Sky Blog
The allocation of control rights between entrepreneurs and capital providers plays a central role in financial contracting and corporate governance. Debt contracts typically include accounting-based covenants that transfer control rights to lenders when accounting numbers (such as earnings) fall below …
CEO compensation typically consists of cash and long-term equity. While the benefits of cash are to some extent fixed, the value of equity-based compensation depends on the market value of the firm. The latter is the key mechanism for motivating …
Institutional investors are increasingly focused on “extra-financial performance” as a predictor of long-term success of companies. Topics like climate change, CO2 emissions reduction, respect for the environment, labour rights, and diversity are more and more factored into investment decisions.
Investors, …
Since passage of the Sarbanes-Oxley Act of 2002, public companies have been more enthusiastic than ever about appointing independent directors with specific expertise. They have often reached into the academy to recruit university professors, where expertise and independent thought thrive. …
The Delaware Court of Chancery ruled in In re Appraisal of Panera Bread Company,[1] following a six-day trial, in a 130-page decision issued on January 31, 2020, that the petitioners received more than fair value for each share …
Several decades of research have found that capital structure and financing decisions are influenced not only by market frictions such as taxes and bankruptcy costs but also by conflicts between managers and shareholders. In a new paper, we test whether …
Academics, notably in sociology and economics, have long understood that social settings are primary drivers of information transmission and economic outcomes, from hiring decisions to product adoption to resource allocation. However, only recently has there been large-sample empirical evidence to …
The problems in global financial markets are often similar, even though the capital market structure across jurisdictions differs significantly. The beginning of the 21st century was marked by a spate of international corporate scandals, and the 2007-2009 global financial …
In a letter to directors of public companies, State Street Global Advisors’ President and CEO, Cyrus Taraporevala, reiterated SSgA’s focus on “financially material” ESG issues as “a matter of value, not values.” He also confirmed that SSgA will go …
In 2020, businesses operating in the UK will need to grapple with the continued uncertainty caused by Brexit and will need to closely monitor a number of important corporate governance and reporting developments expected in the coming year.
Corporate litigation in Delaware continues to reflect the judicial trend toward honoring the decisions of informed stockholders and independent directors, thus limiting those decisions from costly after-the-fact legal attack. While the boundaries of stockholder ratification and director independence continue to …
In my forthcoming article, Management Culture & Surveillance, I argue that we should be worried about management overreach in the use of workplace surveillance. Based on new evidence of modern management’s roots in the slave plantations of the U.S. …
In early 2019, the government of Hong Kong proposed a bill that would allow for the transfer of criminal suspects to jurisdictions with which it does not have an extradition agreement, including Mainland China. The proposed extradition bill triggered an …
While activist campaigns were down slightly year-on-year in 2019, stockholder activism remained a prominent tactic. Looking ahead to 2020, there is no reason to suspect a further decline. Activists notched some big wins over the year, notably Elliott in its …
Shareholder engagement continues to be an important consideration for companies in communicating their long-term strategy and deepening relationships with their investors, and boards are becoming ever more involved in the process.
In PwC’s 2019 “Annual Corporate Directors Survey,” 51% of …
Delaware corporate law differs from other areas where fiduciary obligations apply – such as agency, LLCs, partnerships, and trusts. Three distinct actors owe fiduciary duties – executive officers, directors, and controlling shareholders – and numerous aspects of their duties greatly …
Regulation A+, an exemption from registration that took effect in 2015 and allows small companies to issue stock to the general public, presents interesting questions of corporate governance.
The maximum offering size of $50 million means that most Reg A+ …
Firms regularly grant stock and stock options to their employees as a way to align the incentives of employees and shareholders. This is particularly relevant for executives, because they routinely make decisions that have an appreciable effect on firm value …
Amazon, eBay, Etsy, and Pinterest offer hundreds of items, from t-shirts to coffee mugs to posters, warning against agreement for the sake of agreement.* My wife has, on more than one occasion, reminded me of the danger.[1] And now, …
The presidential race will garner much of the attention during the 2020 election cycle, but there is fierce competition elsewhere, too. Republicans and Democrats are fighting for both U.S. House of Representatives and U.S. Senate seats in …