The Case for Dual Class Shares

By Yvan Allaire February 8, 2019 by renholding

In recent times, the simmering feud between the church of the one share-one-vote and the heretic believers in shares with unequal voting rights has boiled over, particularly in the U.S.

The arguments pro and con this type of capital structure …

ISS Discusses U.S. Proxy Voting Trends from 2000 to 2018: Environmental and Social Issues

By Kosmas Papadopoulos February 5, 2019 by renholding

Appearances can be very deceiving. Case in point: The high-level summary numbers of voting results over the last 19 years seem to indicate that little has changed regarding proxy voting behavior among investors owning U.S. companies. A simple analysis of …

Wachtell Lipton on Dealing with Activist Hedge Funds and Other Activist Investors

By Martin Lipton, Steven A. Rosenblum, Karessa L. Cain and Sabastian V. Niles February 4, 2019 by renholding

Regardless of industry, size or performance, no company should consider itself immune from hedge fund activism. No company is too large, too popular, too new or too successful. Even companies that are respected industry leaders and have outperformed the market …

Do Shareholders Gain from Their Right to Sue?

By Stefano Cassella and Antonino Emanuele Rizzo February 1, 2019 by renholding

There is consensus among economists that legal protections for investor rights have a positive impact on corporate value. The intuition is that investors are willing to pay a higher price for a firm’s stock when there are laws in place …

Auditing Is Too Important to Be Left to the Auditors!

By John C. Coffee, Jr. January 28, 2019 by renholding

Clemenceau was right.[1] Reforming a profession cannot be left to the professionals. A cascade of auditing scandals — in the U.K., the U.S., Europe, and South Africa — has convinced many that reform is necessary. The political reaction has …

How Investors React to Corporate Communications on Twitter, YouTube, and Instagram

By Pawel Bilinski January 17, 2019 by renholding

Can social media help firms improve communication with investors? In a recent paper, I argue that social media communication can give a firm an advantage over competitors in attracting attention to earnings announcements and lead to stronger price reaction to …

Hedge Fund Activism Is About More Than Making a Quick Buck

By Jie (Michael) Guo, Vinay Utham and George Jiaguo Wang January 15, 2019 by renholding

Debate continues to rage among politicians, professors, senior lawyers, and members of the media over the regulation of hedge fund activism. The primary criticism is that, in the absence of merger and acquisition activity, such activism does not create value …

What Is the Domain of Corporate Law?

By Christopher M. Bruner January 14, 2019 by renholding

Judges, legislators, corporate practitioners, and scholars of business law all conduct their work, within their respective professional spheres, based on some working conception of what “corporate law” is. Strangely, however, the question of what this conceptual vessel actually contains is …

Simpson Thacher Discusses Significant Delaware Supreme Court Decisions of 2018

By Paul Gluckow, Peter Kazanoff and Jonathan Youngwood January 10, 2019 by renholding

Board Was Required to Disclose the Chairman’s Reasons for Abstaining From a Board Vote on the Sale of the Company

On February 20, 2018, the Delaware Supreme Court reversed dismissal of a shareholder action alleging that the board of directors …

The Effect of Common Ownership on Profits: Evidence from the U.S. Banking Industry

By Serafin Grundl and Jacob Gramlich December 21, 2018 by renholding

In recent years, large asset managers and other institutional investors have come to own increasingly large shares of firms that are competitors. For instance, BlackRock owns shares of both Bank of America and JPMorgan Chase. Such common ownership is prevalent …

Wachtell Lipton Offers Thoughts for Boards of Directors in 2019

By Martin Lipton, Steven A. Rosenblum, Karessa L. Cain, Amanda S. Blackett and Kathleen C. Iannone December 20, 2018 by renholding

In recent years, it has become increasingly evident that the activism-driven corporate world is relatively fragile and is proving to be unsustainable, particularly when viewed in the broader context of rapidly changing political and social norms and increasing divisiveness across …

ISS Discusses How Governance Practices Show that Independent Board Leadership Matters

By Anthony Garcia and Kosmas Papadopoulos November 30, 2018 by renholding

The debate over board leadership does not seem to go away especially in the U.S. where market participants have long agreed on the need for greater independence in principle, while largely disagreeing on the measures required to put it into …

Bonfire of the Vanities–2018 Style: The Case of Elon Musk

By John C. Coffee, Jr. October 2, 2018 by renholding

Elon Musk came close to doing something truly unique. No, not his electric car. Rather, he was about to roll the dice with his shareholders’ equity.

Securities analysts estimate that somewhere between 25 and 35 percent of the value of …

SEC Commissioner Airs Her Beef With Stakeholders

By Hester M. Peirce September 26, 2018 by renholding

Last time I flew to California, the skies were so clear that I was able to keep an eye on the changing landscape below all the way across the country. The vastness and great variety was striking. Having grown up

…

Corwin at a Crossroads: Could DVMT Stock Be the Tracker Jacker in Dell’s Hunger Games?

By Eric Talley September 25, 2018 by renholding

Of all the conjured hazards faced by the teenage gladiators in the dystopian novel The Hunger Games, the Tracker Jacker (a genetically engineered wasp) was the most deadly and unpredictable when provoked. Dell Technologies Inc. may soon have to …

Corporate Governance and Countervailing Power

By Brian Cheffins September 19, 2018 by renholding

The analysis of corporate governance has been a strikingly one-sided affair. The focus has been almost exclusively on “internal” checks and balances, namely scrutiny of executives by the board of directors and by shareholders. In contrast, mechanisms that can operate …

How Credit Default Swaps Affect Managers’ Voluntary Disclosure

By Jae B. Kim, Pervin K. Shroff, Dushyantkumar Vyas and Regina Wittenberg Moerman September 17, 2018 by renholding

Credit Default Swaps (CDSs) enable lenders to distribute credit risk to parties more willing and able to bear it, thereby enhancing the liquidity and flexibility of individual lenders and the financial system (Greenspan 2004). However, empirical evidence suggests that CDSs …

SEC Commissioner Jackson Issues Statement on Shareholder Voting

By Robert J. Jackson, Jr. September 14, 2018 by renholding

Today, the Office of the Chairman and the Division of Investment Management at the Securities and Exchange Commission suddenly raised questions about long-resolved issues regarding shareholder voting.[1] Because the Investor Advisory Committee’s critical work in this area is ongoing, …

Why Firms Disclose a Supplemental CEO-to-Median Worker Pay Ratio

By Sun Moon Jung, Natalie Kyung Won Kim, Han Seong Ryu and Jae Yong Shin September 5, 2018 by renholding

Pay disparity between executives and employees has been criticized as evidence of corporate greed. It can also create perceptions of unfairness and dissatisfaction among employees, weakening their commitment and performance. To provide more information about pay disparity, the U.S. Congress …

SEC Chair Issues Statement on Proxy Process Roundtable

By Jay Clayton August 1, 2018 by renholding

Shareholder engagement is a hallmark of our public capital markets, and the proxy process is a fundamental component of that engagement. In 2010, the Commission issued a concept release seeking public comment on whether the U.S. proxy system as a …

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