Sky Blog
As corporate directors and other private actors have taken on public or quasi-public functions like reigning in conflicted executives or approving healthcare claims, fiduciary duties have expanded to protect the vulnerable and bridge the gap between public and private law.…
Many firms now issue ESG reports voluntarily in response to fast-growing investor and stakeholder demand. Yet survey evidence shows that corporate lawyers consider ESG-related disputes a top source of litigation risk for their clients.[1] In a new study, we …
Plaintiff stockholder litigation against announced M&A deals continues to be a common feature of the U.S. M&A landscape, despite the prevalence of forum selection bylaws, the demise of disclosure only settlements and general skepticism by the Delaware courts. Over the …
Over the past two years, U.S. public companies faced an unpredictable risk environment. Two geopolitical crises – the Covid-19 pandemic, and the Russian invasion of Ukraine – strained international supply chains and destabilized financial markets.
It is tempting to view …
Many corporate law scholars watched in amazement as merger litigation exploded over the past 15 years. In 2005, only 37 percent of mergers involving U.S. public companies and with a transaction size of at least $100 million were challenged in …
The Situation: A number of shareholder derivative lawsuits in federal court have been filed seeking to hold directors and officers of major companies accountable for alleged failures to uphold their commitment to diversity. To date, the lawsuits have been filed …
Several decades of research have found that capital structure and financing decisions are influenced not only by market frictions such as taxes and bankruptcy costs but also by conflicts between managers and shareholders. In a new paper, we test whether …
Mutual funds own approximately 30 percent of the U.S. equity market, and the Big Three fund families – Blackrock, Vanguard, and State Street – are the largest blockholders in the vast majority of large, publicly traded companies. This has made …
Shareholder litigation is an important way for shareholders to affect corporate governance. Legal protection of shareholders can mitigate agency problems that arise from the separation of ownership and control. In particular, litigation enables shareholders to deter and find remedies for …
Litigation allows shareholders to seek remedies for fiduciary breaches by managers or directors, such as when there has been a misrepresentation of financial results or illegal insider trading. Twitter, for example, faces a derivative lawsuit alleging that executives provided misleading …
Evidence shows shareholders’ wealth is protected from self-serving managers, who are often motivated to divert corporate resources, by both internal and external corporate governance mechanisms (Jensen and Meckling, 1976; Fama, 1980; Fama and Jensen, 1983). However, due to high monitoring …
Recently in In re Cyan, Inc. Stockholders Litigation, the Delaware Court of Chancery dismissed a fiduciary duty claim and a request for a quasi-appraisal remedy in connection with the acquisition of Cyan, Inc. by Ciena Corporation. Relying on principles of …
The Delaware Supreme Court’s decision in Corwin v. KKR Financial Holdings LLC set a high bar for plaintiff stockholders seeking to challenge public company mergers. Assuming a transaction that is not subject to entire fairness review was approved …
In this study, Securities Class Actions Compared to Derivative Lawsuits: Evidence from the Stock Option Backdating Litigation on their Relative Disciplining of Fraudster Executives, 35% of the 151 stock option backdating litigation observations included private securities class actions (in …
The third proxy season of the Dodd-Frank Act’s mandatory shareholder “say-on-pay” advisory votes is well underway, and “round two” of shareholder say-on-pay litigation is in full swing. Unlike the first round of say-on-pay lawsuits, which were based on negative advisory …
On May 29, 2013, Chancellor Leo E. Strine, Jr. of the Delaware Court of Chancery issued an important decision that lays the foundation for controlling stockholders to pursue going-private merger transactions with the comfort that, if certain conditions are met, …