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Delaware’S Retreat From Judicial Scrutiny Of Mergers, Charles R. Korsmo
Delaware’S Retreat From Judicial Scrutiny Of Mergers, Charles R. Korsmo
Faculty Publications
This Article evaluates recent dramatic developments in Delaware law surrounding merger litigation and concludes that they have gone too far in limiting the ability to challenge managerial wrongdoing in the takeover context. The past three years have seen a sea change in merger litigation, brought on by the twin earthquakes of the Delaware Supreme Court’s decision in Corwin v. KKR and the Delaware Court of Chancery’s decision in In re Trulia. Both of these decisions were inspired by a perceived crisis in merger litigation. By 2015, the percentage of economically significant deals challenged by at least one lawsuit had been …
Selling Stock And Selling Legal Claims: Alienability As A Constraint On Managerial Opportunism, Charles R. Korsmo
Selling Stock And Selling Legal Claims: Alienability As A Constraint On Managerial Opportunism, Charles R. Korsmo
Faculty Publications
Scholars have long recognized the importance of market forces as a tool for disciplining the management of public corporations and reducing agency costs. If managers loot or otherwise mismanage the firm, the firm’s stock price will suffer, raising its cost of capital and leaving managers exposed to the threat of a hostile takeover. In recent decades, changing patterns of stock ownership have threatened the viability of this market check on mismanagement. Institutional investors, and particularly index funds, own an increasing portion of publicly traded firms, and face substantial liquidity and other barriers to simply selling their positions. To the extent …