Visual Information in the Age of AI

By Sean Cao, Yichen Cheng, Meng Wang, Yusen Xia and Baozhong Yang August 17, 2023 by renholding

Information disclosed by corporations plays a fundamental role in shaping asset prices and the expectations of investors. That information typically comes in financial statement releases, conference calls, annual reports, and the news media. In a recent paper, though, we …

The Role of Controlling Shareholders Is Missing from the Debate over Short-Termism

By Tom Vos August 7, 2023 by renholding

The debate over short-term thinking at corporations has so far focused largely on companies in the U.S. and the UK. The fact that controlling shareholders are less common in those countries than in many others may explain why the extensive …

Wachtell Lipton Revisits the “New Paradigm” for Corporate Governance

By Martin Lipton, Steven A. Rosenblum, Karessa L. Cain, Elina Tetelbaum and Carmen X.W. Lu July 21, 2023 by renholding

In view of the attacks on “woke” corporations, ongoing legislative opposition to the consideration by investors and corporations of environmental, social and governance (ESG) issues, legal challenges to elements of ESG itself (notably, initiatives designed to further diversity, equity and …

SEC Chair Gensler Speaks to Investor Advisory Committee

By Gary Gensler June 23, 2023 by renholding

Good morning. I’m pleased to speak with the Investor Advisory Committee. As is customary, I’d like to note that my views are my own as Chair of the Securities and Exchange Commission, and I am not speaking on behalf of

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Can ChatGPT Help Investors Process Information?

By Alex G. Kim, Maximilian Muhn and Valeri Nikolaev June 19, 2023 by renholding

Since the launch of ChatGPT in November 2022, there’s been an exponential surge in the use of generative AI tools. Anecdotal evidence suggests that these tools are also of considerable interest to financial firms. As a case in point, Ken …

How Earnings Announcements Discipline Markets Skewed by Media Coverage

By Eric Holzman, Brian Miller and Brady Twedt June 12, 2023 by renholding

Earnings announcements serve a well-recognized role of conveying important information about firm performance to the market. However, an often-overlooked role of earnings releases is their ability to discipline market expectations.

Our study examines this disciplining role in the context of …

On Earnings Calls, It’s How Managers Say It That Can Affect the Market

By Bok Baik, Alex G. Kim, David Sunghyo Kim and Sangwon Yoon June 6, 2023 by renholding

Corporate disclosures increasingly include multimedia content such as audio, images, and videos. In fact, as of 2022, 83 percent of U.S. public firms used graphics in annual reports and various other communications. Additionally, companies commonly provide their earnings calls, shareholder …

How Corporate Investments in Fintech Startups Affect the Performance of the Startups and the Corporations

By Thomas Chemmanur, Harshit Rajaiya, Michael Imerman and Qianqian Yu June 1, 2023 by renholding

Financial Technology, or “fintech,” is one of the fastest growing sectors in finance. In 2010, the total amount of funding raised by fintech firms was just over $1 billion dollars, while in 2018, total funding was around $40 billion. In …

ISS Discusses Water Risks from an Investor Perspective

By Cosima Reiff, Erina Molina and Erin Wood April 7, 2023 by renholding

Water means life. More than half of our bodies consist of water, and it is an indispensable resource for production of food and other goods. It is fundamental for societies and ecosystems alike. While water covers approximately 70% of our …

Rethinking Cautions Accompanying Investment Predictions

By Franklin A. Gevurtz January 23, 2023 by renholding

We are constantly bombarded with warnings about dangers to our health or wellbeing. Sometimes, however, the warnings might facilitate the danger. In a new article, I show how the cautionary statements that commonly accompany predictions of corporate performance fall into …

When Will Investors Vote for Socially Beneficial but Costly ESG Policies?

By Daniel Friedman, John Duffy, Jean Paul Rabanal and Olga Rud January 18, 2023 by renholding

Investors are increasingly interested in whether firms implement environmental, social, and governance (ESG) policies that, for example, reduce the firms’ carbon footprints, diversify their workplaces, or better protect customers’ private information. Some socially beneficial policies (e.g., improving energy-efficiency) may also …

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 …

ISS Discusses ESGF Rating as a Measure of Investing Quality

By Christopher Kuales, Casey Lea and Gavin Thomson December 22, 2022 by renholding

Investors routinely consider both the ESG quality (i.e., the quality of a company’s management approach to environmental, social and governance (ESG) risks and opportunities) and the Financial quality (i.e., a company’s risk-adjusted profitability) of a firm in their day-to-day investment

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Why Do Institutional Investors Request Climate-Related Disclosures?

By Shira Cohen, Igor Kadach and Gaizka Ormazabal July 20, 2022 by renholding

An important debate is playing out over the role of institutional investors in the global effort to mitigate climate risk and achieve net-zero emissions. While some believe that institutional investors are sufficient catalysts in preparing us for a low carbon …

Investor Information Gathering and the Resolution of Uncertainty

By Jed Neilson June 9, 2022 by renholding

Gathering additional information is an instinctive response to uncertainty. This behavior is found in many settings, perhaps most pervasively in capital markets. For example, if investors observe an earnings number that differs from what they expected, they might seek to …

How Mandatory Corporate CSR Disclosures Affect Investors

By Kirsten Fanning, Richard C. Hatfield and Chez Sealy May 24, 2022 by renholding

Investment in companies that engage in sustainable corporate practices is growing rapidly, with those companies receiving approximately $17 trillion from investors so far in the United States alone. As a result, the majority of public companies now voluntarily disclose environmental, …

The Connection Between a Firm’s Investor Base and Media Coverage

By Nicholas Guest, Ashish Ochani and Mani Sethuraman May 12, 2022 by renholding

The financial media provide information to investors by monitoring firms for fraud, excessive CEO pay, and other questionable behavior, as well as mundane activities such as periodic earnings announcements. However, it is unclear why certain firms get extensive media …

Do Investors Prefer Women CEOs at Firms Targeted by Activists?

By Scott C. Jackson, Chris Agoglia and Dave Piercey April 22, 2022 by renholding

Shareholder activism is playing a larger role than ever in companies’ decisions about their operations and reporting, with over 4,600 firms targeted worldwide from 2013 to 2018. Shareholder activists can have several motives for going after a company, from trying …

Business Risks Stemming from Socio-Economic Inequality

By Todd Cort, Stephen Park and Decio Nascimento April 15, 2022 by renholding

Socio-economic inequality has risen over the last 40 years in almost every part of the world and has been exacerbated by the COVID-19 pandemic. Inequality does not only affect societies – it can also have a significant impact on the …

How to Translate Climate Disclosure into Investor Action

By Felix Mormann and Milica Mormann March 31, 2022 by renholding

Massive investment is required if mankind is to meet, and master, the challenges presented by global climate change. A recent report by McKinsey & Company posits that capital spending on energy and land-use infrastructure alone will need to exceed $9 …

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