Is the Quality of Law in the Eye of the Beholder?

By Gerhard Schnyder, Kun Fu, Anna Grosman, Mathias Siems and Ruth V. Aguilera June 16, 2021 by renholding

Millions of dollars are spent every year by international financial institutions and development agencies to promote legal reforms in countries around the world. Indeed, since the late 1990s, legal reforms have become a key tool for trying to promote …

Are Companies More Likely to Go Public If Their Competitors Do?

By Cyrus Aghamolla and Richard T. Thakor June 11, 2021 by renholding

The determinants of when and why private companies decide to go public through an initial public offering (IPO) is an important question with many policy implications. Anecdotally, one reason why firms decide to do an IPO is as a response …

SPAC vs. IPO: Is There a Difference in Executive Compensation?

By James F. Reda May 20, 2021 by renholding

An emerging company in need of capital to grow has an important decision to make: how and when to raise the necessary capital.

The traditional way of taking an emerging company public in an initial public offering, or IPO, is …

The Rise of Dual-Class Stock IPOs

By Dhruv Aggarwal, Ofer Eldar, Yael V. Hochberg and Lubomir P. Litov April 21, 2021 by renholding

Public securities markets have undergone dramatic changes in recent years. Not only has the number of publicly traded firms been declining, but the nature of the firms that choose to go public has also changed. While publicly traded firms in …

Taming Unicorns

By Matthew Wansley April 15, 2021 by renholding

Until the last decade, most startups that grew to become valuable businesses chose to go public. Late-stage startups with reported valuations over $1 billion used to be so rare that venture capitalist Aileen Lee called them “unicorns.” When she coined …

SPACs, IPOs, and Liability Risk Under the Securities Laws

By John Coates April 12, 2021 by renholding

Over the past six months, the U.S. securities markets have seen an unprecedented surge in the use and popularity of Special Purpose Acquisition Companies (or SPACs).[1],[2] Shareholder advocates – as well as business journalists and legal and

…

Regulating SPACs — Before It’s Too Late

By Georges Ugeux March 31, 2021 by renholding

Although it has been used in the past, the resurgence of the Special Purpose Acquisition Company (SPAC) has been spectacular in the last two years. According to its promoters, a SPAC offers relatively easy access to a listing on a …

The Lowdown on SPACs

By Minmo Gahng, Jay Ritter and Donghang Zhang March 11, 2021 by renholding

In 2020, the number of IPOs by a Special Purpose Acquisition Company (SPAC) set records: A total of 248 SPAC IPOs raised over $75 billion. The boom continues in 2021: Each of January and February has seen over 90 SPAC …

Regulatory Costs of Being Public: Evidence from Bunching Estimation

By Michael Ewens, Kairong Xiao and Ting Xu January 8, 2021 by renholding

Disclosure and internal governance regulations are, along with accounting rules, distinguishing features of the public firm. Deregulation agendas such as those of the Trump administration typically assume that many regulations on public firms have imposed high compliance costs. Such arguments …

Paul Weiss Discusses SEC Guidance on Disclosure by SPACs

By Mark S. Bergman, John C. Kennedy, Raphael M. Russo, and David Curtiss January 5, 2021 by renholding

The Staff of the Division of Corporation Finance recently issued CF Disclosure Guidance: Topic 11 – Special Purpose Acquisition Companies (available here). This guidance highlights disclosure considerations for SPACs at both the IPO and business combination stages, with a …

How Corporate Governance Affects the Success of Initial Public Offerings

By Marina Brogi, Valentina Lagasio and Valerio Pesic December 8, 2020 by renholding

In our recent paper, Can Governance Help in Making an IPO “Successful”? New Evidence from Europe, we find that corporate governance affects company performance after an IPO in different ways. We consider an IPO to be successful if it …

The European Commission Considers “Short-Termism” (and “What Do You Mean by That?”)

By John C. Coffee, Jr. November 16, 2020 by renholding

The European Commission retained Ernst & Young (“EY”) to undertake a detailed study of “short-termism” and, implicitly, to report whether it was a major roadblock to more sustainable corporate governance. Their study was then presented at a three day international …

How Categorizing Companies as Unicorns Affects Their IPOs

By Badryah Alhusaini, Bradley E. Hendricks and Wayne R. Landsman September 16, 2020 by renholding

Managers, investors, the financial press, and other capital market participants often use categories to describe firms or their securities. Common examples include “bellwether,” “blue chip,” “tech,” “penny,” and “start-up.” Although these categories may increase a firm’s visibility, they can lead …

Morrison & Foerster Discusses Investor Exits: U.S. Direct Listing Rules in Flux

By Amit Kataria, Brian Snyder and John Owen September 14, 2020 by renholding

Amid intense focus on investor liquidity (and paths to potential liquidity) in private companies, we provide an update on developments around direct listings as an alternative to traditional IPOs in the United States.

On August 26, 2020, the SEC approved …

The Impact of the JOBS Act on M&A

By Jitendra Aswani, Sudip Gupta, Iftekhar Hasan and Anthony Saunders August 18, 2020 by renholding

The Jumpstart Our Business Startups (JOBS) Act, enacted in April 2012, was designed to make it cheaper for emerging growth companies (EGCs) to access capital and, by weakening disclosure requirements, easier for them to conduct initial public offerings (IPOs). Its …

Lemonade, Inc.: Harbinger of Future Public Benefit Corporation IPOs?

By Robert S. Rachofsky, Claire E. James and Clifton M. Brannan August 14, 2020 by renholding

The last six months have been marked by profound changes in how we live and interact with one another. The COVID-19 pandemic has cast a spotlight on societal inequities and racial injustice and reinvigorated dialogue around sustainability and environmental reform. …

Do Corporations Worldwide Still Prefer Delaware?

By William J. Moon June 23, 2020 by renholding

Hardly a day goes by without a headline about the brewing tension between the United States and China. But even as the Trump administration mulled de-listing Chinese firms traded in American securities markets, and Nasdaq reportedly planned to tighten its …

Does Reducing Disclosure Mean Fewer Pre-IPO Lawsuits?

By Burcu Esmer, N. Bugra Ozel and Suhas A. Sridharan June 12, 2020 by renholding

Can silence solve problems that words cannot? The Securities and Exchange Commission (SEC) hopes so, because this premise underlies the confidential filing provision of the Jumpstart Our Businesses (JOBS) Act. But how firms benefit from confidential filings remains unclear, complicating …

The Vanishing IPO Puzzle

By Thomas J. Chemmanur, Jie (Jack) He, Xiao (Shaun) Ren and Tao Shu June 3, 2020 by renholding

The number of private firms going public in the U.S. has declined significantly since 2000. A related phenomenon is that most private firms that “exit” (change ownership structures to allow early equity investors such as entrepreneurs and venture capitalists to …

Do Advisers Mitigate IPO Underpricing and Withdrawals in Europe?

By Emmanuel Pezier July 19, 2019 by renholding

Many issuers have doubts about the efficiency of the IPO market, despite post-2008 regulations designed to reduce conflicts of interests and the costs of going public. As a result, fewer companies are choosing to be listed, and many of those …

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