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Full-Text Articles in Law
The Role Of Independent Directors In Startup Firms, Brian Broughman
The Role Of Independent Directors In Startup Firms, Brian Broughman
Vanderbilt Law School Faculty Publications
This Article develops a new theory to explain the widespread use of independent directors in the governance of startup firms. Privately held startups often assign a tie-breaking board seat to a third-party independent director. This practice cannot be explained by the existing corporate governance literature, which relies on diffuse ownership and passive investment-features unique to the publicly traded firm. To develop an alternative theory, I model a financing contract between an entrepreneur and a venture capital investor. I show that allocating a tie- breaking vote to an unbiased third party can prevent opportunistic behavior that would occur if the firm …
Realigning Corporate Governance: Shareholder Activism By Labor Unions, Randall Thomas, Stewart J. Schwab
Realigning Corporate Governance: Shareholder Activism By Labor Unions, Randall Thomas, Stewart J. Schwab
Vanderbilt Law School Faculty Publications
This paper investigates the increased shareholder activism by labor unions and their pension funds, who are now the most aggressive institutional shareholders. Sometimes unions propose traditional corporate-governance measures through procedures familiar to shareholders. Only the union sponsor is novel. But recently unions have pushed innovative methods to get corporations to listen to shareholder complaints. These methods include mandatory amendment of corporate by-laws by shareholders and floor proposals submitted for a shareholder vote at the annual meeting. Unions as shareholders have conflicting roles. We distinguish union-shareholder initiatives designed to further unions' traditional organizing and collective bargaining goals from those that enhance …