Lessons from Luckin Coffee: The Underappreciated Risks of Variable Interest Entities

On April 2, China’s Luckin Coffee announced that some of its employees, including the chief operating officer, had fabricated over $300 million in reported revenues. On April 21, the Securities and Exchange Commission and the U.S. Public Company Accounting Oversight Board alerted investors that firms based in “emerging markets, including China,” often do not satisfy the auditing standards normally met by firms traded on U.S. exchanges.  In May 2020, the Nasdaq Stock Market ordered Luckin to delist and proposed stricter listing requirements for firms based in markets that restrict U.S. regulators’ access to information.  Concurrently, the U.S. Senate enacted, and … Read more

The Puzzling Case of the WeWork Non-IPO

The dramatic implosion of the IPO of The We Company, parent of office-sharing firm WeWork, (the “WeWork IPO) has attracted intense scrutiny across the business community.  For scholars and practitioners who work at the intersection of law, business, and technology, the sequence of events leading to that implosion raises fascinating and interrelated questions involving corporate governance, the relationship between public markets and private markets, and platform economics.

Is corporate governance going downhill?

One of the most actively discussed topics in corporate governance is the increased use of multi-class stock structures in IPOs, especially in the case of firms in digital … Read more

Antitrust Overreach: Undoing Cooperative Standardization in the Digital Economy

We take for granted that an Apple iPhone can “talk” with a Samsung Galaxy smartphone and a Dell laptop can communicate with an HP printer.  As I describe in a new paper, this ubiquitous interoperability has relied on a standardization infrastructure involving the cooperative efforts of multiple firms. Some of those firms focus on the R&D that contributes technologies toward the standard-setting process and others specialize in embedding those technologies in smartphones, laptops, and other devices.  This multi-firm mechanism contrasts favorably with the historically dominant alternatives of achieving standardization through a single entity: a government monopoly, which suffers from informational … Read more