Making a Market for Corporate Disclosure

By Kevin S. Haeberle and M. Todd Henderson May 23, 2018 by renholding

Public-company information has great social value. However, it is widely thought that left to their own devices, firms will under-disclose information about their condition and prospects. This thinking is embodied in the mandatory-disclosure regime that sits at the foundation of …

Feedback Effect of Disclosure Spillovers

By Jinhwan Kim, Rodrigo S. Verdi and Benjamin Yost May 18, 2018 by renholding

Prior research has documented the existence of disclosure externalities, or information spillovers, between firms in a number of different settings. The idea is that when two firms are economically related, public disclosures by one firm can affect the stock price …

An Unasserted Lesson of the SEC’s Yahoo Cyberbreach Enforcement Action

By Stanley Keller May 10, 2018 by renholding

Much has been written about the Securities and Exchange Commission’s enforcement action involving Yahoo’s failure to adequately disclose a cyberbreach.[1] I am writing about something that the SEC’s announcement and order did not address and therefore has not been …

Can Adverse Effects of Private Management-Investor Meetings Be Mitigated by Board Independence?

By Robert M. Bowen, Shantanu Dutta, Songlian Tang and Pengcheng Zhu May 7, 2018 by renholding

Private meetings between management and investors (site visits) occur worldwide and are generally held at corporate headquarters with invited investors and sell-side analysts. Ng and Troianovski (WSJ, 2015) report that U.S. investors spend $1.4 billion a year for face time …

Davis Polk Discusses SEC’s $35 Million Fine for Late Cyberbreach Disclosure

By Avi Gesser, Joseph A. Hall, Lawrence Portnoy, Linda Chatman Thomsen and Richard D. Truesdell, Jr. May 1, 2018 by renholding

On April 24, the Securities and Exchange Commission charged Altaba Inc., formerly Yahoo! Inc., with misleading shareholders by waiting almost two years to disclose its 2014 data breach. Consenting to a cease-and-desist order, Altaba agreed to pay a $35 …

Sexual Harassment and Corporate Law

By Daniel Hemel and Dorothy Shapiro Lund April 9, 2018 by renholding

Tronc Chairman Michael Ferro became the latest corporate executive to resign amid accusations of unwanted sexual advances when he stepped down from the helm of the newspaper publishing chain in mid-March. Ferro joins a long list of high-profile executives who …

Do Firms Under-Report Information on Cyber-Attacks?

By Eli Amir, Shai Levi and Tsafrir Livne April 2, 2018 by renholding

A cyber-attack is a risk that every firm must manage. Prior studies raised doubts about how harmful cyber-attacks actually are. In particular, studies used the market reaction to cyber-attacks to show that they cause only small losses that decrease over …

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 …

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 …

Silence is Safest: Non-Disclosure When the Audience’s Preferences are Uncertain

By Philip Bond and Yao Zeng March 12, 2018 by renholding

An important and long-standing question in the economics of information is whether voluntary disclosure leads to full disclosure. A compelling and intuitive argument, often described as the “unraveling” argument (see Milgrom, 1981), suggests that the answer is, yes. In brief, …

Blue Sky Banter Podcast: Donald Langevoort on Insider Trading, Disclosure, and Disasters

By Reynolds Holding March 2, 2018 by renholding

Professor Donald Langevoort of Georgetown Law speaks with Reynolds Holding about how two duties — the obligation to disclose or abstain from trading on material information and the duty to reveal corporate secrets — evolved from the Second Circuit’s Texas …

The Cost of Disclosure Regulation: Evidence from D&O Insurance and Non-Meritorious Securities Litigation

By Dain C. Donelson, Justin J. Hopkins and Christopher G. Yust February 22, 2018 by renholding

There is an extensive literature on the benefits of mandatory disclosure by firms, but measuring the costs of such disclosure has been more challenging (Leuz and Wysocki 2016). In particular, while some believe that mandatory disclosure could increase litigation against …

SEC Releases Guidance on Disclosing Cybersecurity Risks and Incidents

By Jay Clayton February 22, 2018 by renholding

On February 20, the Securities and Exchange Commission approved the issuance of an interpretive release, available here, to provide guidance to public companies when preparing disclosures about cybersecurity risks and incidents. The release also communicates the Commission’s views on the

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Optimal Disclosure and Litigation Rules around IPOs and SEOs

By Onur Bayar, Thomas Chemmanur and Paolo Fulghieri February 6, 2018 by renholding

In recent years, there have been a number of reforms to the legal and regulatory framework governing disclosures and litigation around initial public offerings (IPOs) and seasoned equity offerings (SEOs). The most prominent of these are the JOBS Act of …

Materiality Disclosures and Their Effect on Investors’ Decisions

By Brant E. Christensen, Aasmund Eilifsen, Steven M. Glover and William F. Messier, Jr February 5, 2018 by renholding

Auditors consider misstatements or omissions in financial statements to be material if they could influence the economic decisions of financial statement users. Additionally, materiality affects how auditors plan and perform an audit and evaluate identified misstatements. Regulators in the UK …

Gibson Dunn Offers Securities Enforcement Update for 2017

By Marc J. Fagel January 26, 2018 by renholding

2017 was the prototypical transition year for the SEC. In contrast to many other federal agencies under the current administration, the new SEC leadership did not promise a wholesale rethinking of the agency’s mandate. Rather, they seemed to signal minor …

Nonfinancial Risk Disclosure and the Costs of Private Ordering

By Virginia Harper Ho January 22, 2018 by renholding

2017 was a year of major developments that are changing how companies disclose nonfinancial environmental, social, and governance (ESG) risk to investors. In January, regulations implementing the European Union’s 2014 Nonfinancial Reporting Directive took effect for certain large companies operating …

Wachtell Offers 2018 Checklist for Cross-Border M&A Involving U.S. Targets

By Adam O. Emmerich and Robin Panovka January 10, 2018 by renholding

Global M&A accelerated in the fourth quarter of 2017, driven in part by tech expansion and strong economies in several key markets, and there are many signals pointing to a continued strong pace of transactions, including in the U.S. Overall …

The Economics of Disclosure and Financial Reporting Regulation

By Christian Leuz and Peter D. Wysocki January 9, 2018 by renholding

Disclosure and reporting regulation is a central and recurring policy issue that has received significant attention in academic research on accounting, finance, and economics. Further fueling demand for this research are increasingly frequent requests that policy makers and regulators conduct …

Gibson Dunn Discusses SEC Guidance on How the New Tax Law Affects Disclosure and Accounting

By Ronald O. Mueller, Elizabeth Ising, Michael Scanlon, Brian Lane and Andrew Fabens January 8, 2018 by renholding

On December 22, 2017, the Securities and Exchange Commission’s Office of the Chief Accountant and Division of Corporation Finance (“Staff”) issued important guidance that provides significant relief and helpful answers on some of the accounting and disclosure issues raised by …

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