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Emory University School of Law
National Association of Securities Dealers Automated Quotations (Nasdaq)
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To Have Or Have Not: The Limits Of Comply-Or-Explain Governance In An American Exchange, Johnson A. Salisbury Jr.
To Have Or Have Not: The Limits Of Comply-Or-Explain Governance In An American Exchange, Johnson A. Salisbury Jr.
Emory Law Journal
In 2020, the National Association of Securities Dealers Automated Quotations (“Nasdaq”) proposed a comply-or-explain governance rule to the Securities and Exchange Commission (“SEC”), aimed at increasing diversity in companies listed on its exchange. The resulting listing rule—approved by the SEC in 2021—was met with a mixed chorus of cheers and jeers from the public and regulated companies. Missing from that chorus, however, was an analysis of the effectiveness of Nasdaq’s approach in using a flexible, predominantly international comply-or-explain governance model to regulate the companies listed on its exchange.
Framed as a disclosure code, Nasdaq’s Listing Rule 5605(f)(2) requires listed companies …