Sky Blog
Initial public offerings of companies with dual-class shares have made headlines in recent years. An increasing number of newly listed companies have introduced classes of stock with superior voting rights, which typically allow company founders and top executives to maintain …
When it comes to the U.S. securities markets, the game has changed. Historically, the U.S. securities markets were dominated by retail investors who engaged in a buy and hold strategy: purchasing stocks as a vehicle to invest in a corporation …
Do investors behave rationally? Many researchers examine actively managed mutual funds to answer this question. The advantage of doing so setting is that we can observe the past performance of fund managers as well as the capital allocation decisions of …
Can social media help firms improve communication with investors? In a recent paper, I argue that social media communication can give a firm an advantage over competitors in attracting attention to earnings announcements and lead to stronger price reaction to …
In 2000, Overnite Transportation Co. halted its IPO because of a highly disruptive 10-month strike by the Teamsters’ Union. Teamster officials said they had achieved some gains through the strike, noting that Overnite had increased its employees’ hourly wages by …
Short-termism is a loaded phrase in debates over investment time horizons, often used to criticize investors and corporate managers deemed overly focused on near-term gains at the expense of long-term value. One argument is that U.S. mutual funds, as significant …
Public firms are increasingly connected through institutional investors’ stock ownership, largely due to individual investors who invest excess cash and retirement savings through financial institutions. Firms with institutional cross-ownership have institutional stockholders with significant stakes in other firms within the …
While the behavior of mutual fund investors is an active field of study within finance, we do not know very much about how these behaviors have changed over time. The simple reason for this is that most studies in this …
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 …
Investments in private equity are typically structured as 10 year limited partnerships in which fund managers act as general partners (GPs) and investors act as limited partners (LPs). Since the fund life is broken down into an investment and a …
Limited liability companies, or LLCs, have emerged as the entity of choice for new businesses. The form attracts many everyday owners and entrepreneurs as an easy way to combine corporation-style limited liability protection with partnership-style tax treatment. LLCs also offer …
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 …
As we approach the start of the 2018 proxy season, developments since January 2015 prompt a brief review of the state of play.
In the aggregate, retail investors allocate tremendous amounts of capital and often turn to financial advisers to help them pick the best investment opportunities. In a recently published article, I describe how financial adviser conflicts of interest now distort …
Corporate information that moves stock-market prices has long sat at the center of modern securities regulation in the United States. The Great Depression-era securities laws at the foundation of the field require much mandatory disclosure of this type of information. …
Recently, there has been concern among investors, preparers, regulators, and standard setters that corporate disclosure (in particular the annual report, Form 10-K) is becoming increasingly lengthy, redundant, complex, and onerous. In December 2013, the SEC began a comprehensive review of …
In April of 2012, President Obama signed into the law the J.O.B.S. (Jumpstart Our Business Startups) Act. The law’s intent and design was to make it easier for small businesses to raise money by easing their regulatory burdens both on …
Whether one ascribes to the agency theory of shareholder primacy or the contractarian theory of director primacy, boards of directors have great discretion in determining whether, when, and how to sell the corporation. Defensive tactics, like poison pills, can be …
In § 1502 of Dodd-Frank, Congress instructed the SEC to draft rules requiring public companies to disclose their use of “conflict minerals” originating in and around the Democratic Republic of the Congo (DRC). Coined the Conflict Minerals Rule, the statute …
Ethan Allen and its management prevailed a few weeks ago against an intense hedge fund activist campaign to remove its entire board of directors.
An analyst of one of our larger shareholders, the Gabelli funds, observed “I’ve never seen a …