Law Commons^™

Addressing The Auditor Independence Puzzle: Regulatory Models And Proposal For Reform, Martin Gelter, Aurelio Gurrea-Martinez

Vanderbilt Journal of Transnational Law

Auditors play a major role in corporate governance and capital markets. Ex ante, auditors facilitate firms' access to finance by fostering trust among public investors. Ex post, auditors can prevent misbehavior and prevent financial fraud by corporate insiders. In order to fulfill these goals, however, in addition to having the adequate knowledge and expertise, auditors must perform their functions in an independent manner. Unfortunately, auditors are often subject to conflicts of interest, for example, resulting from the provision of nonaudit services but also because of the mere fact of being hired and paid by the audited company. Therefore, even if …

The Conundrum Of Common Ownership, Jennifer G. Hill

Vanderbilt Journal of Transnational Law

The common ownership debate has become one of the most contentious issues in corporate law today. This debate is a by-product of major changes to capital market ownership structure, which have triggered concerns about the rise of institutional investors, the growth of index investing, and the rapid concentration of ownership in major international financial markets. The common ownership theory focuses on concerns about the incentives of large financial institutions holding widely diversified portfolios of shares in competing companies within a particular economic sector. Proponents of the common ownership theory argue that, even where institutional investors have relatively small ownership stakes, …

The Law And Practice Of Shareholder Inspection Rights: A Comparative Analysis Of China And The United States, Robin H. Huang, Randall S. Thomas

Vanderbilt Journal of Transnational Law

Shareholder inspection rights allow a shareholder to access the relevant documents of the company in which they hold an interest, so as to address the problem of information asymmetry and reduce the agency costs inherent in the corporate structure. While Chinese corporate governance and American corporate governance face different sets of agency cost problems, this Article shows that shareholder inspection rights play an important role in both China and the United States. On the books, while shareholder inspection rights in both countries are broadly similar, there are some important differences on issues such as the proper purpose requirement. The empirical …

Singapore's Puzzling Embrace Of Shareholder Stewardship: A Successful Secret, Dan W. Puchniak, Samantha S. Tang

Vanderbilt Journal of Transnational Law

In the wake of the 2008 Global Financial Crisis (GFC), the United Kingdom created the first stewardship code, which was designed to transform its rationally passive institutional investors into actively engaged shareholders. In the UK corporate governance context, this idea made sense. Institutional investors collectively own a sizable majority of the shares in most of the United Kingdom's listed companies. In turn, if the UK stewardship code could incentivize them to effectively monitor management to act as "good shareholder stewards"--the managerial short-termism and excessive risk-taking, which were identified as contributors to the GFC, could be avoided.

The United Kingdom's idea …

Diversity Of Shareholder Stewardship In Asia: Faux Convergence, Gen Goto, Alan K. Koh, Dan W. Puchniak

Vanderbilt Journal of Transnational Law

Since the UK adopted the world's first stewardship code in 2010, stewardship codes have proliferated across Asia. Given the UK Code's prominence, it is tempting to assume that every other stewardship code performs the same function as the UK Code. This assumption belies the truth: all these codes--regardless of whether they have in fact drawn inspiration from the UK Code--have taken different trajectories due to each adopting its jurisdiction's distinctive institutional and legal context.

Using empirical evidence and in-depth case studies of stewardship in Japan and Singapore, this Article reveals how any reception of United Kingdom-style stewardship concepts is only …

Mixed Ownership Reform And Corporate Governance In China's State-Owned Enterprises, Jiangyu Wang, Tan Cheng-Han

Vanderbilt Journal of Transnational Law

This Article provides an early assessment of the impact on corporate governance of the most recent wave of reform of China's state-owned enterprises (SOEs) announced by the CCP in 2013, officially known as the mixed-ownership reform (MOR). It offers a comprehensive and detailed account of the background, policy and regulatory frameworks, and rationale of the MOR in light of the history of ownership reform in China. It also conducts empirical studies of the change in ownership and board composition in over 30 SOEs which have recently completed their MOR experiments, as well as several case studies. It observes that MOR's …