Law | Open Access Articles | Digital Commons Network™

Managing Cyberthreat, Lawrence J. Trautman Jan 2015

Managing Cyberthreat, Lawrence J. Trautman

Lawrence J. Trautman Sr.

Cyber security is an important strategic and governance issue. However, because most corporate CEOs and directors have no formal engineering or information technology training, it is understandable that their lack of actual cybersecurity knowledge is problematic. Particularly among smaller companies having limited resources, knowledge regarding what their enterprise should actually be doing about cybersecurity can’t be all that good. My goal in this article is to explore the unusually complex subject of cybersecurity in a highly readable manner. First, an examination of recent threats is provided. Next, governmental policy initiatives are discussed. Third, some basic tools that can be used …

Go to article

The Alternative Investment Market: Helping Small Enterprises Grow Public, Jonathan R. Hornok Jan 2015

The Alternative Investment Market: Helping Small Enterprises Grow Public, Jonathan R. Hornok

Jonathan R. Hornok

The Alternative Investment Market (“AIM”) of the London Stock Exchange is a twenty-year experiment in light securities regulation for small companies. The empirical literature shows that the AIM underperforms premier exchanges; however, this literature should not be taken as evidence that the AIM experiment is a failure, rather that the AIM serves a unique niche. In contrast to companies listing on premier exchange, those listing on the AIM do not undergo significant changes in ownership, control, and leverage after an initial public offering (“IPO”). Instead, these changes occur over time, if the company grows. This Article argues, based on the …

Go to article

The Bankruptcy Of The Securities Market Paradigm, Stephen P. Wink Jan 2015

The Bankruptcy Of The Securities Market Paradigm, Stephen P. Wink

Stephen P Wink

The current paradigm of securities market regulation in the United States rests on the Efficient Market Hypothesis, a theory that has been largely discredited by modern economics and behavioral finance. The Efficient Market Hypothesis assumes that the price of securities in the market accurately incorporates and reflects all available material information. Building on this notion, regulators have assumed that better information leads to healthier markets—and therefore regulation that enhances disclosure and transparency leads to healthier markets. Over time, this reasoning has elevated these tools, disclosure and transparency, to ends in themselves, despite the flaws in the Efficient Market Hypothesis. Although …

Go to article

Are Investors’ Gains And Losses From Securities Fraud Equal Over Time?, Alicia J. Davis Jan 2015

Are Investors’ Gains And Losses From Securities Fraud Equal Over Time?, Alicia J. Davis

Alicia Davis

Leading securities regulation scholars argue that compensating securities fraud victims is inefficient because diversified investors that trade frequently (generally, institutional investors) are as likely to gain from trading in fraud-tainted stocks as they are to suffer harm from doing so. In other words, institutional investors have no expected net losses from fraud over the long term and are effectively hedged against fraud risk. Moreover, individual investors can protect themselves from fraud, as well, by investing through diversified institutional intermediaries. In this Article, I demonstrate, using both probability theory and observational and computer-simulated trading data, that the argument of the compensation …

Go to article

The Institutional Appetite For Quack Corporate Governance, Alicia J. Davis Jan 2015

The Institutional Appetite For Quack Corporate Governance, Alicia J. Davis

Alicia Davis

This Article offers evidence that higher quality internal corporate governance is associated with higher levels of ownership by institutional investors. This finding is consistent with the idea that institutions have greater reason than individual investors to prefer well-governed firms, but surprising given the substantial empirical evidence that casts doubt on the efficacy of internal governance mechanisms. The study described in this Article also finds that higher quality external governance is associated with lower proportions of ownership by certain types of institutional investors, also a somewhat surprising result given available empirical evidence on the positive relationship between external governance and firm …

Go to article

Re-Envisioning Investors’ Anti-Director Rights Index: Theory, Criticism, And Implications, Sang Yop Kang Jan 2015

Re-Envisioning Investors’ Anti-Director Rights Index: Theory, Criticism, And Implications, Sang Yop Kang

Sang Yop Kang

‘Law and Finance’ theory – which offers analytical frameworks to measure the protection of public investors and the quality of corporate governance – has dominated the comparative corporate governance scholarship in the last decade. So far, many proponents and critics have had debates on the relevance of the theory and the implications of the theory’s empirical studies. Several important points in relation to shareholder protection, however, have been highly neglected in these debates. In particular, the significance of one-share-one-vote (OSOV) rule has been inappropriately underestimated. In response, this Article explores (1) why OSOV is an utmost critical component in corporate …

Go to article

Canadian Stock Exchange Checklist, Tiffany C. Walsh Dec 2014