Columbia Law School
Sky Blog
The universe regularly provides reminders to remain humble, including reminders that having expertise in one area does not make you an expert in adjacent areas. Former Attorney General Bill Barr recently provided one of those reminders with his opinion column
Shareholders
Stakeholder Governance as Governance by Stakeholders
Four score and twelve years ago, Adolf Berle and Merrick Dodd debated the fundamental role of corporations within society. We have engaged in that debate ever since. In a nation conceived in liberty and dedicated to the proposition that all …
How to Prevent Pretextual Books and Records Demands
Delaware General Corporation Law § 220 permits shareholders to inspect a corporation’s books and records for a proper purpose, such as investigating managerial misconduct, valuing shares, or communicating with other shareholders. The Delaware case law interpreting this statute has created …
The Role of Controlling Shareholders Is Missing from the Debate over Short-Termism
The debate over short-term thinking at corporations has so far focused largely on companies in the U.S. and the UK. The fact that controlling shareholders are less common in those countries than in many others may explain why the extensive …
The Duality of Corporate Purpose
In a forthcoming chapter, we explore the duality of corporate purpose, which reflects two sides of corporate law and governance. First, because each corporation must specify a purpose in its charter, corporate purpose can be understood at the level of …
Pay for Prudence
Financial crises are often followed by debates about whether bankers’ incentives helped create distress in the financial sector. We contribute to this debate by documenting the extent to which bankers’ pay contains prudence-related targets, the association between those targets and …
How the SEC Uses Information Disclosed on Earnings Conference Calls
Earnings conference calls are an important way for firms to communicate with external stakeholders. Equity shareholders, buy-side and sell-side analysts, debtholders, and other capital market participants view the calls as informative beyond the contemporaneous earnings announcements. Yet, little is known …
Wachtell Lipton Revisits the “New Paradigm” for Corporate Governance
In view of the attacks on “woke” corporations, ongoing legislative opposition to the consideration by investors and corporations of environmental, social and governance (ESG) issues, legal challenges to elements of ESG itself (notably, initiatives designed to further diversity, equity and …
Bailout Blues: The Write-Down of the AT1 Bonds in the Credit Suisse Bailout
A key principle of Chapter 11 corporate reorganizations is the “absolute priority rule.” It requires that the claims of a dissenting class of creditors be paid in full before any stakeholders in a class junior to such dissenting …
Activist Shareholders in Corporate Governance: Lessons from Australia
Much of the debate about activist shareholders is informed by experience in Northern Hemisphere markets, particularly the United States. In my recently published book, I examine the topic from an Australian perspective.
Australia is ideal for exploring shareholder activism for …
When Will Investors Vote for Socially Beneficial but Costly ESG Policies?
Investors are increasingly interested in whether firms implement environmental, social, and governance (ESG) policies that, for example, reduce the firms’ carbon footprints, diversify their workplaces, or better protect customers’ private information. Some socially beneficial policies (e.g., improving energy-efficiency) may also …
How Market Feedback Affects CEO Pay
Stock prices affect various corporate decisions such as the amount of CEO compensation, as emphasized in traditional pay-for-performance studies, and capital investment. However, an unanswered question is whether changes in firms’ stock price in a short window around events related …
Shareholder Primacy and Basketball
I recently participated in a festschrift for retired justice (and noted stakeholderist) Leo E. Strine, Jr., hosted by the University of Pennsylvania Journal of Law and Business. Justice Strine’s interventions in the debate over shareholder primacy have added heft, pragmatism, …
Corporate Governance Beyond the Shareholder and Stakeholder Models
In a new paper, we compare the main models of corporate governance (Schoenmaker, Schramade and Winter, 2022). One is the stakeholder model, which recognizes that companies have responsibilities to society that are broader than just making a profit. A problem …
How Corporate Managers Think about Forward-Looking Guidance
Headlines during earnings season often focus on the forward-looking guidance corporate managers provide. Yet, questions remain about managers’ perceptions of the guidance process and the tradeoffs they face in deciding whether and what to guide. To gain greater insight, we …
Green Pills
Many of the world’s largest firms have recently announced their intention to reduce carbon emissions over the coming decades. The financial sector claims to have mobilized over $130 trillion in support of the net zero transition, and 33 percent of …
How Private Shareholder Engagements on Material ESG Issues Affect Companies
Shareholders have increasingly taken the lead in pushing for corporate sustainability. In 2021, for example, 20 percent of U.S. environmental and social shareholder proposals won over 50 percent of shareholder support, while in 2016 only 3 percent of such proposals …
ISS Discusses Securities Class-Action Settlements in First Half of 2022
The value of U.S. shareholder class action settlements in the first half of 2022 totaled $2.32 billion, the exact amount as the same period in 2021. However, the quantity of settlements in the first six months of the year increased
Paul Hastings Discusses Japanese Poison Pills Without Shareholders’ Blessing
In many jurisdictions, poison pills are devised and implemented by the board of directors without shareholders being involved. Since the 2007 Supreme Court case[1] (in re Bulldog Sauce) in Japan, however, courts have largely relied on the …
Rolling Back Dodd-Frank: Investors’ and Banks’ Responses to Financial Market Deregulation
In the wake of the 2007-2008 financial crisis, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Dodd-Frank created a new financial regulatory landscape with intensified federal oversight and an extensive set of regulations on banks, …