong …

Financial Misreporting: Hiding in the Shadows or in Plain Sight?

By Delphine Samuels, Daniel J. Taylor and Robert E. Verrecchia June 13, 2018 by renholding

It’s widely assumed that executives are less likely to inflate earnings at high profile companies under a good deal of regulatory oversight. And yet it’s also widely known that managers in high profile companies have an incentive to overstate their …

Davis Polk Discusses Largest U.S. Antitrust Divestiture in Bayer-Monsanto Deal

By Arthur J. Burke, Ronan P. Harty, Jon Leibowitz, Howard Shelanski and Jesse Solomon June 13, 2018 by renholding

On May 29, 2018, the Department of Justice announced the largest-ever antitrust divestiture in the U.S. in connection with Bayer’s takeover of Monsanto. In addition to being newsworthy in light of its sheer size (at approximately $9 billion), the remedy …

SEC’s Jackson Calls for Curbing Executives’ Ability to Cash Out on Buybacks

By Robert J. Jackson, Jr. June 12, 2018 by renholding

Thank you so much, Neera [Tanden], for that very kind introduction. I’ve long admired all that you and everyone here at the Center for American Progress do to promote a progressive economic agenda. And I share your commitment to making

…

Mergers and the Market for Busy Directors: A Global Analysis

By Stephen Ferris, Narayanan Jayaraman and Min-Yu (Stella) Liao June 12, 2018 by renholding

The issue of directors serving on multiple corporate boards has come under increasing scrutiny from both academicians and practitioners. There are two types of arguments associated with the conflicting evidence of how multiple directorships affect firm value and performance. The …

Valuation Disputes in Corporate Bankruptcy

By Kenneth Ayotte and Edward R. Morrison June 11, 2018 by renholding

In bankruptcy, as in corporate law, valuation drives disputes. Prior bankruptcy scholarship points to disagreements about valuation and judicial valuation error as key drivers of Chapter 11 outcomes, including the decision whether to reorganize the distressed firm or sell it …

Cleary Gottlieb Discusses Long Term Investors’ Duty to Revive the Staggered Board

By Neil Whoriskey June 11, 2018 by renholding

Beyond the cacophonous din of voices calling for companies to serve a “social purpose,” adopt a variety of governance proposals, achieve quarterly performance targets, and listen to (and indeed even “think like”) activists, there is now, most promisingly, a call …

The Economic Impact of Mutual Fund Investor Behavior

By Geoffrey C. Friesen and Viet Nguyen June 8, 2018 by renholding

While the behavior of mutual fund investors is an active field of study within finance, we do not know very much about how these behaviors have changed over time. The simple reason for this is that most studies in this …

Product Markets Offer New Evidence on How Board Structure Affects Firm Performance

By Onur K. Tosun, Xiaoyuan Hu and Danmo Lin June 7, 2018 by renholding

In a new paper, we discuss our findings on how corporate board structure affects firm performance under different product market conditions. Though many studies have examined the relationship between corporate board structure and firm performance, some have found that board …

SEC Chief Accountant Talks Financial Reporting and Innovation

By Wesley Bricker June 7, 2018 by renholding

Thank you, Robert [Hodgkinson] for the kind introduction. Thank you, also, to the Institute of Chartered Accountants in England and Wales (“ICAEW”) for sponsoring this event. I am delighted to be in London and with you this afternoon. London continues …

Financial Enforcement Actions and the Role of Whistleblowers

By Andrew C. Call, Gerald S. Martin, Nathan Y. Sharp and Jaron H. Wilde June 6, 2018 by renholding

In our recent paper, we investigate the association between employee whistleblowers and outcomes of financial misrepresentation enforcement actions by the Securities and Exchange Commission (SEC) and Department of Justice (DOJ). We examine SEC and DOJ enforcement actions for financial misrepresentation …

Debevoise & Plimpton Discusses Changes to the Volcker Rule

By Gregory J. Lyons, David L. Portilla, Satish Kini, Jen Barrows, N. Angelica Freeland and Chen Xu June 6, 2018 by renholding

On May 30, the Federal Reserve Board proposed revisions (the “Proposal”) to the regulations implementing section 13 of the Bank Holding Company Act (referred to as the “Volcker Rule”) and asked questions on potential additional changes. Below are our preliminary …

Post-Earnings Announcement Drift and Corporate Insider Trading

By Christina Dargenidou, Ian Tonks and Fanis Tsoligkas June 5, 2018 by renholding

Post-earnings announcement drift (PEAD) is a well-documented and puzzlingly persistent market anomaly. Companies that report earnings higher than expected typically experience an upward drift in their stock prices while those that report earnings below what was anticipated see a downward …

Latham & Watkins Discusses New SEC Guidance on Cybersecurity

By Jennifer C. Archie and Serrin Turner June 5, 2018 by renholding

With so much boardroom attention on cybersecurity, directors continue to focus on the Securities and Exchange Commission (SEC) guidance issued earlier this year and its implications. The guidance adds specific expectations for disclosure controls and incident response procedures, and reiterates …

Sense and Nonsense About Securities Litigation

By Richard A. Booth June 4, 2018 by renholding

In a forthcoming article, I contend that Professor James Spindler has it wrong in his recent critique[1] of scholarly opposition to securities fraud class actions (SFCAs). Spindler argues that the opposition is based on two mistaken ideas: (1) that …

Wachtell’s Lipton Shines a Spotlight on Boards for 2018

By Martin Lipton June 4, 2018 by renholding

The ever-evolving challenges facing corporate boards prompt an updated snapshot of what is expected from the board of directors of a major public company—not just the legal rules, but also the aspirational “best practices” that have come to have equivalent …

Corporate Loan Securitization and Standardization of Finance Covenants

By Zahn Bozanic, Maria Loumioti and Florin P. Vasvari June 1, 2018 by renholding

Over the last few years, the corporate loan market has experienced significant growth. Arguably, the most significant development has been the securitization of syndicated loans through Collateralized Loan Obligations (CLOs). CLOs are special purpose entities that purchase high-yield corporate loans …

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The CLS Blue Sky Blog

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

June 2018