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Full-Text Articles in Law
Retail Investors And Corporate Governance: Evidence From Zero-Commission Trading, Dhruv Aggarwal, Albert H. Choi, Yoon-Ho Alex Lee
Retail Investors And Corporate Governance: Evidence From Zero-Commission Trading, Dhruv Aggarwal, Albert H. Choi, Yoon-Ho Alex Lee
Law & Economics Working Papers
We examine the effects of the sudden abolition of trading commissions by major online brokerages in 2019, which lowered stock market entry costs for retail investors, on corporate governance. Firms already popular with retail investors experienced positive abnormal returns around the abolition of commissions. Firms with positive abnormal returns in response to commission-free trading subsequently saw a decrease in institutional ownership, a decrease in shareholder voting, and a deterioration in environmental, social, and corporate governance (ESG) metrics. Finally, these firms were more likely to adopt bylaw amendments to reduce the percentage of shares needed for a quorum at shareholder meetings. …
Meme Corporate Governance, Dhruv Aggarwal, Albert H. Choi, Yoon-Ho Alex Lee
Meme Corporate Governance, Dhruv Aggarwal, Albert H. Choi, Yoon-Ho Alex Lee
Law & Economics Working Papers
Can retail investors revolutionize corporate governance and make public companies more responsive to social concerns? The U.S. stock market offered an unusual experiment to test the impact of retail investors in 2021, when there was a dramatic influx of retail investors into the shareholder base of companies such as GameStop and AMC. The meme surge phenomenon elicited a variety of reactions from scholars and practitioners. While some worried that affected companies’ share prices were becoming disjointed from their financial fundamentals, others predicted that retail shareholders will reduce the power of large institutional investors and democratize corporate governance. This Article presents …
Regulating The Corporate Governance Of State-Owned Enterprises In Investment Arbitration, Mark Mclaughlin
Regulating The Corporate Governance Of State-Owned Enterprises In Investment Arbitration, Mark Mclaughlin
Research Collection Yong Pung How School Of Law
The renaissance of sovereign investment is one of the defining economic trends of the 21st century. While many states have benefitted, and continue to benefit, from an influx of state-backed foreign investment, this embrace is not without its hesitancies. Host states are particularly concerned that state-owned enterprises (SOE s) pursue non-commercial policy objectives, maintain lower levels of transparency than their private counterparts, and operate with inferior standards of responsible business conduct. In response, domestic regulators have enacted a series of countermeasures for SOE investment, including requirements that such enterprises must invest on a “commercial basis.” However, the regulation of foreign …
Are All Risks Created Equal? Rethinking The Distinction Between Legal And Business Risk In Corporate Law, Adi Libson, Gideon Parchomovsky
Are All Risks Created Equal? Rethinking The Distinction Between Legal And Business Risk In Corporate Law, Adi Libson, Gideon Parchomovsky
All Faculty Scholarship
Should corporate legal risk be treated similarly to corporate business risks? Currently, the law draws a clear-cut distinction between the two sources of risk, permitting the latter type of risk and banning the former. As a result, fiduciaries are shielded from personal liability in the case of business risk and are entirely exposed to civil and criminal liability that arises from legal risk-taking. As corporate law theorists have underscored, the differential treatment of business and legal risk is highly problematic from the perspective of firms and shareholders. To begin with, legal risk cannot be completely averted or eliminated. More importantly, …
Caremark And Esg, Perfect Together: A Practical Approach To Implementing An Integrated, Efficient, And Effective Caremark And Eesg Strategy, Leo E. Strine Jr., Kirby M. Smith, Reilly S. Steel
Caremark And Esg, Perfect Together: A Practical Approach To Implementing An Integrated, Efficient, And Effective Caremark And Eesg Strategy, Leo E. Strine Jr., Kirby M. Smith, Reilly S. Steel
All Faculty Scholarship
With increased calls from investors, legislators, and academics for corporations to consider employee, environmental, social, and governance factors (“EESG”) when making decisions, boards and managers are struggling to situate EESG within their existing reporting and organizational structures. Building on an emerging literature connecting EESG with corporate compliance, this Essay argues that EESG is best understood as an extension of the board’s duty to implement and monitor a compliance program under Caremark. If a company decides to do more than the legal minimum, it will simultaneously satisfy legitimate demands for strong EESG programs and promote compliance with the law. Building …
Reversing The Fortunes Of Active Funds, Adi Libson, Gideon Parchomovsky
Reversing The Fortunes Of Active Funds, Adi Libson, Gideon Parchomovsky
All Faculty Scholarship
In 2019, for the first time in the history of U.S. capital markets, passive funds surpassed active funds in terms of total assets under management. The continuous growth of passive funds at the expense of active funds is a genuine cause for concern. Active funds monitor the management and partake of decision-making in their portfolio companies. Furthermore, they improve price efficiency and managerial performance by engaging in informed trading. The buy/sell decisions of active funds provide other market participants reliable information about the quality of firms. The cost of active investing is significant and it is exclusively borne by active …
The Duty Of Corporate Directors To Tie Executive Compensation To The Long-Term Sustainability Of The Firm, Alberto Salazar, Muthana Mohamed
The Duty Of Corporate Directors To Tie Executive Compensation To The Long-Term Sustainability Of The Firm, Alberto Salazar, Muthana Mohamed
Osgoode Legal Studies Research Paper Series
Executive compensation is said to be for performance and, in liberal market economies, the board of directors along with compensation committees have largely been in charge of safeguarding pay for performance. This executive compensation system is legally protected by the business judgment rule (a strong judicial deference) and has recently been supplemented with shareholders’ ‘say on pay’. Further legal or government intervention has been deemed unnecessary. However, such system has resulted in extremely excessive executive compensation, outrageous pay disparities between executives and workers, poor or short-term performance, recurrent corporate failures and economic recession. This paper explores the need for a …
Framing A Purpose For Corporate Law, William W. Bratton
Framing A Purpose For Corporate Law, William W. Bratton
All Faculty Scholarship
This article seeks to frame a short statement of purpose for corporate law on which all reasonable observers can agree. The statement, in order to succeed at its intended purpose, must satisfy two strict conditions: first, it must have enough content to be meaningful; second, it must be completely uncontroversial, both descriptively and normatively. The exercise, thus described, involves avoiding the issues that occupy center stage in discussions about corporate law while at the same time highlighting the discussants’ generally held presuppositions. Three closely interconnected issues arise. First, whether the statement of the purpose of corporate law should speak in …
A Conflict Primacy Model Of The Public Board, Usha Rodrigues
A Conflict Primacy Model Of The Public Board, Usha Rodrigues
Scholarly Works
e board of directors is the theoretical fulcrum of the corporate form: Statutes task the board with managing the corporation. Yet in the twentieth century, CEOs and other executives came to dominate the real-world control of the corporation. In light of this transformation, in the 1970s Melvin E. Eisenberg proposed reconceiving the board as an independent monitor. Eisenberg’s monitoring board is now the dominant regulatory model of the board. Recently two different visions of the board of directors have emerged. Stephen Bainbridge’s “director primacy” model calls directors “Platonic guardians,” and Margaret Blair and Lynn Stout’s “team production model” characterizes them …
Pathways For Women To Senior Management Positions And Board Seats: An A-Z List, Douglas M. Branson
Pathways For Women To Senior Management Positions And Board Seats: An A-Z List, Douglas M. Branson
Articles
In April, Michigan State University School of Law held a symposium entitled “Pathways to Power.” For the most part, symposium speakers confined themselves to speaking about women’s progress along partner tracks in law firms, into positions as prosecutors and judges, and elections to political office. The author of this article has published two books (No Seat at the Table - How Governance and Law Keep Women Out of the Boardroom and The Last Male Bastion - Gender and the CEO Suite) and several articles on pathways for women to corporate management positions and to board seats. This article …
Managing Corporate Federalism: The Least-Bad Approach To The Shareholder Bylaw Debate, Christopher M. Bruner
Managing Corporate Federalism: The Least-Bad Approach To The Shareholder Bylaw Debate, Christopher M. Bruner
Scholarly Works
Over recent decades, shareholders in public corporations have increasingly sought to augment their own power - and, correlatively, to limit the power of boards - through creative use of corporate bylaws. The bylaws lend themselves to such efforts because enacting, amending, and repealing bylaws are essentially the only corporate governance actions that shareholders can undertake unilaterally. In this Article I examine thecontested nature of bylaws, the fundamental issues of corporate power and purpose that they implicate, and the differing ways in which state and federal lawmakers and regulators may impact the debate regarding thescope of the shareholders' bylaw authority.
The …
The Future Of Shareholder Democracy, Lisa Fairfax
The Future Of Shareholder Democracy, Lisa Fairfax
All Faculty Scholarship
This Article seeks to ascertain the impact of the Securities and Exchange Commission's rejection in 2007 of a proxy access rule, a rule that would have required corporations to include shareholder-nominated candidates on the ballot. On the one hand, the SEC's rejection appears to be a stunning blow to the shareholders' rights campaign because many shareholders' rights advocates have long considered access to the corporate ballot as the "holy grail" of their campaign for increased shareholder power. On the other hand, some corporate experts maintain that characterizing proxy access as the indispensable ingredient for sufficient shareholder influence fails to appreciate …
On Beyond Calpers: Survey Evidence On The Developing Role Of Public Pension Funds In Corporate Governance, Stephen Choi, Jill E. Fisch
On Beyond Calpers: Survey Evidence On The Developing Role Of Public Pension Funds In Corporate Governance, Stephen Choi, Jill E. Fisch
All Faculty Scholarship
No abstract provided.
The Role Of Government In Corporate Governance, Cary Coglianese, Elizabeth K. Keating, Michael L. Michael, Thomas J. Healey
The Role Of Government In Corporate Governance, Cary Coglianese, Elizabeth K. Keating, Michael L. Michael, Thomas J. Healey
All Faculty Scholarship
Numerous corporate scandals in the past several years have fueled widespread debate over proposals for government action. The central challenge for government is how to restore corporate integrity and market confidence without overreacting and stifling the dynamism that underlies a strong economy. To examine this challenge, the Center for Business and Government's Regulatory Policy Program organized a conference in May 2004 on The Role of Government in Corporate Governance. The conference brought together government officials, business leaders, and academic researchers to discuss three fundamental public policy issues raised by recent corporate abuses. First, who should regulate corporate management - government …
The Qualified Legal Compliance Committee: Using The Attorney Conduct Rules To Restructure The Board Of Directors, Jill E. Fisch, Caroline M. Gentile
The Qualified Legal Compliance Committee: Using The Attorney Conduct Rules To Restructure The Board Of Directors, Jill E. Fisch, Caroline M. Gentile
All Faculty Scholarship
The Securities and Exchange Commission introduced a new corporate governance structure, the qualified legal compliance committee, as part of the professional standards of conduct for attorneys mandated by the Sarbanes-Oxley Act of 2002. QLCCs are consistent with the Commission’s general approach to improving corporate governance through specialized committees of independent directors. This Article suggests, however, that assessing the benefits and costs of creating QLCCs may be more complex than is initially apparent. Importantly, QLCCs are unlikely to be effective in the absence of incentives for active director monitoring. This Article concludes by considering three ways of increasing these incentives.
Teaching Corporate Governance Through Shareholder Litigation, Jill E. Fisch
Teaching Corporate Governance Through Shareholder Litigation, Jill E. Fisch
All Faculty Scholarship
No abstract provided.
Taking Boards Seriously, Jill E. Fisch
Questioning Philanthropy From A Corporate Governance Perspective, Jill E. Fisch
Questioning Philanthropy From A Corporate Governance Perspective, Jill E. Fisch
All Faculty Scholarship
No abstract provided.
Relationship Investing: Will It Happen? Will It Work?, Jill E. Fisch
Relationship Investing: Will It Happen? Will It Work?, Jill E. Fisch
All Faculty Scholarship
No abstract provided.