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
investors
How Crypto Fraud Affects Investor Behavior
In the world of financial markets, fraud poses a significant threat, undermining investor trust and leading to misallocation of resources. Cryptocurrency markets present heightened risks of fraud, which draws the attention of regulators, legal experts, and investors. The Securities and …
Visual Information in the Age of AI
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
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
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
Can ChatGPT Help Investors Process Information?
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
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
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
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
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
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?
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
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
Why Do Institutional Investors Request Climate-Related Disclosures?
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
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
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
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?
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 …