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Articles 1 - 5 of 5
Full-Text Articles in Securities Law
Securitizing Notes Of Small Businesses And Needy Workers, Tamar Frankel
Securitizing Notes Of Small Businesses And Needy Workers, Tamar Frankel
Faculty Scholarship
Businesses, whether large ones or small ones, such as restaurants and small shops, are presently closed and some of their employees have been laid off.1 Currently, the government is lending money to these small businesses2 and the now unemployed workers for their sustenance. It then collects the payments from some of the borrowers and the source of the rest of the money is taxes.3 Since not all, or perhaps only a few, small businesses own real estate, they might sign notes promising to repay the loans but can offer no asset backing. Presumably, the nation’s financial deficit …
Corporate Governance By Index Exclusion, Scott Hirst, Kobi Kastiel
Corporate Governance By Index Exclusion, Scott Hirst, Kobi Kastiel
Faculty Scholarship
Investors have long been unhappy with certain governance arrangements adopted by companies undertaking initial public offerings, such as dual-class voting structures. Traditional sources of corporate governance rules—the Securities and Exchange Commission, state law, and exchange listing rules—do not constrain these arrangements. As a result, investors have turned to a new source of governance rules: index providers.
This Article provides a comprehensive analysis of index exclusion rules and their likely effects on insiders’ decision-making. We show that efforts to portray index providers as the new sheriffs of the U.S. capital markets are overstated. Index providers face complex and conflicting interests, which …
The Specter Of The Giant Three, Scott Hirst, Lucian Bebchuk
The Specter Of The Giant Three, Scott Hirst, Lucian Bebchuk
Faculty Scholarship
This Article examines the large, steady, and continuing growth of the Big Three index fund managers — BlackRock, Vanguard, and State Street Global Advisors. We show that there is a real prospect that index funds will continue to grow, and that voting in most significant public companies will come to be dominated by the future “Giant Three.”
We begin by analyzing the drivers of the rise of the Big Three, including the structural factors that are leading to the heavy concentration of the index funds sector. We then provide empirical evidence about the past growth and current status of the …
Leverage In The Board Room: The Unsung Influence Of Private Lenders In Corporate Governance, Frederick Tung
Leverage In The Board Room: The Unsung Influence Of Private Lenders In Corporate Governance, Frederick Tung
Faculty Scholarship
The influence of banks and other private lenders pervades public companies. From the first day of a lending arrangement, loan covenants and built-in contingency provisions affect managerial decision making. Conventional corporate governance analysis has been slow to notice or account for this lender influence. Corporate governance discourse has traditionally focused only on corporate law arrangements. The few existing accounts of creditors' influence over firm managers emphasize the drastic actions creditors take in extreme cases - when a firm is in serious trouble - but in fact, private lender influence is a routine feature of corporate governance even absent financial distress. …
Financial Accounting And Corporate Behavior, David I. Walker
Financial Accounting And Corporate Behavior, David I. Walker
Faculty Scholarship
The power of financial accounting to shape corporate behavior is underappreciated. Positive accounting theory teaches that even cosmetic changes in reported earnings can affect share value, not because market participants are unable to see through such changes to the underlying fundamentals, but because of implicit or explicit contracts that are based on reported earnings and transaction costs. However, agency theory suggests that accounting choices and corporate responses to accounting standard changes will not necessarily be those that maximize share value. For a number of reasons, including the fact that executive compensation often is tied to reported earnings, managerial preferences for …