ESG, Common Ownership, and Systematic Risk: How They Intersect

By John C. Coffee, Jr. September 14, 2020 by renholding

This brief column will assert that three developments that seem unrelated are in fact closely related and may soon impact U.S. corporate governance with the force of a freight train. This column summarizes a longer article just posted by this …

The Politics of Institutional Shareholder Voting: Transparency Before Reform

By Isabel Verkes August 13, 2020 by renholding

On July 22, the SEC finalized a sweeping rule change to enhance the transparency around the role of proxy advisers. This follows an earlier proposal to reform the process for including shareholder proposals in a company’s proxy statement.^[1] These …

Skadden Reviews ESG for First Half of 2020

By Scott C. Hopkins, Simon Toms, Adam M. Howard and Patrick Tsitsaros August 10, 2020 by renholding

Interest in the environmental, social and governance (ESG) policies of companies and their impact on the wider community has continued to increase amongst institutional investors, retail shareholders and the media during the first half of 2020. The COVID-19 pandemic and …

The New Civil Code: ISS and Glass Lewis as Lawmakers

By Neil Whoriskey July 28, 2020 by renholding

ISS and Glass Lewis have arrogated to themselves the power to make law, promulgating a civil code of astounding breadth and detail, ruling over decisions on board composition, director qualifications, term limits, majority voting standards, executive compensation, capital structure, poison …

Why the SEC’s Proposal to Amend Rule 13f-1 Should Fail

By Eduardo Gallardo July 27, 2020 by renholding

On July 10, the Securities and Exchange Commission (SEC) proposed a 35-fold increase – from $100 million to $3.5 billion – in the threshold for requiring institutional investment managers to publicly report their equity holdings on Form 13F.[1] This …

The Conundrum of Common Ownership

By Jennifer G. Hill June 11, 2020 by renholding

My forthcoming article, “The Conundrum of Common Ownership,” examines the phenomenon of common ownership through a corporate governance lens. The common ownership debate has become one of the most contentious in corporate law. It is a by-product of …

Can Institutional Investors Help the Market Evaluate Complex Legal Disputes?

By Paul Borochin, Xiaoqiong Wang and Siqi Wei March 6, 2020 by renholding

Do institutional investors have the ability to mitigate information asymmetries around complex corporate events? Securities class actions (SCA) are suitable for testing any informational advantage for institutional investors: The number of SCAs brought against U.S. firms has increased markedly in …

Mapping the Landscape of Comments to the SEC’s New Proxy Rules

By Jens Frankenreiter March 4, 2020 by renholding

In November 2019, the Securities and Exchange Commission (“SEC”) issued a notice of proposed rulemaking aimed at the roles played by proxy advisers in providing information and voting recommendations to clients. The move was preceded by substantively similar interpretive guidance …

Why the SEC Proposal to Regulate Proxy Advisors Is Flawed

By Ken Bertsch February 19, 2020 by renholding

[Editor’s Note: This and the piece that immediately follows offer a point/counterpoint on the SEC’s proxy advisor proposal.] The Council of Institutional Investors opposes the SEC’s proposal to create a new regulatory structure for proxy advisory firms.[1]…

The Results Are in: Global Investor-Director Survey on Climate Risk Management

By The Millstein Center and LeaderXXchange February 14, 2020 by renholding

Institutional investors are increasingly focused on “extra-financial performance” as a predictor of long-term success of companies. Topics like climate change, CO2 emissions reduction, respect for the environment, labour rights, and diversity are more and more factored into investment decisions.

Investors, …

CEO Networks and Shareholder Litigation

By William R. McCumber and Lingna Sun February 11, 2020 by renholding

Academics, notably in sociology and economics, have long understood that social settings are primary drivers of information transmission and economic outcomes, from hiring decisions to product adoption to resource allocation. However, only recently has there been large-sample empirical evidence to …

SEC Chair Clayton Addresses Proposed Order on Access to Equity Market Data

By Jay Clayton January 9, 2020 by renholding

Good morning. This is an open meeting of the U.S. Securities and Exchange Commission on January 8, 2020, under the Government in the Sunshine Act. The Commission today will consider a staff recommendation to issue for public comment a Proposed

…

The Case for Institutional Investors’ Collective Engagements

By Giovanni Strampelli and Gaia Balp November 1, 2019 by renholding

Shareholder cooperation is on the rise as a tool for active corporate ownership and a way to effectively voice concerns about corporate governance and performance. While “wolf packs” of activist hedge funds that aim to bring about significant corporate change …

The Cost to Retail Investors and Public Markets of “Harmonizing” Securities Offering Exemptions

By Erik F. Gerding October 1, 2019 by renholding

In June 2019, the U.S. Securities and Exchange Commission (“SEC” or the “Commission”) issued a Concept Release on the Harmonization of Securities Offering Exemptions (the “Concept Release”), which set forth proposals to expand the …

Institutional Shareholders: Friends or Foes of Banks?

By Emmanuel T. De George, Nayana Reiter, Christina Synn and Christopher D. Williams August 9, 2019 by renholding

Following the financial crisis, regulators, academics, and practitioners investigated the factors that contributed to the systemic failure of the financial system. An important dimension of systemic risk that was identified is the correlated movements in market prices among banks during …

Are Executives Really “Penny Wise and Pound Foolish” About ESG?

By David F. Larcker and Brian Tayan July 26, 2019 by renholding

Critics of the shareholder-primacy model assert that it is flawed because it encourages managers to adopt a myopic view of profit generation that forgoes necessary investment and creates externalities borne by society. These critics argue that greater attention should be …

Common Ownership Has Not Yet Ushered in an Era of Anticompetitive Behavior

By Andrew Koch, Marios A. Panayides and Shawn Thomas January 24, 2019 by renholding

As mutual funds have become popular with individual investors, the institutions that manage these funds have grown dramatically. Along with the benefit of offering individual investors inexpensive portfolio diversification and engagement in corporate governance, there is mounting concern that the …

How Institutional Ownership Affects Insider Trading

By Stephen A. Hillegeist and Liwei Weng October 18, 2018 by renholding

Institutional owners have traditionally been thought of as passive investors that have little concern for or influence on corporate policies and decisions. In contrast, recent literature shows that while many institutions are passive in terms of their investment choices and …

Buy-Side Analysts and Earnings Conference Calls

By Michael J. Jung, M.H. Franco Wong and X. Frank Zhang August 29, 2018 by renholding

The role of sell-side equity analysts in the capital markets has been researched extensively by academics over the past several decades. In contrast, due to data limitations, there has been little research on buy-side analysts. Buy-side analysts work for institutional …

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