Attention to Dividends, Inattention to Earnings?

Why do firms pay dividends? A well-known finance theory proposes that, in frictionless markets, dividends are irrelevant for firm valuation because an investor’s wealth does not change if the firm holds a dollar in the bank or if the firm returns a dollar to an investor through a dividend who then holds it in the bank.[1]  Despite this, roughly 40 percent of public firms pay dividends and, because they are rarely cut, dividends provide investors with a predictable stream of cash.  Research has had limited success in explaining why firms pay dividends (i.e. the benefits), but the costs, such … Read more

The Association Between Corporate General Counsel and Firm Credit Risk

The role of the corporate general counsel (GC) has evolved over the past several decades. Traditionally, the GC served as an internal monitor via his/her gatekeeping functions to ensure that firms and their personnel acted legally and responsibly in business matters. In this sense, GCs are similar to other gatekeepers who are responsible for ensuring that firms engage in “best practices” (e.g., auditors, safety inspectors, etc.).

Over time, increases in business complexity and regulation have altered the GC’s responsibilities to include more advisory and entrepreneurial tasks. Internal counsel is now expected to expand the role of law and legal practice … Read more