Sky Blog
VUCA is an acronym for volatility, uncertainty, complexity, and ambiguity – four dimensions of risk – and a tool that can used to better manage legal risk. Designed by the U.S. military and reinforced by business,[1] it describes an …
As 2017 draws to a conclusion and we reflect on the evolution of corporate governance since the turn of the millennium, a recurring question percolating in boardrooms and among shareholders and other stakeholders, academics and politicians is: what’s next on …
Fiscal policy—and taxation in particular—is one of the most important tools that policymakers can use to influence the economy. While the effect of corporate taxes on managers’ corporate investment decisions has been extensively studied, little is known about the effect …
It is well known that banks play an important role in monitoring borrowing firms (e.g., Diamond, 1984). Yet, how banks choose among alternative mechanisms that reduce agency costs with borrowers is not completely understood. In our paper, “Bank Relations and …
The separation of corporate ownership from control leads to an agency problem caused by the divergent interests of shareholders (the principals) and management (the agent). One area of contention is the level of risk-taking by the firm. Managers’ investment in …
Excessive risk-taking by corporate executives is often blamed for triggering the financial crisis of 2008. Therefore, it is crucial to understand the nature of corporate risk-taking so as to prevent, or reduce the likelihood of, a future crisis. In theory, …
Recent news of sexual harassment and other legal controversies at Uber and throughout Silicon Valley serves as a vivid reminder that irresponsible and unethical conduct continues across the corporate landscape. Revelations of serious transgressions by senior corporate leaders belies a …
In June, the Office of the Comptroller of the Currency (OCC), the regulator of national banks, federal savings associations, and federal savings banks, issued additional guidance on the oversight and risk management of third-party relationships (Bulletin 2017-21). The guidance takes …
In a new paper, we examine how tournament-based incentives affect corporate cash holdings and the value of those holdings for shareholders.
Before a firm selects a new CEO, it may run a tournament within the firm to rank its vice-presidents …
A significant emerging governance issue is how best to monitor – and influence – the management style of senior executives who by nature are insensitive to the risks of their initiatives. As recent controversies across multiple industry sectors confirm, such …
Recent advances in financial technology (FinTech) have dramatically transformed the financial landscape with respect to the way we access, invest, and transfer financial capital. In our recent article, we explore a promising avenue for the use of natural-language processing in …
While it remains too early to predict with any certainty, both allies and adversaries alike are anxiously scanning statements from the campaign and Trump’s past for any clues as to the policy directions his administration is likely to take. In …
The syndicated loan market is one of the largest sources of financing for U.S. firms. This market has experienced tremendous growth over the past 20 years. In fact, some recent estimates suggest that U.S. firms obtain over $1 trillion in …
There is an increasing worldwide focus on trying to end the problem of “too big to fail” (“TBTF”). Regulators are concerned that systemically important financial firms might engage in excessive risk-taking because they would profit from a success and be …
In this update, we review a number of recent regulatory developments that may impact firms engaged in the industry of new and innovative financial technology (“FinTech”). First, we discuss the Federal Deposit Insurance Corporation’s (“FDIC”) new guidance on examining third-party …
Crowdfunding has emerged in recent years as an alternative financing channel in which entrepreneurs can directly solicit contributions from a large number of investors. In return for their contributions, investors receive non-pecuniary rewards, private benefits, or most recently, monetary payoffs. …
Designing sensible defined-contribution retirement-plan rules is a challenging task since most Americans do not have sufficient financial acumen and self-discipline to manage their own retirement portfolio. In spite of the fact that retirement plans constitute the bulk of their savings, …
Financial regulation after the Dodd-Frank Act was enacted in 2010 has produced a blizzard of acronyms, many of which revolve around the basic “too big to fail” problem. OLA, OLF, SPOE, and TLAC are new regulatory tools that seek to …
On September 13, 2016, the New York State Department of Financial Services (DFS) proposed a broad set of cybersecurity regulations for banks, insurers, and other financial institutions.[1] The proposal is largely consistent with existing guidance (e.g., under the NIST …
According to a recent survey of over 1,500 chief executive officers, creativity is the single most important leadership skill needed for enterprises to navigate today’s complex global business environment.[1] This is not surprising; innovative company culture has many benefits. …