Does Litigation Encourage or Deter Real Earnings Management?

By Sterling Huang, Sugata Roychowdhury and Ewa Sletten October 31, 2019 by renholding

Securities class actions may deter financial misreporting and flawed disclosure, but how effective are they at deterring managers from taking actions that sacrifice long-term value for higher profits? In a recent paper, we uncover a novel mechanism that extends the …

SEC Chair Seeks Public Input on Disclosure for Residential Mortgage-Backed Securities

By Jay Clayton October 31, 2019 by renholding

Securitization plays a critical role in the U.S. capital markets and can enhance liquidity in important sectors of the economy. In particular, residential mortgage-backed securities (“RMBS”) play a significant role in enhancing liquidity in the residential mortgage market and thereby

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(When) Does Transparency Reduce Liquidity?

By Karthik Balakrishnan, Aytekin Ertan and Yun Lee October 30, 2019 by renholding

The catchphrase “too much information” can be applied in many circumstances, personal and social, but not, surely, in relation to financial markets.

It has long been held that greater transparency, thus more information, can only increase the volume of trading …

Corporate Behavior and the Tax Cuts and Jobs Act

By Nicholas Cohen and Manoj Viswanathan October 30, 2019 by renholding

How has the U.S. Tax Cuts and Jobs Act of 2017 changed corporate behavior? In addition to reducing the corporate income tax rate to a flat 21 percent from a high of 35 percent, the TCJA changed other important rules …

Merger Breakups

By Menesh Patel October 29, 2019 by renholding

One of today’s most pressing antitrust questions is how antitrust should address the conduct of dominant technology companies, such as Amazon, Facebook, and Google. Once heralded as the champions of innovation and the modern economy, these companies are now the …

Exequity Discusses Valuing Amazon

By Ben Burney October 29, 2019 by renholding

It is widely accepted among investors that compensation committees should align executive pay with performance in part by using incentive metrics that contribute directly to shareholder value. For this reason, it is common for incentive metrics to overlap with performance …

Paul Weiss Offers M&A at a Glance for September 2019

By Matthew W. Abbott, Scott A. Barshay, Angelo Bonvino, Ariel J. Deckelbaum, Robert B. Schumer and Taurie M. Zeitzer October 28, 2019 by renholding

M&A activity in the U.S. and worldwide declined against many indicators in September, confirming numerous recent reports that dealmaking has taken a downturn. While the number of deals rose by 13.9% in the U.S., to 803, and by 7.6% globally, …

The Asymmetric Private Information Mask: Informed Trading in Takeovers

By Sarah Osborne October 25, 2019 by renholding

The U.S. Securities and Exchange Commission (SEC) has increased the regulation of asymmetric information-based trading, aiming to mitigate disclosure of material private information to select market participants. These efforts have not been fully successful, raising questions about the impact of …

Wachtell Lipton Discusses Stakeholder Governance: Issues and Answers

By Martin Lipton and William Savitt October 25, 2019 by renholding

The Business Roundtable’s recent call for a commitment to long-term sustainable economic value creation has prompted a vigorous debate about the optimal corporate governance model for achieving that goal.

Certain familiar arguments have reappeared in reaction to the Business Roundtable’s …

The Shareholder Perspective on Security Breaches

By Allen Michel, Jacob Oded and Israel Shaked October 24, 2019 by renholding

In a forthcoming paper, we explore the stock prices of companies during the period just before to just after an announcement that they have been hit with a computer breach. We analyze all available public equity data by breach type …

Cleary Gottlieb Discusses EU’s New Whistleblower Protections

By J.F. Daniel Weyde, Richard Kreindler, Rüdiger Harms, Patrick Gerardy and Johannes Natus October 24, 2019 by renholding

A lively debate has been sparked both among the public and scholars about the protection of informants, prompted in part by the whistleblowers who uncovered the scandals that recently attracted so much interest in the media, including Cambridge Analytica, …

Shareholder Primacy Isn’t the Best of All Possible Worlds

By Todd H. Baker October 23, 2019 by renholding

In a recent opinion piece in the Financial Times[1], Harvard Law School Professor Jesse Fried makes a strong case that the Business Roundtable’s CEOs statement, in which they committed to “lead their companies for the benefit of all …

Discontinuation of LIBOR

By Shubhangi Agarwalla October 23, 2019 by renholding

Global financial markets are preparing for the phasing out of the London interbank offered rate, or LIBOR, with the loan, derivatives, securities, and bond markets most affected. As of mid-2018, about $400 trillion worth of financial contracts referenced LIBOR in …

On an Expansive Definition of Shareholder Value in the Boardroom

By Eduardo Gallardo October 22, 2019 by renholding

Directors of a Delaware corporation must act in the best interest of the corporation and its shareholders.[1] Other stakeholders – such as employees, creditors, customers, and suppliers – may only be considered by directors to the extent there …

Skadden Discusses DOJ and the Arbitration Option for Merger Review

By Karen Hoffman Lent, Kenneth Schwartz and Heather Cicchese October 22, 2019 by hdh2120

After letting the option go unused for more than 20 years, the Antitrust Division of the Department of Justice recently announced it would use arbitration to settle its challenge of the proposed merger of two aluminum producers. In a press …

Calculating SEC Whistleblower Awards: A Theoretical Approach

By Amanda Rose October 21, 2019 by renholding

On October 23, the Securities and Exchange Commission is scheduled to vote on whether to adopt proposed amendments to the rules governing its whistleblower bounty program. The most controversial proposed amendments are to Rule 21F-6, which governs the way the …

Richards Kibbe & Orbe Discusses Delaware Rulings on Boards’ Duty of Oversight

By Scott C. Budlong, David B. Massey, Margaret W. Meyers, Lee S. Richards III and Daniel C. Zinman October 21, 2019 by renholding

Earlier this month, the Delaware Court of Chancery denied defendant directors’ motion to dismiss a duty-of-oversight claim brought by plaintiff shareholders in In re Clovis Oncology, Inc. Derivative Litigation.[1] This decision, together with a similar June 2019 ruling by …

Entrenchment Through Discretion over M&A Contractual Provisions

By Richard Schubert October 18, 2019 by renholding

Managerial entrenchment is detrimental to shareholder value (Faleye (2007), Cohen and Wang (2013), and Cohen and Wang (2017)). Managers are able to become entrenched by making specific investments whose value is higher under their watch than under that of the …

SEC Investor Advocate Calls Dual-Class Shares a Recipe for Disaster

By Rick A. Fleming October 18, 2019 by renholding

Thank you, Kerrie Waring, for your kind introduction. I appreciate the opportunity to speak at a conference where you will spend the next two days discussing the stewardship responsibilities of shareholders.[1] I know you take those responsibilities seriously, and

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The CLS Blue Sky Blog

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

October 2019