How Shareholders Vote When Pay and Performance Are Misaligned

By James Jianxin Gong, Nian Lim (Vic) Lee and Sophia Wang July 1, 2025 by renholding

Shareholders and investor advocacy groups have long criticized executives for being paid top dollar while achieving subpar returns for shareholders. In response, the Securities and Exchange Commission (SEC) passed the Dodd-Frank Act of 2010, which has two, related provisions that …

Mayer Brown Discusses ISS Halt to Diversity-Based Voting Recommendations

By Anna T. Pinedo, Jennifer Zepralka and Alexandria Hasenkamp April 8, 2025 by renholding

On February 11, 2025, Institutional Shareholder Services, Inc. (ISS) announced that it will be halting consideration of certain diversity factors indefinitely when making vote recommendations with respect to the election and re-election of U.S. company directors under its Benchmark and …

Moving from Agency Costs and Private Benefits of Control to Principal Costs and Private Benefits of Influence

By Maria Goranova and Edward J. Zajac October 28, 2024 by renholding

Corporate governance research has historically focused on agency costs (imposed by professional managers) or principal-principal expropriation (imposed by dominant shareholders). We seek to reverse this theoretical focus on private benefits of control, and its preoccupation with the principal/shareholder and agent/manager …

How Board Diversity Compares in Private and Public Firms

By Johan Cassel, James Weston and Emmanuel Yimfor December 14, 2023 by renholding

In today’s rapidly evolving corporate landscape, the composition of boards is not just a matter of compliance or social responsibility; it’s a strategic imperative that shapes the future of firms. Amidst growing public scrutiny and socio-economic shifts, particularly following the …

Do Private or Public Firms Invest More Efficiently?

By Pantelis Kazakis, Woon Sau Leung and Steven Ongena November 20, 2023 by renholding

In a new paper, we examine the differences between private and public firms to see whether one outshines the other when it comes to investment efficiency. Our analysis begins with three theories.

The Agency Theory: Although going public offers …

Gibson Dunn Offers Activism Update for 2022

By Barbara Becker, Richard Birns, Daniel Alterbaum, Saee Muzumdar and Andrew Kaplan September 1, 2023 by renholding

This update discusses shareholder activism activity involving NYSE- and Nasdaq- listed companies with equity market capitalizations in excess of $1 billion and below $100 billion (as of the last date of trading in 2022) during 2022.

Announced shareholder activist activity …

How Companies Evaluate Their Corporate Governance

By Lauren Cunningham, Christie Hayne, Terry Neal and Sarah Stein February 9, 2023 by renholding

Practitioners and academics alike debate best practices in corporate governance, but rarely do companies reveal how they determine what governance practices work best for them. In a new paper, we report the results of interviews on this topic with …

The Effect on Dividend Payouts of Board Independence

By Pandej Chintrakarn, Sirimon Treepongkaruna, Pornsit Jiraporn and Sang Mook Lee December 6, 2022 by renholding

In a new paper, we use agency theory to explore the effect of board independence on dividend policy. Over the past few decades, many studies have incorporated several market imperfections into their model of capital markets, such as transaction costs, …

How to Improve Disclosure and Promote Better Corporate Governance in Public Companies

By Jennifer O’Hare October 28, 2022 by renholding

Corporate governance guidelines (“CGGs”) are a relatively recent addition to the corporate governance framework of public companies. In 2003, in response to accounting scandals at Enron Corporation and several other large public companies, the NYSE created rules to improve the …

The Blurring Lines between Private and Public Ownership

By Michelle Lowry September 27, 2022 by renholding

Public versus private status is a common point of differentiation among companies and can determine, for example, how they are regulated and who can invest in them. Yet many private companies increasingly resemble their public counterparts. This blurring of the …

In Search of Good Corporate Governance

By Dorothy S. Lund June 1, 2022 by renholding

What is the right governance framework for a public company? This question sits at the core of decades of empirical and theoretical research, and yet we still lack consensus on an answer. In particular, agency-cost essentialists support governance structures that …

Does Going Private Affect Peer Firms’ Disclosures?

By Lisa A. Hinson and Jeffery Piao May 11, 2022 by renholding

Disclosure by publicly listed companies provides critical information to the capital markets and benefits not only firms’ stakeholders but also the overall economy (e.g., Badertscher et al. 2013; Shroff et al. 2017; Barrios et al. 2021). However, the number of …

Too Much Information? Increasing Firms’ Information Advantages in the IPO Process

By Michele Dathan and Yan Xiong May 3, 2022 by renholding

Traditionally, high-growth private firms in the United States have used the public equity markets as their primary source of external financing to fund innovation and expansion. For this reason, well-functioning capital markets have been instrumental to the U.S. economy, supporting …

SEC Chairman Gensler Speaks on Proposal for Mandatory Cybersecurity Disclosures

By Gary Gensler March 10, 2022 by renholding

Today [March 9], the Commission is considering a proposal to mandate cybersecurity disclosures by public companies. I am pleased to support this proposal because, if adopted, it would strengthen investors’ ability to evaluate public companies’ cybersecurity practices and incident reporting.

…

SEC Commissioner Peirce Dissents on Cybersecurity Proposal

By Hester M. Peirce March 10, 2022 by renholding

Thank you, Renee, Ian, and Jessica. Cybersecurity risk is top of mind for everyone. The Commission’s consideration of this topic—whether for investment advisers, as we did a month ago,[1] or public companies, as we are doing today [March 9]—is, …

The Breakdown of the Public–Private Divide in Securities Law

By George S. Georgiev February 14, 2022 by renholding

Securities law in the United States has traditionally been designed around a set of lines – the “public–private divide” – which separate public companies, public capital, and public markets from private companies, private capital, and private markets. Until the early …

SPACtivism

By Sharon Hannes, Adi Libson and Gideon Parchomovsky January 12, 2022 by renholding

SPACs are on fire. Scholars and commentators have pointed out the flaws of SPACs, including the various agency problems they generate (Klausner 2021), and their utilization by sophisticated investors to take advantage of unsophisticated investors (Spamann, …

The SPACtacular Rise of the Special Purpose Acquisition Company: A Retail Investor’s Worst Nightmare

By Bobby V. Reddy December 13, 2021 by renholding

The special purpose acquisition company, or SPAC, is a company with no commercial or operating history that has listed on a stock exchange with the sole objective of raising financing to identify and acquire another company. SPACs developed after the …

Gibson Dunn Discusses SEC Rules Mandating Use of Universal Proxy Card

By Eduardo Gallardo, James J. Moloney and Andrew Kaplan November 22, 2021 by renholding

On November 17, 2021, the Securities and Exchange Commission (SEC) approved amendments to the federal proxy rules to mandate the use of a universal proxy card in public solicitations involving director election contests. After the rules become effective on August …

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