SEC Investor Advocate Discusses Mandatory Arbitration as Illusory Remedy for Shareholders

By Rick A. Fleming February 27, 2018 by renholding

Today [February 24, 2018] is a special day for the [Securities and Exchange Commission’s] Office of the Investor Advocate.[1] I started this job four years ago today, and because I am the first Investor Advocate that is also the …

Perpetual Dual-Class Stock: The Case Against Corporate Royalty

By Robert J. Jackson, Jr. February 16, 2018 by renholding

My first few weeks at the Securities and Exchange Commission have been a whirlwind—and just to be clear, I am not talking about the markets.[1] In a few short weeks, I have gotten a crash course on SEC policymaking—and

…

SEC Chair Clayton Testifies About Virtual Currencies

By Jay Clayton February 8, 2018 by renholding

Chairman Crapo, Ranking Member Brown and distinguished senators of the Committee, thank you for the opportunity to testify before you today.[1] I am pleased that the Committee is holding this hearing to bring greater focus to the important issues …

Europe Faces Problem of Strong Shareholders and Weak Outside Investors

By María Gutiérrez-Urtiaga and Maria Isabel Sáez-Lacave February 7, 2018 by renholding

Corporate governance literature has largely focused on listed firms with dispersed ownership, but those with controlling stockholders are increasingly important in the United States and Europe. In the U.S., the likes of Google, Facebook, and other technology firms have gone …

Who Falls Prey to the Wolf of Wall Street?

By Christian Leuz, Steffen Meyer, Maximilian Muhn, Eugene F. Soltes and Andreas Hackethal December 21, 2017 by renholding

“Seniors [are] particularly vulnerable to investment scams” read one headline. “We are taking further steps to find and eliminate from our system pump-and-dump scammers, those who prey on retirees,” noted Jay Clayton, chairman of the Securities …

Why Do Retail Investors Ignore Accounting Information?

By Elizabeth Blankespoor, Ed deHaan, John Wertz and Christina Zhu November 21, 2017 by renholding

Prior research finds that individual (retail) investors often fail to use accounting information when making stock trading decisions. Instead, many individuals underperform by trading on attention-grabbing technical trends such as high past stock returns.

A number of Securities and Exchange …

PwC Discusses SEC’s Increased Scrutiny of Robo-Advisers

By Dan Ryan, Julien Courbe, Adam Gilbert, Mike Alix and Roberto Rodriguez November 8, 2017 by renholding

Earlier this year, the Securities and Exchange Commission (SEC) issued guidance regarding “robo-advisers,” automated investment advice tools accessed via web-based or mobile platforms with minimal human interaction.¹ The guidance is an important reminder to the industry that robo-advisers are …

Activism and Informed Trading

By John C. Coffee, Jr. November 1, 2017 by renholding

Hedge fund activism has transformed the corporate governance landscape – possibly for better, possibly for worse. But as activist funds emerge as the newest and most potent players in corporate governance, there is one certainty: New agency costs also arise. …

Is Corporate Short-Termism on the Rise in the U.S.?

By Rachelle Sampson and Yuan Shi October 18, 2017 by renholding

Corporate short-termism has been much discussed over the past few decades, but has recently become a growing concern for the U.S. economy. Executives and politicians warn of increased market pressure on corporations to meet short-term performance metrics at the expense …

Is It Time to Retire Securities Act Form S-8?

By Keith F. Higgins October 13, 2017 by renholding

Every securities lawyer knows that offers and sales of securities must either be registered under the Securities Act of 1933 (Securities Act) or made pursuant to an applicable exemption. This rule is so fundamental that we often neglect to think …

How Investor Attention Affects Fraud Discovery and Value Loss in Securities Class Actions

By Anna Abdulmanova, Stephen Ferris, Narayanan Jayaraman and Pratik Kothari September 19, 2017 by renholding

A securities class action is a complex event characterized by scarce information, high uncertainty, and increased information asymmetry between stakeholders and firms. In our paper “The Effect of Investor Attention on Fraud Discovery and Value Loss in Securities Class Action …

A Reality Check on the Appeal of the DFC Global Appraisal Case

By Charles Korsmo and Minor Myers July 17, 2017 by renholding

A peculiar appeal is currently before the Delaware Supreme Court. The case involves the judicial appraisal of DFC Global, a company acquired by a private equity firm in 2014. Approximately 12 percent of DFC stockholders dissented, and the Court of …

Mutual Fund Advisors’ “Empty Voting” Raises New Governance Issues

By Bernard S. Sharfman July 3, 2017 by renholding

The creation of the mutual fund will go down as one of the greatest innovations in financial history. It has provided tens if not hundreds of millions of unsophisticated and uninformed stock market investors with easy access to low cost …

What Responsibilities Do Sovereign Funds Have to Other Investors?

By Paul Rose June 20, 2017 by renholding

With trillions of dollars in assets, sovereign wealth funds (SWFs) play a major role in financial markets around the world. With billions (and perhaps trillions) of dollars’ worth of equity investments around the world, the investment behavior of SWFs is …

Can Investors Anticipate Post-IPO Mergers and Acquisitions?

By Christopher W. Anderson, Gokhan Torna and Jian Huang March 21, 2017 by renholding

Of the nearly 6,000 U.S. firms that conducted initial public offerings between 1980 and 2008, 38 percent became merger bidders within three years after the IPO and 12 percent became takeover targets. It is important that investors understand these developments, …

What Matters in Governance?

By Martijn Cremers, Saura Masconale and Simone M. Sepe March 16, 2017 by renholding

In the past 20 years, many corporate law scholars have come to the view that governance arrangements protecting incumbents from removal are what really matter for firm value, arguing that such arrangements help entrench managers and harm shareholders. A major …

How Institutional Investor Objectives Affect Firm Valuation and Governance

By Paul Borochin and Jie Yang January 9, 2017 by renholding

Over the last 30 years, institutional investors have dramatically increased their stakes in U.S. companies. In the 1980s, they held approximately 20 percent to 30 percent of the average firm in the U.S. By 2010, they held over 65 percent. …

PwC Discusses Election’s Impact on Advisers’ Duty to Retirement Investors

By Dan Ryan, Mike Alix, Adam Gilbert and Armen Meyer December 2, 2016 by renholding

We believe the recent election will have less impact on the Department of Labor’s (DOL) fiduciary duty rule than some in the media are currently speculating.[1] While some provisions may be modified by a new Administration, we believe the …

How Venture Capital Improves the Market Value of Firms that Go Public

By Thomas Chemmanur, Karthik Krishnan and Qianqian Yu November 17, 2016 by renholding

It is well established that venture capitalists can improve the product market value — the quality of projects and employees — at the private firms they invest in, either by making the firms more efficient (Chemmanur, Krishnan, and Nandy (2011)) …

Scattered Information’s Value to Investors

By Christian Goulding and Xingtan Zhang November 10, 2016 by renholding

The more an investor can learn about a financial security’s value, the better his trades and the higher his profits can be. But research is costly, and trading on one’s own information inevitably affects prices, which then reveal some of …

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