Does Sustainable Investing Matter to the Market?

By Claire Economidou, Dimitrios Gounopoulos, Dimitris Konstantios and Emmanuel D. Tsiritakis December 7, 2021 by renholding

The value of an investment is no longer just about financial returns. A growing number of investors and other corporate stakeholders are calling for their money to go toward stocks or funds that are both profitable over the long term …

Ninth Circuit Gives Plaintiffs Some “Slack” on Tracing Shares

By John Livingstone, Anat Alon-Beck and Robert Rapp November 30, 2021 by renholding

On September 20, 2021, the Ninth Circuit took aim at a foundational requirement in securities litigation that has long bedeviled plaintiff’s attorneys. In a 2-1 decision in Pirani v. Slack Technologies, the court imposed a strict liability standard under …

SPACs: The Roles of Reputation and Disclosure When Information Is Limited

By Andrea Pawliczek, A. Nicole Skinner and Sarah Zechman October 25, 2021 by renholding

Special purposes acquisition corporations (also known as SPACs or blank check companies) have received a lot of attention recently – and for good reason. SPACs accounted for more than half of U.S. IPOs in 2020, raising over $70 billion in …

Comparing Angels and Venture Capitalists as Investors in Entrepreneurial Firms

By Thomas J. Chemmanur, Harshit Rajaiya and Jiajie Xu October 22, 2021 by renholding

Angel investors (angels) and venture capital (VC) investors are both important sources of financing for entrepreneurial firms, but some critics, particularly VCs, often believe that angels are less able than VCs to perform due-diligence. However, an alternative view holds that …

Unicorniphobia

By Alexander Platt September 20, 2021 by renholding

Once upon a time, a successful startup that reached a certain maturity would “go public” – selling securities to ordinary investors, perhaps listing on a national stock exchange, and taking on the privileges and obligations of a public company under …

ESG and the Pricing of IPOs: Does Sustainability Matter?

By Alessandro Fenili and Carlo Raimondo June 18, 2021 by renholding

In recent years, investors and others in the financial community have devoted increasing attention to the role of sustainability in financial markets and the economy at large. Sustainability is now seen as an alternative form of risk management, a way …

Are Earnings Announcements More Useful than Other News for IPO Pricing?

By Ivy Zhang, Yong Zhang and Xiaoxu Ling June 17, 2021 by renholding

We study the relative usefulness of earnings announcements for valuation from the perspective of information externalities: the use of industry peer information for valuation, particularly for IPO pricing. Externalities of accounting information are one of the primary justifications for disclosure …

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 …

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