Corporate Purpose and the Dangers of Government-Mandated CSR
Latest from The CLS Blue Sky Blog
SEC Chair on Transparent Market Prices, Small Business, and Teamwork
Thank you Bob [Stebbins]. It is such a pleasure to be in a university town.
We drove in just after 11pm last night [September 12] and even then you could feel the energy, the energy that comes with curiosity, a thirst for knowledge and a belief that knowledge, know how, effort and community will bring us a better tomorrow.
As we drove down Mission Street this morning — past the same Buffalo Wild Wings where…
Uncovering Hidden Conflicts in Stockholder Class Action Litigation
Stockholder representatives in class and derivative actions are supposed to share in any recovery on the same terms as other stockholders.[1] Absent court approval, class counsel typically cannot share fee awards with their clients.[2] Indeed, class-action litigator William Lerach famously served time in federal prison after pleading guilty to a conspiracy charge related to the payment of kickbacks to class plaintiffs.[3]
Direct payments between class counsel and their clients are…
Wachtell Lipton Discusses Directors’ Duties in an Evolving Risk and Governance Landscape
The stakes for responsible corporate stewardship have never been higher.
Corporations today account for a greater proportion of our collective productivity than ever before. Of the 100 largest economies in the world, 71 are corporations, and only 29 are countries. U.S. corporations alone generated profits of $2.3 trillion in 2018 — the highest in history. Reflecting their unprecedented scale, U.S. corporations have been blamed for accelerating environmental degradation and aggravating disparities in income and wealth. …
Do Anti-Pledging Policies Have Unintended Consequences for Corporate Governance?
Many managers receive company stock as compensation and then pledge that stock as collateral for personal loans. The practice is increasingly common, and its potential economic impact is anything but negligible. For example, Larcker and Tayan (2010) document that pledged shares by 982 directors in 2006-2009 averaged 44 percent of the total shares received as compensation. In addition, the damage to firm value from managers’ failure to meet margin calls can be significant, as shown…
Davis Polk Discusses M&A Impact of Changes to Loss Carryforwards
On September 9, 2019, the Internal Revenue Service (“IRS”) released proposed regulations (the “Proposed Regulations”) that, if finalized in their current form, would in many cases dramatically reduce the portion of a company’s net operating loss (“NOL”) carryforward that is available to be used following a so-called ownership change of the company. The Proposed Regulations would be effective for ownership changes occurring after they are finalized.
The Proposed Regulations would make other significant changes potentially…
Does Mandatory Disclosure for Private Firms Increase Their Chances of Going Public?
How do disclosure requirements influence a private firm’s decision to go public? This is an important question for regulators and corporate finance professionals, given current debate about how much information private firms should have to disclose. Conceptually, public disclosure requirements for private firms can lead to greater exposure of the firm’s confidential and proprietary information. Keeping this information out of the hands of competitors is a major factor that pushes firms to stay private. However,…
The Rise of the Mega-Law Firm: Some Reckless Reflections and Prickly Predictions
This post comes to us from John C. Coffee, Jr., the Adolf A. Berle Professor of Law at Columbia University Law School and the Director of its Center on Corporate Governance. These slides accompanied a lunch address that he gave at a Conference, entitled “Law Firms in the 21st Century,” which was held at Columbia on September 14, 2019.
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What Comes After Shareholder Primacy? Employee Empowerment
In corporate law, the U.S. academic elite stubbornly clings to shareholder primacy as the foundational principle of the field. The concept is simple, even elegant: Shareholders should be given ultimate control of the corporation because they are entitled to the residual – the leftover profits after all other contractual constituents have been paid – and they therefore have the proper incentives to maximize the overall value of the firm.
At an earlier time, shareholder primacy…
Cleary Gottlieb Discusses U.S. CLOUD Act’s Possible Impact on EU Data Protection
Responding to a request by the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs (LIBE), the EU’s data protection supervisory bodies released an initial joint opinion on the impact of the U.S. Clarifying Lawful Overseas Use of Data Act (“CLOUD Act”) on the EU data protection framework. The preliminary assessment by the European Data Protection Supervisor (“EDPS”) and European Data Protection Board (“EDPB”) leaves service providers facing a familiar dilemma.
Although the CLOUD…