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Wachtell Lipton Discusses Risk Management and the Board of Directors

By Martin Lipton, Wayne M. Carlin, Daniel A. Neff, Sabastian V. Niles and Andrew R. Brownstein April 4, 2018 by Carly Goeman

The past year has seen continued evolution in the political, legal and economic arenas as technological change accelerates. Innovation, new business models, dealmaking and rapidly evolving technologies are transforming competitive and industry landscapes and impacting companies’ strategic plans and prospects …

How CEOs’ Personal Finances Affect Their Companies’ Financial Decisions

By Timo P. Korkeamaki, Eva Liljeblom and Daniel Pasternack April 3, 2018 by renholding

A number of recent studies have focused on how the behavior of chief executives affects their firms’ financial decisions. We contribute to this literature by looking at the connections between CEOs’ personal finances and those of their firms. Unique data …

The Power of Voluntary Disclosure by Activist Shareholders

By Ryan McDonough and Jordan Schoenfeld March 29, 2018 by renholding

A key challenge for activist investors is convincing other shareholders that the activist agenda will increase the value of a target firm. Accordingly, activists commonly release public disclosures through traditional and social media, news wires, or their fund’s website. These …

Antitrust as Corporate Governance: Why a Firm’s Mission Is to Earn No Profit

By Ramsi Woodcock March 28, 2018 by renholding

BlackRock, the vast asset manager, has been feted for demanding that the boards of its portfolio firms pursue a social purpose, which likely entails spreading corporate profits beyond shareholders to include labor and victims of environmental harm.[1] But despite …

Meaningful Ways to Measure Organizational Performance

By Hershey H. Friedman and Frimette Kass-Shraibman March 23, 2018 by renholding

A key principle of financial reporting is that “information should be expressed so that substance, not form, governs” [1]. What this means is that “the financial statements and accompanying disclosures of a business should reflect the underlying realities of business …

Social Enterprise Laws and Director Primacy’s Demise: Risks to Governance and Growth

By Joshua P. Fershee March 22, 2018 by renholding

Businesses often face criticism for putting profit over people and for sometimes ignoring the needs of various stakeholders, including employees and communities. This reality has led to a variety of efforts, including the corporate social responsibility movement, seeking to encourage …

Stock Market Indices: Inside the Black Box

By Anita Anand and Adriana Z. Robertson March 21, 2018 by renholding

The news that a whistleblower contacted U.S. regulators last month about alleged manipulation of the Chicago Board Options Exchange Volatility Index, or VIX, highlights near universal reliance on information that stock market indices provide. While the VIX is not itself …

VUCA and the Management of Legal Risk

By Robert C. Bird March 15, 2018 by renholding

VUCA is an acronym for volatility, uncertainty, complexity, and ambiguity – four dimensions of risk – and a tool that can used to better manage legal risk. Designed by the U.S. military and reinforced by business,[1] it describes an …

A Rule-Based Method for Comparing Corporate Laws

By Lynn M. LoPucki March 13, 2018 by renholding

Scholars, lawyers, judges, and policymakers frequently need to compare corporate laws, both internationally and domestically. In part, this need results from the internal affairs doctrine, a conflict-of-laws rule that is unique to corporate law. The doctrine requires that courts apply …

Enhancing Governance in Dual-Class Share Firms

By Anita Anand February 27, 2018 by renholding

In a typical public company, shareholders can elect the board, appoint the auditors, and approve fundamental changes. In other words, they can participate in the governance of the firm. Firms with dual class shares (DCS) alter this balance by inviting …

Protecting LLC Owners While Preserving LLC Flexibility

By Peter Molk February 26, 2018 by renholding

Limited liability companies, or LLCs, have emerged as the entity of choice for new businesses. The form attracts many everyday owners and entrepreneurs as an easy way to combine corporation-style limited liability protection with partnership-style tax treatment. LLCs also offer …

Fried Frank Discusses Delaware Decision Absolving LCC Board of Duty to Maximize Price

By Gail Weinstein, Robert C. Schwenkel, Brian T. Mangino, Matthew V. Soran and Andrea Gede-Lange February 23, 2018 by renholding

In Miller v. HCP (Feb. 1, 2018), the Court of Chancery dismissed claims made against the members of a limited liability company board, a majority of whom had been appointed by the private equity firm that was the company’s controlling …

Changes in Corporate Governance: Externally Dictated vs. Organically Determined

By Onur K. Tosun February 20, 2018 by renholding

Several major corporate scandals in the United States during the early 2000s brought attention to corporate governance of large U.S. companies. As a result, Congress passed the Sarbanes-Oxley Act (SOX), and the Securities and Exchange Commission (SEC) announced several regulations …

Following the Corporate Governance Canon Pays Off for Chinese Companies

By Say Hak Goo and Bryane Michael February 19, 2018 by renholding

Over the years, a consensus on the best corporate governance practices has emerged. The OECD Guidelines of Corporate Governance epitomize a canon of such practices, including things like having non-executive shareholders on boards, having an audit committee, and following special …

Perpetual Dual-Class Stock: The Case Against Corporate Royalty

By Robert J. Jackson, Jr. February 16, 2018 by renholding

My first few weeks at the Securities and Exchange Commission have been a whirlwind—and just to be clear, I am not talking about the markets.[1] In a few short weeks, I have gotten a crash course on SEC policymaking—and

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Corporate Governance that Works for Everyone

By Barnali Choudhury and Martin Petrin February 15, 2018 by renholding

Corporate governance has traditionally been viewed as a way to reduce agency costs between shareholders and managers in the context of private ordering. Laws and regulations pertaining to corporate governance have, therefore, typically aimed to enhance long-term wealth for shareholders.…

Wachtell Lipton Discusses Investor Engagement in the New Paradigm for Corporate Governance

By Martin Lipton, Steven A. Rosenblum, Karessa L. Cain and Sabastian V. Niles February 13, 2018 by charlesbluesky

The accelerated interest in sustainability, ESG, corporate social responsibility and investment for long-term growth and value creation (the new paradigm) as most cogently exemplified by Value Act’s newly formed Spring Fund focusing on promoting environmental and social goals of the

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Europe Faces Problem of Strong Shareholders and Weak Outside Investors

By María Gutiérrez-Urtiaga and Maria Isabel Sáez-Lacave February 7, 2018 by renholding

Corporate governance literature has largely focused on listed firms with dispersed ownership, but those with controlling stockholders are increasingly important in the United States and Europe. In the U.S., the likes of Google, Facebook, and other technology firms have gone …

New Year’s Resolutions for Director Compensation from Investors Bancorp

By Jennifer S. Conway, Edmond T. Fitzgerald, Arthur H. Kohn, Brian D. Robbins and Vanessa C. Richardson February 5, 2018 by renholding

In recent years, shareholder plaintiffs have brought a series of claims before the Delaware Court of Chancery alleging that directors of Delaware companies have abused their discretion in granting themselves excessive equity compensation for their board service. These cases raised …

Has Their Time Come? A Tale of Two Corporate Responsibility Movements

By Joanne Bauer and Elizabeth Umlas February 2, 2018 by renholding

Amid the many calls for corporations to be socially responsible, two movements that have emerged since the turn of the 21st century stand out as being particularly serious about defining and holding corporations accountable to higher standards. One is the …

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