The Rise of Asian Equity Markets and the International Corporate Governance Dialogue

By Mats Isaksson December 11, 2018 by renholding

While there is a growing debate in the United States about a shift from public equity markets to private ownership models, Asian stock exchanges are steaming ahead. Last year a record 1,074 companies got listed in the region, and 43 …

Institutional Investors, Voting Power, and Voting Patterns

By Efrat Dressler December 6, 2018 by renholding

Institutional shareholders’ role in corporate governance and their effect on firm value have been explored, both theoretically and empirically, mainly in the context of dispersed-ownership environments like the United States or the United Kingdom. In these common law countries, institutional …

Wachtell Lipton Puts a Spotlight on Boards

By Martin Lipton December 3, 2018 by renholding

The ever-evolving challenges facing corporate boards prompt an updated snapshot of what is expected from the board of directors of a major public company—not just the legal rules, but also the aspirational “best practices” that have come to have equivalent …

ISS Discusses How Governance Practices Show that Independent Board Leadership Matters

By Anthony Garcia and Kosmas Papadopoulos November 30, 2018 by renholding

The debate over board leadership does not seem to go away especially in the U.S. where market participants have long agreed on the need for greater independence in principle, while largely disagreeing on the measures required to put it into …

The Transatlantic Debate over Shareholder Rights

By Maria Lucia Passador November 9, 2018 by renholding

Effective and sustainable shareholder engagement is a cornerstone of the corporate governance model of listed companies, which is based on a system of checks and balances among boards, management, and stakeholders. Enhancing the involvement of shareholders in corporate governance is …

Sullivan & Cromwell Offers Corporate Governance Updates

By Heather L. Coleman, Melissa Sawyer and Marc Treviño October 29, 2018 by renholding

On October 18, Institutional Shareholder Services Inc. (“ISS”) announced that the comment period for its 2019 benchmark voting policy is open until 5:00 PM ET on November 1, 2018. For U.S. companies, ISS is soliciting comments on proposed changes relating …

The Role of Public Pension Funds in Governance

By Ying Duan, Yawen Jiao and Kunsun Tam October 24, 2018 by renholding

Public pension funds have great influence over corporate governance because of the size and nature of their portfolios: They manage more than $3 trillion in assets and often invest in a large number of companies. Besides largely unobservable private negotiations, …

Going Concern Opinions, Institutional Ownership, and CEO Compensation

By Ning Ren and Yun Zhu October 22, 2018 by renholding

Auditors issue going concern opinions when they have substantial doubts about a client’s ability to continue as a going concern for one year beyond the financial statement date. Abundant anecdotal evidence shows that companies that received these opinions went through …

Wachtell Lipton Discusses the State of Play in Activism

By Martin Lipton and Zachary S. Podolsky October 11, 2018 by renholding

As we approach the 2019 proxy season, developments since September 2017 prompt a brief updated review of the state of play.

The threat of activism remains high, and has become increasingly global.
Activist assets under management remain at elevated levels,

…

Is Shareholder Voting an Effective Corporate Governance Tool?

By Cory A. Cassell, Tyler J. Kleppe and Jonathan E. Shipman October 3, 2018 by renholding

Proponents of shareholder voting argue that restricting it would reduce the ability of shareholders to hold management accountable. The implication of this argument is that mandating equal voting rights for all shares will benefit shareholders. However, the evidence as to …

SEC Commissioner Airs Her Beef With Stakeholders

By Hester M. Peirce September 26, 2018 by renholding

Last time I flew to California, the skies were so clear that I was able to keep an eye on the changing landscape below all the way across the country. The vastness and great variety was striking. Having grown up

…

Corporate Governance and Countervailing Power

By Brian Cheffins September 19, 2018 by renholding

The analysis of corporate governance has been a strikingly one-sided affair. The focus has been almost exclusively on “internal” checks and balances, namely scrutiny of executives by the board of directors and by shareholders. In contrast, mechanisms that can operate …

Comparative Corporate Governance

By Ilir Haxhi September 7, 2018 by renholding

By adopting a systematic cross-national comparative approach, my recent study provides an overview of corporate governance (CG) around the world. It takes stock of what we know about the two main CG models, the variations within and across these models, …

The Subversion of Shareholder Democracy and the Rise of Hedge-Fund Activism

By Jang-Sup Shin September 6, 2018 by renholding

Hedge fund activists are technically just minority shareholders, yet they exert enormous influence, often forcing companies to undertake fundamental restructuring and substantially increase stock buybacks and dividends. For instance, Third Point Management and Trian Fund Management, holding only 2 percent …

Corporate Governance—The New Paradigm—A Better Way Than Federalization

By Martin Lipton August 24, 2018 by renholding

While “The Accountable Capitalism Act” introduced on August 15 by Senator Elizabeth Warren contains several very worthwhile provisions, it is premised on the federalization of all public corporations with revenues in excess of $1 billion. Mandatory federal incorporation and the …

How Creditors Affect Corporate Governance

By Tomas Jandik and William R. McCumber August 13, 2018 by renholding

Though the majority of studies in corporate governance focus on the ability of shareholders to advise and monitor firms, debt financing is much more common than equity financing. According to the Thomas Reuters Loan Pricing Corporation, $2 trillion in syndicated …

Are Independent Board Members Necessarily Credible?

By Yvan Allaire August 8, 2018 by renholding

By the late 2000s, independent directors were in the majority on the boards of almost every type of U.S. organization. While this achievement may have improved corporate governance, it was not the panacea that some had anticipated, as subsequent events …

Wachtell Lipton Discusses Gender Diversity and Board Quotas

By David A. Katz and Laura A. McIntosh August 8, 2018 by renholding

California has made headlines this summer with legislative action toward instituting gender quotas for boards of directors of public companies headquartered in the state. The legislation has passed the state senate; to be enacted, it must be passed by the …

How Corporate Governance Affects Mimicking Peers’ Financial Decisions

By Douglas J. Fairhurst and Yoonsoo Nam August 1, 2018 by renholding

Traditional explanations for why companies choose certain financial policies focus on firm-specific factors. For instance, all else being equal, firms with higher tax rates are likely to favor debt financing over equity financing, given the tax advantages of debt. However, …

Where the Fisch, Hamdani, and Davidoff Solomon Theory of Passive Investors Goes Awry

By J.B. Heaton July 25, 2018 by renholding

President Reagan once said, “I’ve heard that hard work never killed anyone, but I say why take the chance?” In a recent paper, professors Jill Fisch, Assaf Hamdani, and Steven Davidoff Solomon (hereafter “FHDS”) argue that passive investors – …

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