Brian Broughman

Risk-Seeking Corporate Governance

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Several developments suggest that venture capitalists (VCs) are retreating from their traditional corporate governance role of monitoring their portfolio companies. Startup founders are retaining more equity and control over their companies, and contrary to past practice, some VCs say they will never remove a founder. At the same time, startups are taking unprecedented risks – defying regulators, growing in unsustainable ways, and racking up billion-dollar losses. There have also been a series of high-profile scandals at the likes of Uber, WeWork, FTX, where VCs have proven unable or unwilling to prevent founder misbehavior.

In a new article, we propose that … Read more

How Shareholder Approval Rules Affect the Forms of Mergers

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While all acquisitions require approval from target shareholders, the necessary level of shareholder support varies across jurisdictions and deal structures.  Some transactions can be approved by a simple majority of target shareholders, while others require super-majority approval.  In our paper, Shareholder Decision Rights in Acquisitions: Evidence from Tender Offers, we investigate the impact of such variation on deal outcomes, particularly on the choice between a tender offer and merger structure.

To isolate variation in approval thresholds, we use the 2013 enactment of Delaware General Corporation Law § 251(h), which reduced the shareholder support threshold to close out a two-step … Read more