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Full-Text Articles in Business Organizations Law
The Public Cost Of Private Equity, William Magnuson
The Public Cost Of Private Equity, William Magnuson
William J. Magnuson
This Article presents a theory of the corporate governance costs of private equity. In doing so, it challenges the common view that private equity’s governance structure has resolved, or at least significantly mitigated, one of the fundamental tensions in corporate law, that is, the conflict between management and ownership. The Article argues that this widespread perception about the corporate governance benefits of private equity overlooks the many ways in which the private equity model, far from eliminating agency costs, in fact exacerbates them. These governance costs include compensation structures that incentivize excessive risk-taking, governance rights that provide investors with few …
Reforming The Unbargained Contract: Avoiding Bondholder Claims For Surprise Par Calls, Robert S. Blanc, Randy D. Gordon
Reforming The Unbargained Contract: Avoiding Bondholder Claims For Surprise Par Calls, Robert S. Blanc, Randy D. Gordon
Randy D. Gordon
Until the last couple of decades, interest rates remained relatively stable, thus providing little incentive for corporate borrowers to seek novel ways of redeeming purportedly non-callable bonds at par. But with the advent of junk bonds and periods of great interest rate volatility, issuers have been provided with powerful incentives to explore the relatively uncharted waters of par calls. This Article examines the authority for and legality of such par calls and ultimately proposes a redefinition of the issuer-bondholder relationship. This redefinition accounts for the realities of the marketplace and should lead a return to more settled expectations in both …