Board Committee Charters and ESG Accountability

By Lisa M. Fairfax February 16, 2023 by renholding

Increasing corporate focus on environmental, sustainability, and governance (“ESG”) has prompted considerable criticism from across the ideological spectrum. Those who disagree with that focus – viewing it as a breach of fiduciary duty and antithetical to profit maximization – have …

Making Audit Committee Disclosure More Transparent Requires Investor Feedback

By Lauren Cunningham, Sarah Stein, Kim Walker and Karneisha Wolfe January 12, 2023 by renholding

The role of the audit committee in a company’s board of directors has changed significantly since the passage of the Sarbanes-Oxley Act of 2002 (SOX). Traditionally, audit committees have overseen the company’s independent auditor, the internal audit function, and other …

Do Individual Directors Matter?

By Dipesh Bhattarai, Matthew Serfling and Tracie Woidtke November 17, 2022 by renholding

A fundamental question in corporate governance research is whether the board of directors affects firm value. Some argue that directors contribute no additional value to the firm and may even lower its value if they act only as a rubber …

How Director and Officer Liability Affects Corporate Tax Avoidance

By Sarfraz Khan, Sung-Jin Park, Stan Veliotis and John K. Wald October 12, 2022 by renholding

In a recent paper, we use the law protecting directors and officers of Nevada-incorporated firms from liability to study how such laws relate to corporate tax avoidance. Under the 1987 law, those directors and officers are liable only if …

Skadden Discusses How Directors, Officers, and Other Fiduciaries Can Deal With Inflation and Market Turmoil

By Van C. Durrer II October 10, 2022 by renholding

Directors, officers and other fiduciaries (together, “fiduciaries”) owe two primary duties to a corporation and its shareholders: the duty of loyalty and the duty of care. The duty of loyalty requires that fiduciaries make business judgments in the honest and …

The Role of Transaction Costs in Common Ownership

By Kenneth Khoo July 21, 2022 by renholding

“Common Ownership” arises when shareholders hold substantial stakes in different firms that impose externalities on each other, and it challenges the assumption that firms act to maximize their own profits. While firm decisions are ordinarily made by its board of …

Skadden Discusses Court Decision Striking Down Women on Boards Law

By Virginia Milstead May 20, 2022 by renholding

On May 13, 2022, a judge of the Los Angeles County Superior Court ruled in Crest v. Padilla, Case No. 19STCV27561, that California’s statute requiring California-based public companies to have one to three women on their boards of directors (S.B. …

ISS Discusses Japanese Board Independence and Diversity

By Taketoshi Yoshikawa April 28, 2022 by renholding

A recent ISS analysis of Japanese board composition finds a marked uptick in board independence and female board representation. At the close of Japan’s March 2022 “mini-season”, ISS found a 13percentage point jump in companies with at least a one-third

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Wachtell Lipton Puts Spotlight on Boards: Spring 2022 Update

By Martin Lipton, Steven A. Rosenblum, Karessa L. Cain and Hannah Clark April 21, 2022 by renholding

The ever-evolving challenges facing corporate boards prompt periodic updates to a snapshot of what is expected from the board of directors of a public company—not just the legal rules, or the principles published by institutional investors and various corporate and …

Boardroom Gender-Diversity Reforms and Institutional Monitoring

By Larry Fauver, Mingyi Hung, Alvaro G. Taboada and Emily Jing Wang April 11, 2022 by renholding

The past decade has seen an explosion of boardroom gender diversity reforms worldwide. As of 2014, 23 countries have amended governance codes and 14 countries have enacted laws to increase gender diversity on corporate boards. While investors play a critical …

Exequity Discusses Board Committee Oversight of ESG

By Ben Burney and Emily Brown March 30, 2022 by renholding

Over the past two years, Environmental, Social, and Governance (ESG) matters have become an increasingly important issue in the boardroom. This trend is accelerating today as a growing number of investors and stakeholders expect companies to both produce strong stock …

Does Media Exposure Affect Financial Reporting Quality Through Auditors?

By Steven Cahan, Chen Chen and Rencheng Wang March 24, 2022 by renholding

The media play an important role in capital markets. Media coverage can attract the attention of investors and the public at large and affect the decisions of management. As such, the media can have a corporate governance role in disciplining …

ISS Discusses Women on California Boards

By Paul Hodgson March 15, 2022 by renholding

Since 1995, US presidents have issued a series of annual proclamations designating March as Women’s History Month to celebrate the contributions women have made to the US and recognize the specific achievements women have made over the course of American

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Skadden Discusses Delaware Law Authorizing Captive Insurance for D&O Coverage

By Allison L. Land, Edward B. Micheletti and Peter Luneau February 18, 2022 by renholding

On February 7, 2022, Delaware’s governor signed a bill amending the Delaware General Corporation Law (DGCL) to expressly authorize Delaware corporations to purchase and maintain directors’ and officers’ (D&O) liability insurance by or through captive insurance companies. This amendment, described …

What Role Do Boards Play in Companies with Visionary CEOs?

By Xu Jiang and Volker Laux February 3, 2022 by renholding

CEOs, in particular founder-CEOs, are often visionaries with strong beliefs about the right strategic direction for their firms. For example, Apple CEO and founder Steve Jobs was known to be obsessed with product quality and design. The strategy to produce …

Cleary Gottlieb Discusses the Virtual Board Room in the Post-Pandemic Era

By Jeffrey D. Karpf and Fernando A. Martinez January 18, 2022 by renholding

Almost two years into the COVID-19 pandemic, it is clear that the corporate workplace has changed for good. As the world continues to reopen and companies return to the office, what we are returning to is not business as usual, …

How Generalist and Specialist CEOs Compare in the Eyes of Independent Directors

By Pattanaporn Chatjuthamard, Pornsit Jiraporn and Sirimon Treepongkaruna November 5, 2021 by renholding

The benefits and drawbacks of generalist CEOs – those with the talent and skill to manage companies in various industries – have been fiercely debated in contemporary research. Some research touts generalist CEOs’ varied professional experiences and ability to launch …

Uninformative Performance Signals and Forced CEO Turnover

By Raphael Flepp September 16, 2021 by renholding

Evaluating the performance of CEOs is one of the most important tasks of corporate boards of directors. When deciding whether to retain or dismiss CEOs, boards should follow the informativeness principle developed by Holmström (1979) and include all valuable performance …

Wachtell Lipton Puts a Spotlight on Boards

By Martin Lipton, Steven A. Rosenblum, Karessa L. Cain and Hannah Clark September 9, 2021 by renholding

Electoral Accountability in the Workplace

By David Foster and Joseph Warren August 20, 2021 by renholding

Corporate codetermination, which allows workers to elect representatives to a board of directors, is in the news again. Proposals for codetermination were, for example, a prominent part of this past presidential campaign, with senators Sanders and Warren disagreeing over what …

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