Sky Blog
This post responds to the paper, Exit vs. Voice, by Eleonora Broccardo, Oliver Hart, and Luigi Zingales (BHZ),[1] a deep engagement with the choice between alternative means by which an “altruistic” investor can influence corporate behavior. An “altruistic” investor …
Our examination of the votes cast by 155 mutual funds on over 6 million corporate election items during 2004-2017 led us to a surprising conclusion: We found that Institutional Shareholder Services’ (ISS) proxy advice did not lead funds to vote …
A common dilemma for people who seek advice is that good advice sometimes comes at the cost of revealing negative information about the persons seeking it. In the world of corporate decision making, a CEO who seeks the counsel of …
Codetermination is a system of shared corporate governance between workers and shareholders. While such a system has long been a staple of the European business world, it has been generally ignored by U.S. corporate governance scholars. When it has made …
Recently, workers at Amazon dealt what has been called a “decisive” and “crushing” blow to organized labor,[1] with their proposed union receiving less than 30 percent of the votes cast, according to the federal vote counters overseeing the …
The fundamental question in the law of business organizations – what is the purpose of the corporation? – contains a related question of constituencies and, therefore, priorities among them: Whom does the corporation serve? If, for example, the purpose that …
A growing number of financial institutions, from BlackRock to the Bank of England, have reached the conclusion that markets are not accurately assessing climate change-related risks. European Central Bank President Christine Lagarde recently warned that central bankers “will have to …
In late 2019, somewhat surprisingly, the Business Roundtable issued a brief statement advocating “a fundamental commitment to all of our stakeholders,” thus ending its decades long singular commitment to shareholder value.
The statement triggered an intense global debate about the …
Historically, how a corporation invests and pursues its goals has been recognized as within the discretion of the board of directors. The business judgment rule insulates directors from liability for exercising that discretion by restricting second-guessing from shareholders absent a …
In August 2019, the Business Roundtable released a statement redefining the purpose of a corporation to maximize value “for the benefit of all stakeholders – customers, employees, suppliers, communities, and shareholders.” The statement was signed by 181 CEOs, including Jamie …
Business persons and lawyers have long debated whether a business corporation does or should have a purpose other than advancing shareholder interests. In a democratic, pluralist society, the issue of corporate purpose remains important and will not (and should not) …
Defined-benefit pension plans and deferred compensation are often sizable and important components of CEO pay packages. In recent years, though, they have prompted controversy among investors, policymakers, and academics. On the one hand, CEO pension and deferred compensation are unsecured …
Delaware courts have recently had the opportunity to evaluate and discuss management of potential conflicts. That guidance may be particularly salient in the context of insider transactions and down-rounds, which may animate potential conflicts and lead to difficult litigation for …
Last August, the Business Roundtable (an organization of around 200 corporate CEOs) announced it was amending its Principles of Corporate Governance to eliminate the statement that the “primary purpose” of a corporation was to serve its shareholders. The CEOs wanted …
In a new paper, we ask whether social media could have a role in corporate governance. Prior to the advent of social media, a small shareholder faced prohibitive costs to reach other investors. For example, she would have had to …
The ever-evolving challenges facing corporate boards prompt periodic updates to a snapshot of what is expected from the board of directors of a public company—not just the legal rules, or the principles published by institutional investors and various corporate and …
CEO activism – CEOs expressing their views on social, environmental, and political issues – is growing, likely driven by popular opinion that CEOs have a duty to stand up for important issues of the day. A 2018 survey of 3,544 …
The past six months have been marked by a profound upheaval that has accelerated the growing focus on both the purpose of the corporation and the role of the board in overseeing and leading the corporation in ways that promote …
[Editor’s Note: This and the following piece offer a point/counterpoint on shareholder voting.] The SEC’s recently proposed rules on proxy advisers and shareholder proposals have made shareholder voting one of the most prominently debated corporate governance issues ever. In a …