Sexual Harassment and Corporate Law

Tronc Chairman Michael Ferro became the latest corporate executive to resign amid accusations of unwanted sexual advances when he stepped down from the helm of the newspaper publishing chain in mid-March. Ferro joins a long list of high-profile executives who have resigned—or been fired—in recent months due to alleged sexual misconduct. Indeed, well before Ferro’s departure, it was clear that the #MeToo movement had reached the c-suite, resulting in resignations and terminations at dozens of prominent companies.

These scandals have caught the attention of shareholders and plaintiffs’ lawyers. In 2017 and the first quarter of 2018, shareholders at four publicly … Read more

How Nonvoting Shares Can Help Promote Efficient Corporate Governance

Companies that go public with multiple classes of shares will be excluded from the major U.S. stock indexes of S&P Dow Jones Indices, the organization announced in July. A few days earlier, FTSE Russell said it would bar dual-class companies from its indexes unless public shareholders hold at least 5 percent of the voting rights. These policy changes were made in response to a recent surge in dual-class initial public offerings, which generated hostile reactions from investors, regulators, and the public. Such structures were historically favored by family-owned companies seeking to preserve control but have gained popularity among successful technology … Read more

The Case Against Passive Shareholder Voting

In the past few years, investors have begun to embrace the reality that academics have been championing for decades—that a broad-based passive indexing strategy is superior to picking individual stocks or actively managed mutual funds. As a result, millions of investors have abandoned actively managed mutual funds, or “active funds,” in favor of passively managed funds, or “passive funds.” This past year alone, investors withdrew $340 billion from active funds (approximately 4 percent of the total) while investing $533 billion into passive funds (growing the total by 9 percent).

This historically unprecedented shift is good news for investors, who benefit … Read more