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Articles 1 - 16 of 16
Full-Text Articles in Law and Economics
Global Value Chains And Resource Corridors: The Nexus Is Regional Integration, Perrine Toledano
Global Value Chains And Resource Corridors: The Nexus Is Regional Integration, Perrine Toledano
Columbia Center on Sustainable Investment Staff Publications
To be more involved in the global value chains, sub-Saharan African countries should intensify their regional integration efforts. A first step in this direction can be implementing cross-border resource-based development corridors.
Political Uncertainty And The Market For Ipos, Jay B. Kesten, Murat C. Mungan
Political Uncertainty And The Market For Ipos, Jay B. Kesten, Murat C. Mungan
Faculty Scholarship
This Article presents a simple theory and model of the effects of political uncertainty on the market for IPOs. Our model generates four central predictions: (i) increased political uncertainty reduces the frequency of IPOs; (ii) firms that choose to conduct an IPO during periods of political uncertainty are, on average, of higher quality and generate greater return on investment in the secondary market; (iii) political uncertainty increases the cost of capital for IPO firms; but (iv) underpricing is less pronounced during periods of heightened political uncertainty. We demonstrate that each of these predictions is consistent with available empirical evidence.
Our …
Institutional Investors In Corporate Governance, Edward B. Rock
Institutional Investors In Corporate Governance, Edward B. Rock
All Faculty Scholarship
This chapter of the Oxford Handbook on Corporate Law and Governance examines the role of institutional investors in corporate governance and the role of regulation in encouraging institutional investors to become active stewards. I approach these topics through asking what lessons we can draw from the U.S. experience for the E.U.’s 2014 proposed amendments to the Shareholder Rights Directive.
I begin by defining the institutional investor category, and summarizing the growth of institutional investors’ equity holdings over time. I then briefly survey how institutional investors themselves are governed and how they organize share voting. This leads me to two central …
Not So Fast, Jeffrey D. Sachs, Lisa E. Sachs, Lise Johnson
Not So Fast, Jeffrey D. Sachs, Lisa E. Sachs, Lise Johnson
Columbia Center on Sustainable Investment Staff Publications
President Barack Obama and the Republican leadership in Congress are trying to pass "fast track" legislation in order to push through major economic agreements with eleven countries of the Pacific region (the Trans-Pacific Partnership) and Europe (the Trans-Atlantic Trade and Investment Partnership) without the possibility for Congressional amendments. Both are being sold generally as "trade agreements," yet they involve key areas of business law and regulation far beyond trade. Before Congress approves fast track, these agreements need to be made public and exposed to thorough public scrutiny.
Eyes Wide Shut On Isds, Lisa E. Sachs, Lise Johnson
Eyes Wide Shut On Isds, Lisa E. Sachs, Lise Johnson
Columbia Center on Sustainable Investment Staff Publications
Recent agreement among congressional leaders on a “fast-track” bill may have been a victory for the Obama administration’s trade agenda. However, members of congress should take a look at the recent Bilcon case, decided by a NAFTA tribunal, to understand what they are signing up for.
Political Uncertainty And The Market For Ipos, Jay B. Kesten, Murat C. Mungan
Political Uncertainty And The Market For Ipos, Jay B. Kesten, Murat C. Mungan
Scholarly Publications
No abstract provided.
The Mess At Morgan: Risk, Incentives And Shareholder Empowerment, Jill E. Fisch
The Mess At Morgan: Risk, Incentives And Shareholder Empowerment, Jill E. Fisch
All Faculty Scholarship
The financial crisis of 2008 focused increasing attention on corporate America and, in particular, the risk-taking behavior of large financial institutions. A growing appreciation of the “public” nature of the corporation resulted in a substantial number of high profile enforcement actions. In addition, demands for greater accountability led policymakers to attempt to harness the corporation’s internal decision-making structure, in the name of improved corporate governance, to further the interest of non-shareholder stakeholders. Dodd-Frank’s advisory vote on executive compensation is an example.
This essay argues that the effort to employ shareholders as agents of public values and, thereby, to inculcate corporate …
Federal Securities Fraud Litigation As A Lawmaking Partnership, Jill E. Fisch
Federal Securities Fraud Litigation As A Lawmaking Partnership, Jill E. Fisch
All Faculty Scholarship
In its most recent Halliburton II decision, the Supreme Court rejected an effort to overrule its prior decision in Basic Inc. v. Levinson. The Court reasoned that adherence to Basic was warranted by principles of stare decisis that operate with “special force” in the context of statutory interpretation. This Article offers an alternative justification for adhering to Basic—the collaboration between the Court and Congress that has led to the development of the private class action for federal securities fraud. The Article characterizes this collaboration as a lawmaking partnership and argues that such a partnership offers distinctive lawmaking advantages. …
The New Stock Market: Sense And Nonsense, Merritt B. Fox, Lawrence R. Glosten, Gabriel Rauterberg
The New Stock Market: Sense And Nonsense, Merritt B. Fox, Lawrence R. Glosten, Gabriel Rauterberg
Faculty Scholarship
How stocks are traded in the United States has been totally transformed. Gone are the dealers on NASDAQ and the specialists at the NYSE. Instead, a company’s stock can now be traded on up to sixty competing venues where a computer matches incoming orders. High-frequency traders (HFTs) post the majority of quotes and are the preponderant source of liquidity in the new market.
Many practices associated with the new stock market are highly controversial, as illustrated by the public furor following the publication of Michael Lewis’s book Flash Boys. Critics say that HFTs use their speed in discovering changes in …
The Macroprudential Turn: From Institutional 'Safety And Soundness' To Systematic 'Financial Stability' In Financial Supervision, Robert C. Hockett
The Macroprudential Turn: From Institutional 'Safety And Soundness' To Systematic 'Financial Stability' In Financial Supervision, Robert C. Hockett
Cornell Law Faculty Publications
Since the global financial dramas of 2008-09, authorities on financial regulation have come increasingly to counsel the inclusion of macroprudential policy instruments in the standard ‘toolkit’ of finance-regulatory measures employed by financial supervisors. The hallmark of this perspective is its focus not simply on the safety and soundness of individual financial institutions, as is characteristic of the traditional ‘microprudential’ perspective, but also on certain structural features of financial systems that can imperil such systems as wholes. Systemic ‘financial stability’ thus comes to supplement, though not to supplant, institutional ‘safety and soundness’ as a regulatory desideratum.
The move from primarily micro- …
Lift Not The Painted Veil! To Whom Are Directors’ Duties Really Owed?, Martin Gelter, Geneviève Helleringer
Lift Not The Painted Veil! To Whom Are Directors’ Duties Really Owed?, Martin Gelter, Geneviève Helleringer
Faculty Scholarship
In this article, we identify a fundamental contradiction in the law of fiduciary duty of corporate directors across jurisdictions, namely the tension between the uniformity of directors’ duties and the heterogeneity of directors themselves. American scholars tend to think of the board as a group of individuals elected by shareholders, even though it is widely acknowledged (and criticized) that the board is often a largely self-perpetuating body whose inside members dominate the selection of their future colleagues and eventual successors. However, this characterization is far from universally true internationally, and it tends to be increasingly less true even in the …
The Digital Shareholder, Andrew A. Schwartz
The Digital Shareholder, Andrew A. Schwartz
Publications
Crowdfunding, a new Internet-based securities market, was recently authorized by federal and state law in order to create a vibrant, diverse, and inclusive system of entrepreneurial finance. But will people really send their money to strangers on the Internet in exchange for unregistered securities in speculative startups? Many are doubtful, but this Article looks to first principles and finds reason for optimism.
Well-established theory teaches that all forms of startup finance must confront and overcome three fundamental challenges: uncertainty, information asymmetry, and agency costs. This Article systematically examines this “trio of problems” and potential solutions in the context of crowdfunding. …
Confronting The Peppercorn Settlement In Merger Litigation: An Empirical Analysis And A Proposal For Reform, Jill E. Fisch, Sean J. Griffith, Steven M. Davidoff
Confronting The Peppercorn Settlement In Merger Litigation: An Empirical Analysis And A Proposal For Reform, Jill E. Fisch, Sean J. Griffith, Steven M. Davidoff
All Faculty Scholarship
Shareholder litigation challenging corporate mergers is ubiquitous, with the likelihood of a shareholder suit exceeding 90%. The value of this litigation, however, is questionable. The vast majority of merger cases settle for nothing more than supplemental disclosures in the merger proxy statement. The attorneys that bring these lawsuits are compensated for their efforts with a court-awarded fee. This leads critics to charge that merger litigation benefits only the lawyers who bring the claims, not the shareholders they represent. In response, defenders of merger litigation argue that the lawsuits serve a useful oversight function and that the improved disclosures that result …
Introduction To Institutional Investor Activism: Hedge Funds And Private Equity, Economics And Regulation, William W. Bratton, Joseph A. Mccahery
Introduction To Institutional Investor Activism: Hedge Funds And Private Equity, Economics And Regulation, William W. Bratton, Joseph A. Mccahery
All Faculty Scholarship
The increase in institutional ownership of recent decades has been accompanied by an enhanced role played by institutions in monitoring companies’ corporate governance behaviour. Activist hedge funds and private equity firms have achieved a degree of success in actively shaping the business plans of target firms. They may be characterized as pursuing a common goal – in the words used in the OECD Steering Group on Corporate Governance, both seek ‘to increase the market value of their pooled capital through active engagement with individual public companies. This engagement may include demands for changes in management, the composition of the board, …
Mandatory Disclosure And Individual Investors: Evidence From The Jobs Act, Colleen Honisberg, Robert J. Jackson Jr., Yu-Ting Forester Wong
Mandatory Disclosure And Individual Investors: Evidence From The Jobs Act, Colleen Honisberg, Robert J. Jackson Jr., Yu-Ting Forester Wong
Faculty Scholarship
One prominent justification for the mandatory disclosure rules that define modem securities law is that these rules encourage individual investors to participate in stock markets. Mandatory disclosure, the theory goes, gives individual investors access to information that puts them on a more equal playing field with sophisticated institutional shareholders. Although this reasoning has long been cited by regulators and commentators as a basis for mandating disclosure, recent work has questioned its validity. In particular, recent studies contend that individual investors are overwhelmed by the amount of information required to be disclosed under current law, and thus they cannot and do …
Human Equity? Regulating The New Income Share Agreements, Shu-Yi Oei, Diane Ring
Human Equity? Regulating The New Income Share Agreements, Shu-Yi Oei, Diane Ring
Faculty Scholarship
A controversial new financing phenomenon has recently emerged. New "income share agreements" (''ISAs'') enable an individual to raise funds by pledging a percentage of her future earnings to investors for a certain number of years. These contracts, which have been offered by entities such as Fantex, Upstart, Pave, and Lumni, raise important questions for the legal system: Are they a form of modern-day indentured servitude or an innovative breakthrough in human financing? How should they be treated under the law?
This Article comprehensively addresses the public policy and legal issues raised by ISAs and articulates an analytical approach to evaluating …