Will Systematic Stewardship Save the Planet?

By Zohar Goshen and Assaf Hamdani November 28, 2023 by renholding

The convergence of environmental urgency and the rising power of “universal owners” – asset managers with broad-based portfolios, such as BlackRock – has kindled the hope among academics and activists that universal owners will leverage their power to push companies …

The Determinants and Consequences of Appointing Activist Directors

By Ian D. Gow, Sa-Pyung Sean Shin and Suraj Srinivasan February 22, 2023 by renholding

In recent years, an increasingly popular strategy among hedge fund activists has been to acquire seats on the boards of target companies. These board seats are held by what we refer to as “activist directors,” who may be affiliated with …

Wachtell Lipton on Dealing with Activist Hedge Funds and Other Activist Investors

By Martin Lipton, Steven A. Rosenblum, Karessa L. Cain, Sabastian V. Niles and Anna Dimitrijević September 7, 2022 by renholding

The SEC rule requiring a universal proxy card in director election proxy fights becomes effective today [September 1]. The resurgence of activism is already in progress, and the universal proxy card may significantly facilitate some proxy contests in which an …

Why Activist Hedge Funds Deserve Representation on Corporate Boards

By Martin Gregor and Beatrice Michaeli August 22, 2022 by renholding

Activist hedge funds will soon likely have greater leverage in proxy contests, thanks to a new rule from the Securities and Exchange Commission. But will that benefit shareholders who care about long-term value? Our study suggests that it will – …

Poison Pills in a World of Activism and ESG

By Caley Petrucci and Guhan Subramanian May 23, 2022 by renholding

Since the creation of the poison pill in the 1980s as a response to hostile takeovers, the corporate world has seen the rise of stakeholder governance, ESG, and stockholder activism and a host of other dramatic developments. The stock market …

Do Activists Increase Long-Term Shareholder Value? New Evidence that Includes Non-Hedge Fund Activists

By Edward Swanson, Glen Young and Christopher G. Yust December 23, 2021 by renholding

Shareholder activists are often accused of having short investment horizons and thus pushing companies to increase their stock prices at the expense of long-term shareholder value (“short-termism”). These accusations have prompted extensive research on interventions by hedge funds. In a …

Raiders, Activists, and the Risk of Mistargeting

By Zohar Goshen and Reilly S. Steel October 19, 2021 by renholding

For decades, Delaware and federal law governing contests for corporate control have focused on building walls to keep corporate raiders outside the gates, while doing relatively little to stop activist hedge funds. The prevailing academic view has been similar: Scholars …

Corporate Vote Suppression: A Counter-Response to Eric Robinson

By Jeffrey N. Gordon September 1, 2021 by renholding

I appreciate the engagement by long-term pill observer Eric Robinson with my Corporate Vote Suppression piece. I am also glad that he agrees that the pill in The Williams Companies Shareholder Litigation ought to be struck down, though he narrowly …

The Underside of Hedge Fund Activism: Looting the Pension Fund

By John C. Coffee, Jr. April 14, 2021 by renholding

Hedge fund activism is a topic on which most law professors have closed their minds. They learned in student days that activist hedge funds are excellent agents of change that efficiently discipline managements at targeted firms and increase shareholder wealth. …

SEC Chairman Announces Roundtable on Management, Reporting, and Regulation

By Jay Clayton May 22, 2019 by renholding

Our capital markets benefit from a level of retail investor participation that is unparalleled among the world’s large industrialized countries. Our Main Street investors who, day in and day out, put their hard-earned money to work for the long term

…

Cleary Gottlieb Discusses Long Term Investors’ Duty to Revive the Staggered Board

By Neil Whoriskey June 11, 2018 by renholding

Beyond the cacophonous din of voices calling for companies to serve a “social purpose,” adopt a variety of governance proposals, achieve quarterly performance targets, and listen to (and indeed even “think like”) activists, there is now, most promisingly, a call …

Activism and Informed Trading

By John C. Coffee, Jr. November 1, 2017 by renholding

Hedge fund activism has transformed the corporate governance landscape – possibly for better, possibly for worse. But as activist funds emerge as the newest and most potent players in corporate governance, there is one certainty: New agency costs also arise. …

Another Reason Why Companies Avoid IPOs

By Bernard S. Sharfman September 29, 2017 by renholding

In a recent New York Times article, Steven Davidoff Solomon listed several possible explanations for a significant decline in the number of initial public offerings (IPOs). Among the most interesting was that there are many large and successful high-tech …

Wachtell Lipton Discusses the Classified Board Duels

By Martin Lipton and Daniel Bulaevsky July 6, 2017 by renholding

Professor Lucian Bebchuk has engaged in two rounds of law-review-article duels with Professor Martijn Cremers and Professor Simone Sepe over classified boards. The weapons were statistics (and common sense). Cremers and Sepe wore the classified-board-stakeholder colors; Bebchuk, the agency-model-shareholder-democracy colors. …

Mutual Fund Advisors’ “Empty Voting” Raises New Governance Issues

By Bernard S. Sharfman July 3, 2017 by renholding

The creation of the mutual fund will go down as one of the greatest innovations in financial history. It has provided tens if not hundreds of millions of unsophisticated and uninformed stock market investors with easy access to low cost …

Board Declassification Activism: Why Run From the Evidence?

By Martijn Cremers and Simone M. Sepe June 29, 2017 by renholding

In a recently released study, we examined the value implications of board declassifications promoted by the Harvard Law School Shareholder Rights Project (“SRP study”). In a May 2017 note, Lucian Bebchuk and Alma Cohen “contest” the results in our study. …

Reputation and Investor Activism

By Travis Johnson and Nathan Swem April 25, 2017 by renholding

Investor activism is an important mechanism by which a company’s shareholders can affect corporate decisionmaking. To legally compel corporate managers to change policies, activist investors must engage in proxy fights during which they solicit support for their proposals from other …

How Proxy Contests Affect Corporate Policy

By Jian Huang and Gokhan Torna April 21, 2017 by renholding

Activist investors that believe an agency problem exists between shareholders and management may attempt a proxy contest aimed at specific issues or control of the board. Research shows that, in anticipation of a proxy contest, managers make significant adjustments in …

What Matters in Governance?

By Martijn Cremers, Saura Masconale and Simone M. Sepe March 16, 2017 by renholding

In the past 20 years, many corporate law scholars have come to the view that governance arrangements protecting incumbents from removal are what really matter for firm value, arguing that such arrangements help entrench managers and harm shareholders. A major …

Wachtell Lipton Shines a Spotlight on Boards for 2017

By Martin Lipton and Sabastian V. Niles January 27, 2017 by renholding

This past year witnessed a number of new corporate governance initiatives. Among the most significant:

BlackRock, State Street and Vanguard each issued strong statements supporting long-term investment, criticizing the short-termism afflicting corporate behavior and the national economy and rejecting financial

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