Business Roundtable’s Statement on Corporate Purposes Has Noble Aims but Creates Uncertainty

By Michael W. Peregrine August 30, 2019 by renholding

The Business Roundtable’s controversial new Statement on the Purpose of a Corporation (“Statement”) is a significant corporate governance development that requires thorough board discussion. The Statement will not only affect corporate purposes generally, but also have a very uncertain impact …

Time Variation in the Relationship Between News and Returns

By Paul Glasserman, Fulin Li and Harry Mamaysky August 29, 2019 by renholding

How does the stock market respond to news reports about a company? Previous work has found that it takes a few days for prices to fully absorb news, and this underreaction has been attributed to investors’ limited ability to process …

SEC Commissioners Discuss Proposed Changes to Regulation S-K

By Robert J. Jackson, Jr. and Allison Herren Lee August 29, 2019 by renholding

We support sending out for public comment the recently proposed revisions to Regulation S-K, the central repository for non-financial statement disclosure. We’re especially grateful to our colleagues in the Division of Corporation Finance, Director Bill Hinman, Betsy Murphy, Felicia Kung,

…

Modern ESG Activism and Past Civil Rights Activism Compared

By Omari Scott Simmons August 28, 2019 by renholding

The embrace of shareholder activism as a tool to bring about broad social change is a welcome development. It reflects a trend of outsourcing public functions and values to private actors and stems in part from a frustration with interest …

Richards Kibbe & Orbe Discusses Limited Legal Implications of Business Roundtable Statement

By Scott C. Budlong, Lee S. Richards III, Margaret W. Meyers and David B. Massey August 28, 2019 by renholding

The Statement on the Purpose of a Corporation by the Business Roundtable, a one-page document signed by nearly all the organization’s member CEOs,[1] has been dramatically portrayed by the media (with the BRT’s encouragement) as a new commitment by …

Are Audit Committees Suffering from Overload?

By Musaib Ashraf, Preeti Choudhary and Jacob Jaggi August 27, 2019 by renholding

Audit committee responsibilities have consistently increased, and practitioners have raised concerns that audit committees may be overloaded with duties. For example, in a 2005 interview, one audit committee member noted, “It’s becoming almost excessive. We get press releases almost weekly …

Cleary Gottlieb Offers 2019 Mid-Year Developments in Securities and M&A Litigation

By Roger Cooper, Jared Gerber, Vanessa Richardson and David Wagner August 27, 2019 by renholding

The most significant securities decision to be handed down in the first half of 2019 came from the Supreme Court in Lorenzo v. SEC, which clarified the scope of “scheme liability” under Rule 10b-5(a) and (c). Another significant ruling …

Is Positive Sentiment in Corporate Annual Reports Informative?

By Mehran Azimi and Anup Agrawal August 26, 2019 by renholding

Recent advances in machine learning and natural language processing (NLP) enable machines to better understand human languages. E-mail systems now routinely warn us when an email we receive may be a spam, suggest a quick response to an email, correct …

Wachtell Lipton Discusses Stakeholder Corporate Governance: Business Roundtable and CII

By Martin Lipton August 26, 2019 by renholding

The failure of the Council of Institutional Investors to join the Business Roundtable in rejecting shareholder primacy and embracing stakeholder corporate governance is misguided. The argument that protection of stakeholders other than shareholders should be left to government regulation is …

How Rank and File Equity Compensation Affects Earnings Management

By Kip Holderness, Adrienna A. Huffman and Melissa F. Lewis-Western August 23, 2019 by renholding

Equity compensation is a beneficial tool when it motivates employees to engage more intensely in performance-enhancing activities. One negative consequence of equity compensation, however, is that it provides incentives to manage earnings (i.e., to strategically present financial reports or structure …

Paul Weiss Discusses D.C. Circuit Decision Ordering Chinese Banks to Produce Documents

By Brad S. Karp, Michael E. Gertzman, H. Christopher Boehning, Roberto J. Gonzalez and Karen R. King August 23, 2019 by renholding

On July 30, 2019, the U.S. Court of Appeals for the District of Columbia affirmed civil contempt orders by the D.C. District Court against three Chinese banks for their failure to produce documents in response to U.S. government subpoenas relating …

SEC Clarifies Investment Advisers’ Proxy Voting Responsibilities

By Securities and Exchange Commission August 22, 2019 by renholding

The Securities and Exchange Commission today provided guidance [rules available here] to assist investment advisers in fulfilling their proxy voting responsibilities. The guidance discusses, among other matters, the ability of investment advisers to establish a variety of different voting arrangements

…

SEC Chairman and Commissioners Issue Statements on Proxy Adviser Guidance

By Reynolds Holding August 22, 2019 by renholding

The U.S. Securities and Exchange Commission’s chairman and each of its commissioners issued a statement at yesterday’s open meeting on guidance about proxy voting and proxy voting advice. Chairman Jay Clayton’s statement is here. In support of the guidance, …

Addressing Economic Insecurity: Why Social Insurance Is Better Than Corporate Governance Reform

By Jeffrey N. Gordon August 21, 2019 by renholding

The question that emerges from proposals to elevate a corporation’s “purpose,”[1] the call for co-determination in Senator Warren’s Accountable Capitalism Act and now the Business Roundtable’s purported elevation of stakeholder interests, is whether corporate governance is capable of …

SEC Data Analysis in Insider Trading Investigations

By Daniel M. Hawke August 21, 2019 by renholding

Recent SEC enforcement actions charging senior lawyers at Apple and SeaWorld with insider trading provide reason to dust off company insider trading policies and assess whether updates or additional training are needed. As sanctuaries for corporate America’s most valuable confidential …

The Case for Mandatory Stakeholder Disclosure

By Ann M. Lipton August 20, 2019 by renholding

There are many sources of information about corporate operations, but one of the most critical is the disclosure required by the federal securities laws. Whenever a company seeks to raise capital through the public sale of securities, the U.S. Securities …

SEC Commissioner Speaks Before Forum on Small Business Capital Formation

By Hester M. Peirce August 20, 2019 by renholding

Thank you, Martha [Miller]. It is wonderful to be here in Omaha. Thank you to all the participants in today’s [August 14] program. Dean [Anthony] Hendrickson, thank you for welcoming us to Creighton University’s Heider College of Business. It is

…

Economic Consequences of Corporate Governance Disclosure

By Ole-Kristian Hope and Haihao Lu August 19, 2019 by renholding

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 …

Gibson Dunn Discusses Delaware Chancery Decision on Advance Notice Bylaws

By Eduardo Gallardo, Adam H. Offenhartz and Aric H. Wu August 19, 2019 by renholding

In an important transcript ruling issued on August 14,[1] the Delaware Court of Chancery upheld the validity and vitality of advance notice bylaw provisions, which govern the timing and disclosure requirements of stockholder nominations of board candidates. The ruling …

Facebook’s Libra Heightens Debate Over the Regulation of Cryptocurrencies

By Hadar Y. Jabotinsky August 16, 2019 by renholding

Cryptocurrencies like Ether, DAO, Bitcoin and Facebook’s Libra are electronically generated and stored currencies by which users can trade real or virtual objects with one another, bypassing traditional central clearinghouses. Given that these cryptocurrencies are starting to replace some national …

1 2 Next »

The CLS Blue Sky Blog

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

August 2019