The SEC’s recently proposed Amendments to Exemptions from the Proxy Rules for Proxy Voting Advice is an efficient and necessary response to the “collective action” problem that is imbedded in the shareholder voting of public companies and the deficiencies that this problem creates in the voting recommendations of proxy advisors. The amendments will enhance the value of voting recommendations by requiring proxy advisors to make much needed investments in a few key areas of the voting recommendation process.
Part I of this letter will describe the collective action problem that is at the heart of shareholder voting. Part II will discuss the problems that this collective action causes for the voting recommendations of proxy advisors, including the creation of a resource constrained business environment. Part III discusses how proxy advisors deal with such a business environment. Part IV will discuss how the market for voting recommendations is an example of a market failure, requiring the SEC to pursue regulatory action to mitigate the harm caused by two significant negative externalities. Part V will discuss how the collective action problem of shareholder voting and the market failure impacts corporate governance. Part VI will discuss the value of the proposed amendments.
{"title":"RE: Amendments to Exemptions from the Proxy Rules for Proxy Voting Advice","authors":"Bernard S. Sharfman","doi":"10.2139/ssrn.3507731","DOIUrl":"https://doi.org/10.2139/ssrn.3507731","url":null,"abstract":"The SEC’s recently proposed Amendments to Exemptions from the Proxy Rules for Proxy Voting Advice is an efficient and necessary response to the “collective action” problem that is imbedded in the shareholder voting of public companies and the deficiencies that this problem creates in the voting recommendations of proxy advisors. The amendments will enhance the value of voting recommendations by requiring proxy advisors to make much needed investments in a few key areas of the voting recommendation process. <br><br>Part I of this letter will describe the collective action problem that is at the heart of shareholder voting. Part II will discuss the problems that this collective action causes for the voting recommendations of proxy advisors, including the creation of a resource constrained business environment. Part III discusses how proxy advisors deal with such a business environment. Part IV will discuss how the market for voting recommendations is an example of a market failure, requiring the SEC to pursue regulatory action to mitigate the harm caused by two significant negative externalities. Part V will discuss how the collective action problem of shareholder voting and the market failure impacts corporate governance. Part VI will discuss the value of the proposed amendments.","PeriodicalId":22151,"journal":{"name":"SRPN: Corporate Governance (Topic)","volume":"5 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-12-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89639249","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Effective management of banks and financial institutions are crucial issues of contemporary society. Good and effective governance are expected to establish financial credibility to its stakeholders and society. However, insolvency, liquidation and restructuring of the company are the matters of court procedure. Insolvency process begins only with the decision of designated court. In case banks and financial institutions, Nepal Rastra Bank can follow administrative measures of financial liquidation under prevailing laws and custom of administration, and it can recommend to the court for the liquidation of company. Direction to banks and financial institutions for improvement, declaration of problem bank, reformative and corrective measures, resolution process i.e. formation of special administration team, suspension of power of directors, establishment of bridge institutions or unit, exchange of reciprocal assistance; information sharing through credit Information Bureau are also the measures of restructuring of banks and financial institutions in Nepal. Other methods of restructuring of financial sector are granting lender of the last resort facilities, prompt corrective actions for capital improvement, merger and acquisition, declaration of insolvency i.e winding up of companies, liquidation, restructuring of the company if so is possible upon the decision of the court etc. The decision of restructuring of banks and financial institutions are made by the examination of books of account and financial statement. Central Bank can also make inspection and supervision to find out actual situation of banks and financial institutions. Nepal Rastra Bank, with their own administrative team, has already been restructured then Lumbini Bank Limited from March 20, 2002 to December 24, 2004; Nepal Bank Limited from March 14, 2002 to April 2015; Nepal Bangladesh Bank Limited from November 12, 2006 to March 2010; NCC Bank Limited from February 4, 2014 to January 2, 2017; Bank of Kathmandu from May 20, 2009 to July 23, 2009 etc. Nepal Rastra Bank also restructured then Gorkha Development Bank, H & B Development Bank, Nepal Share Market Finance Company, Nepal Finance etc. Many institutions are in the process of resolutions. Nepal Rastra Bank acts as a guardian of banks and financial institutions. If corrective and remedial actions are not sufficient, such institutions are sent for liquidation and winding up. United Development Bank, including some finance companies, was liquidated upon the decision of designated court. Last but not least, Central Bank, Nepalese Judiciary, Office of the Company Registrar, and Credit Information Bureau are playing important role to make restructuring of banks and financial institutions in Nepal. Conversely, absence of the Asset Management Company, longer time period for court decision, priority payment in the time of liquidation through small depositors, and longer time period of liquidation are the challenges of restructuring of
银行和金融机构的有效管理是当代社会的关键问题。良好和有效的治理有望为其利益相关者和社会建立财务信誉。但是，公司的破产、清算和重组属于法院程序事项。破产程序只有在指定法院作出决定后才开始。在银行和金融机构的情况下，根据现行法律和管理惯例，尼泊尔拉斯特拉银行可以遵循金融清算的行政措施，并可以向法院建议对公司进行清算。对银行和金融机构的整改指示、问题银行的申报、改革整改措施、解决流程，即成立专门管理小组、暂停董事权力、设立桥梁机构或单位、互换互助;通过信用信息局共享信息也是尼泊尔银行和金融机构重组的措施。金融部门重组的其他方法包括提供最后贷款人设施、迅速采取纠正措施改善资本、合并和收购、宣布破产，即公司清盘、清算、根据法院的决定对公司进行重组等。银行和金融机构重组的决定，是通过审查帐簿和财务报表作出的。中央银行也可以进行检查和监督，了解银行和金融机构的实际情况。2002年3月20日至2004年12月24日，尼泊尔拉斯特拉银行重组为蓝毗尼银行有限公司，拥有自己的行政团队;2002年3月14日至2015年4月担任尼泊尔银行有限公司总裁;2006年11月12日至2010年3月担任尼泊尔孟加拉国银行有限公司董事;NCC Bank Limited(2014年2月4日至2017年1月2日);加德满都银行2009年5月20日至2009年7月23日等。尼泊尔拉斯特拉银行还重组了廓尔喀发展银行、尼泊尔发展银行、尼泊尔股票市场金融公司、尼泊尔金融等。许多机构正在进行决议。尼泊尔拉斯特拉银行是银行和金融机构的监护人。如果纠正和补救措施不够，这些机构将被送去清算和清盘。联合开发银行，包括一些金融公司，在指定法院的判决下被清算。最后但并非最不重要的是，中央银行、尼泊尔司法机构、公司注册办公室和信用信息局在尼泊尔银行和金融机构的重组中发挥着重要作用。相反，资产管理公司的缺席、较长的法院判决期限、通过小存款人在清算时优先付款、较长的清算期限是尼泊尔银行和金融机构重组面临的挑战。
{"title":"Restructuring of Banks and Financial Institutions","authors":"Suman Acharya","doi":"10.2139/ssrn.3469223","DOIUrl":"https://doi.org/10.2139/ssrn.3469223","url":null,"abstract":"Effective management of banks and financial institutions are crucial issues of contemporary society. Good and effective governance are expected to establish financial credibility to its stakeholders and society. However, insolvency, liquidation and restructuring of the company are the matters of court procedure. Insolvency process begins only with the decision of designated court. In case banks and financial institutions, Nepal Rastra Bank can follow administrative measures of financial liquidation under prevailing laws and custom of administration, and it can recommend to the court for the liquidation of company. Direction to banks and financial institutions for improvement, declaration of problem bank, reformative and corrective measures, resolution process i.e. formation of special administration team, suspension of power of directors, establishment of bridge institutions or unit, exchange of reciprocal assistance; information sharing through credit Information Bureau are also the measures of restructuring of banks and financial institutions in Nepal. Other methods of restructuring of financial sector are granting lender of the last resort facilities, prompt corrective actions for capital improvement, merger and acquisition, declaration of insolvency i.e winding up of companies, liquidation, restructuring of the company if so is possible upon the decision of the court etc. The decision of restructuring of banks and financial institutions are made by the examination of books of account and financial statement. Central Bank can also make inspection and supervision to find out actual situation of banks and financial institutions. Nepal Rastra Bank, with their own administrative team, has already been restructured then Lumbini Bank Limited from March 20, 2002 to December 24, 2004; Nepal Bank Limited from March 14, 2002 to April 2015; Nepal Bangladesh Bank Limited from November 12, 2006 to March 2010; NCC Bank Limited from February 4, 2014 to January 2, 2017; Bank of Kathmandu from May 20, 2009 to July 23, 2009 etc. Nepal Rastra Bank also restructured then Gorkha Development Bank, H & B Development Bank, Nepal Share Market Finance Company, Nepal Finance etc. Many institutions are in the process of resolutions. Nepal Rastra Bank acts as a guardian of banks and financial institutions. If corrective and remedial actions are not sufficient, such institutions are sent for liquidation and winding up. United Development Bank, including some finance companies, was liquidated upon the decision of designated court. Last but not least, Central Bank, Nepalese Judiciary, Office of the Company Registrar, and Credit Information Bureau are playing important role to make restructuring of banks and financial institutions in Nepal. Conversely, absence of the Asset Management Company, longer time period for court decision, priority payment in the time of liquidation through small depositors, and longer time period of liquidation are the challenges of restructuring of ","PeriodicalId":22151,"journal":{"name":"SRPN: Corporate Governance (Topic)","volume":"60 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-10-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81292191","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We consider a supply network where a retailer sources from multiple economically weaker suppliers for a high-quality key material. The production of the material needs to comply with social and environmental standards over time. However, such compliance is costly, and the cost varies with privately observed dynamically changing environment (termed as the state), so the suppliers may cut corners, risking losing the ability to supply in the future. While retailer can invest to reduce the compliance cost, the investment outcome is uncertain. Therefore each party faces a trade-off between short-term gains/losses and long-term losses/gains. We present a dynamic model to capture these complexities and explore incentive mechanisms that enable all parties collaborate to achieve sustainable quality supply. We propose a sustainability index that reflects the supplier’s compliance status, and then construct a dynamic mechanism to achieve the first-best index in each period. The payments to the suppliers reflect both current and future states. This mechanism allows suppliers’ voluntary participation and induces truthful information exchange, self-enforcement, as well as first-best retailer investments. We show that the retailer commits and invests in a supplier only if the collaboration is longer than a certain contract length. Thus, we uncover situations where the support from the non-for-profit organizations is particularly valuable. Finally, we discuss additional strategies the retailer may adopt to scale up the program.
{"title":"A Dynamic Mechanism for Achieving Sustainable Quality Supply","authors":"T. Lewis, Fang Liu, Jing-Sheng Song","doi":"10.2139/ssrn.2513103","DOIUrl":"https://doi.org/10.2139/ssrn.2513103","url":null,"abstract":"We consider a supply network where a retailer sources from multiple economically weaker suppliers for a high-quality key material. The production of the material needs to comply with social and environmental standards over time. However, such compliance is costly, and the cost varies with privately observed dynamically changing environment (termed as the state), so the suppliers may cut corners, risking losing the ability to supply in the future. While retailer can invest to reduce the compliance cost, the investment outcome is uncertain. Therefore each party faces a trade-off between short-term gains/losses and long-term losses/gains. We present a dynamic model to capture these complexities and explore incentive mechanisms that enable all parties collaborate to achieve sustainable quality supply. We propose a sustainability index that reflects the supplier’s compliance status, and then construct a dynamic mechanism to achieve the first-best index in each period. The payments to the suppliers reflect both current and future states. This mechanism allows suppliers’ voluntary participation and induces truthful information exchange, self-enforcement, as well as first-best retailer investments. We show that the retailer commits and invests in a supplier only if the collaboration is longer than a certain contract length. Thus, we uncover situations where the support from the non-for-profit organizations is particularly valuable. Finally, we discuss additional strategies the retailer may adopt to scale up the program.","PeriodicalId":22151,"journal":{"name":"SRPN: Corporate Governance (Topic)","volume":"51 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-10-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82706130","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We investigate the effect of CEOs’ education on their firms’ probability of choosing convertible debt instead of straight debt and equity. Using a security choice framework, we find that CEOs with higher levels of education have a greater likelihood of issuing convertible debt, particularly when this is beneficial to their firms. However, CEOs with MBAs are unlikely to rely on convertibles, consistent with the assumption that an MBA might impede non-standard corporate finance choices. Consistent with the upper echelon theory, we find that better educated executives are more innovative and make better corporate finance choices. The findings withstand a range of robustness tests.
{"title":"Does CEOs’ Education Matter for Convertible Bond Issuance Decisions?","authors":"Zainab Mehmood, Marie Dutordoir, A. De Cesari","doi":"10.2139/ssrn.3270222","DOIUrl":"https://doi.org/10.2139/ssrn.3270222","url":null,"abstract":"We investigate the effect of CEOs’ education on their firms’ probability of choosing convertible debt instead of straight debt and equity. Using a security choice framework, we find that CEOs with higher levels of education have a greater likelihood of issuing convertible debt, particularly when this is beneficial to their firms. However, CEOs with MBAs are unlikely to rely on convertibles, consistent with the assumption that an MBA might impede non-standard corporate finance choices. Consistent with the upper echelon theory, we find that better educated executives are more innovative and make better corporate finance choices. The findings withstand a range of robustness tests.","PeriodicalId":22151,"journal":{"name":"SRPN: Corporate Governance (Topic)","volume":"77 1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-09-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90223162","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study examines the effects of environmental protection activities on corporate tax avoidance. Focusing on environmental responsibility, we show an association between actual outlay on environmental protection activities and tax avoidance, as measured by the effective tax rate (ETR). We also leverage environmental ratings in accordance with previous studies. Using tax-deductible costs for environmental protection activities enables us to more directly analyze their effects on the ETR compared with previous studies because the ETR is measured in monetary amounts. Moreover, we investigate how corporate governance influences this association because both environmental protection and tax avoidance activities are largely related to management decision-making. The results show that the ETR decreases for firms that spend more on environmental protection, whereas it has no relation to environmental ratings. These results, which use environmental protection costs, are completely different from those using environmental ratings. We show that the negative effects of environmental protection costs on corporate tax avoidance are moderated for firms with more outside directors. Additionally, the negative relationship between environmental protection costs and the ETR is found to become stronger for firms that have higher institutional ownership. These results, related to outside directors and institutional ownership, suggest that corporate governance mechanisms that regulate management behavior play a prominent role in the association between environmental protection costs and tax avoidance.
{"title":"The Effects of Environmental Protection Activities on Corporate Tax Avoidance in Japan","authors":"H. Onuma, Yoshinori Shimada","doi":"10.2139/ssrn.3193769","DOIUrl":"https://doi.org/10.2139/ssrn.3193769","url":null,"abstract":"This study examines the effects of environmental protection activities on corporate tax avoidance. Focusing on environmental responsibility, we show an association between actual outlay on environmental protection activities and tax avoidance, as measured by the effective tax rate (ETR). We also leverage environmental ratings in accordance with previous studies. Using tax-deductible costs for environmental protection activities enables us to more directly analyze their effects on the ETR compared with previous studies because the ETR is measured in monetary amounts. Moreover, we investigate how corporate governance influences this association because both environmental protection and tax avoidance activities are largely related to management decision-making. The results show that the ETR decreases for firms that spend more on environmental protection, whereas it has no relation to environmental ratings. These results, which use environmental protection costs, are completely different from those using environmental ratings. We show that the negative effects of environmental protection costs on corporate tax avoidance are moderated for firms with more outside directors. Additionally, the negative relationship between environmental protection costs and the ETR is found to become stronger for firms that have higher institutional ownership. These results, related to outside directors and institutional ownership, suggest that corporate governance mechanisms that regulate management behavior play a prominent role in the association between environmental protection costs and tax avoidance.","PeriodicalId":22151,"journal":{"name":"SRPN: Corporate Governance (Topic)","volume":"50 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-06-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83377877","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-05-16DOI: 10.1017/9781316998472.015
C. Liao
Gender plays a critical role in the construction of corporate institutions and the regulatory infrastructure that governs them. The lack of women in executive positions and corporate boardrooms is a direct consequence of a male-dominated history, and so are the laws and norms guiding the institutions that hold immense power in society. This Chapter tackles difficult questions related to business and power through the lens of feminist legal theory, and provide an unapologetic and ambitious call to redesign existing power structures and internal power dynamics that are leading our world into environmental crises. It begins with a short primer on the social construction of gender, and how society continuously reinforces different behaviours from men and women. The Chapter then examines how gendered predispositions are imbued in the entrenched norms that dominate corporate law, and through implicit biases that prevent or slow the rise of women in the corporate world. These invisible power imbalances need to be widely recognized as they subvert the ability of women to attain meaningful positions of power that instigate change. A critical partnership must be forged between feminist legal theory and corporate sustainability to overcome the formidable challenges in attaining a greener future.
{"title":"Power and the Gender Imperative in Corporate Law","authors":"C. Liao","doi":"10.1017/9781316998472.015","DOIUrl":"https://doi.org/10.1017/9781316998472.015","url":null,"abstract":"Gender plays a critical role in the construction of corporate institutions and the regulatory infrastructure that governs them. The lack of women in executive positions and corporate boardrooms is a direct consequence of a male-dominated history, and so are the laws and norms guiding the institutions that hold immense power in society. This Chapter tackles difficult questions related to business and power through the lens of feminist legal theory, and provide an unapologetic and ambitious call to redesign existing power structures and internal power dynamics that are leading our world into environmental crises. It begins with a short primer on the social construction of gender, and how society continuously reinforces different behaviours from men and women. The Chapter then examines how gendered predispositions are imbued in the entrenched norms that dominate corporate law, and through implicit biases that prevent or slow the rise of women in the corporate world. These invisible power imbalances need to be widely recognized as they subvert the ability of women to attain meaningful positions of power that instigate change. A critical partnership must be forged between feminist legal theory and corporate sustainability to overcome the formidable challenges in attaining a greener future.","PeriodicalId":22151,"journal":{"name":"SRPN: Corporate Governance (Topic)","volume":"35 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-05-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85595075","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
J. Coffee, Robert J. Jackson, Jr., Joshua Mitts, Robert E. Bishop
We develop and apply a new and more rigorous methodology by which to measure and understand both insider trading and the agency costs of hedge fund activism. We use quantitative data to show a systematic relationship between the appointment of a hedge fund nominated director to a corporate board and an increase in informed trading in that corporation’s stock (with the relationship being most pronounced when the fund’s slate of directors includes a hedge fund employee). This finding is important from two different perspectives. First, from a governance perspective, activist hedge funds represent a new and potent force in corporate governance. A robust debate continues as to whether activist funds reduce the agency costs of corporate governance, but this is the first attempt to investigate whether the activist hedge fund also imposes new agency costs through widened bid/ask spreads and informed trading. Second, although insider trading is almost universally condemned, it has only been studied in individual cases. Using instead a quantitative approach, we develop a tool that enables regulators (civil and criminal) to identify suspicious trading patterns: Both to demonstrate such a pattern and to map these new agency costs, we assembled a data set of 475 settlement agreements, between target companies and activists funds relating to the appointment of fund nominated directors, from 2000 and 2015, in order to focus on what happens once such a fund-nominated director goes on the board. Among our principal findings are: 1. Prevalence of Hedge Fund Employees on Slate. Approximately 70% of fund-nominated director slates include a hedge fund employee. 2. Increase in Information Leakage. Once a fund-nominated director goes on the board, an abrupt increase in “information leakage” follows, with the result that the target corporation’s stock price begins to anticipate future public disclosures. Specifically, we examine some 635,450 Form 8-K’s filed by 7,799 public traded companies over the period of January 1, 2000 to September 30, 2016, and we construct a control group for each of the corporations subject to an activist intervention. We find that firms appointing an activist nominee or nominees experience a difference-in-differences increase in leakage of 25-27 percentage points. 3. Hedge Funds versus Other Activists. We next consider whether post-appointment increases in leakage depend on the identity of the activist investors (i.e., hedge fund versus other activist investors). We find that the leakage effect is clearly driven by hedge fund activists (and no other type of activist). 4. Leakage and Hedge Fund Employees. We investigate whether leakage increases depend on the identity of the director appointed to target firm’s board, distinguishing between hedge fund employees and non-hedge fund employees. We find that the increase in leakage is driven by the appointment of activist fund employees to the corporate board (and not by the appointment of othe
{"title":"Activist Directors and Agency Costs: What Happens When an Activist Director Goes on the Board?","authors":"J. Coffee, Robert J. Jackson, Jr., Joshua Mitts, Robert E. Bishop","doi":"10.2139/ssrn.3100995","DOIUrl":"https://doi.org/10.2139/ssrn.3100995","url":null,"abstract":"We develop and apply a new and more rigorous methodology by which to measure and understand both insider trading and the agency costs of hedge fund activism. We use quantitative data to show a systematic relationship between the appointment of a hedge fund nominated director to a corporate board and an increase in informed trading in that corporation’s stock (with the relationship being most pronounced when the fund’s slate of directors includes a hedge fund employee). This finding is important from two different perspectives. First, from a governance perspective, activist hedge funds represent a new and potent force in corporate governance. A robust debate continues as to whether activist funds reduce the agency costs of corporate governance, but this is the first attempt to investigate whether the activist hedge fund also imposes new agency costs through widened bid/ask spreads and informed trading. Second, although insider trading is almost universally condemned, it has only been studied in individual cases. Using instead a quantitative approach, we develop a tool that enables regulators (civil and criminal) to identify suspicious trading patterns: Both to demonstrate such a pattern and to map these new agency costs, we assembled a data set of 475 settlement agreements, between target companies and activists funds relating to the appointment of fund nominated directors, from 2000 and 2015, in order to focus on what happens once such a fund-nominated director goes on the board. \u0000Among our principal findings are: \u00001. Prevalence of Hedge Fund Employees on Slate. Approximately 70% of fund-nominated director slates include a hedge fund employee. \u00002. Increase in Information Leakage. Once a fund-nominated director goes on the board, an abrupt increase in “information leakage” follows, with the result that the target corporation’s stock price begins to anticipate future public disclosures. Specifically, we examine some 635,450 Form 8-K’s filed by 7,799 public traded companies over the period of January 1, 2000 to September 30, 2016, and we construct a control group for each of the corporations subject to an activist intervention. We find that firms appointing an activist nominee or nominees experience a difference-in-differences increase in leakage of 25-27 percentage points. \u00003. Hedge Funds versus Other Activists. We next consider whether post-appointment increases in leakage depend on the identity of the activist investors (i.e., hedge fund versus other activist investors). We find that the leakage effect is clearly driven by hedge fund activists (and no other type of activist). \u00004. Leakage and Hedge Fund Employees. We investigate whether leakage increases depend on the identity of the director appointed to target firm’s board, distinguishing between hedge fund employees and non-hedge fund employees. We find that the increase in leakage is driven by the appointment of activist fund employees to the corporate board (and not by the appointment of othe","PeriodicalId":22151,"journal":{"name":"SRPN: Corporate Governance (Topic)","volume":"11 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84255005","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Since late 90s, a lot has been written and talked regarding Corporate Governance. Things have changed, international crisis have occurred, new developments in the corporate world have taken place. Moreover, in recent years we are not discussing only Corporate Governance matters, but also and together, Corporate Sustainability aspects. This paper focuses these ideas and this analysis from the point of view of emerging markets of emerging countries. And, of course, taking into account what happens in my own country, Peru. But also I have taken a random selection of four countries – not only emerging – and I will somehow describe what is happening there regarding corporate sustainability.
{"title":"Corporate Governance, Is It Worthy?","authors":"L. Rocca","doi":"10.2139/ssrn.3092112","DOIUrl":"https://doi.org/10.2139/ssrn.3092112","url":null,"abstract":"Since late 90s, a lot has been written and talked regarding Corporate Governance. Things have changed, international crisis have occurred, new developments in the corporate world have taken place. Moreover, in recent years we are not discussing only Corporate Governance matters, but also and together, Corporate Sustainability aspects. This paper focuses these ideas and this analysis from the point of view of emerging markets of emerging countries. And, of course, taking into account what happens in my own country, Peru. But also I have taken a random selection of four countries – not only emerging – and I will somehow describe what is happening there regarding corporate sustainability.","PeriodicalId":22151,"journal":{"name":"SRPN: Corporate Governance (Topic)","volume":"43 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2017-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85711573","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Previous literature has shown mixed results on the role of female participation on bank boards and bank performance: some papers find that more women on boards enhance financial performance, while others find negative or no effects. Applying instrumental variables methods to data on approximately 90 U.S. bank holding companies over the 1999–2015 period, we argue that these inconclusive results are due to the fact that there is a non-linear, U-shaped relationship between gender diversity on boards and various measures of bank performance: female participation has a positive effect once a threshold level of gender diversity is achieved. Furthermore, this positive effect is only observed in better capitalized banks. Our results suggest that continuing the voluntary expansion of gender diversity on bank boards will be value-enhancing, provided that they are well capitalized.
{"title":"The Performance Effects of Gender Diversity on Bank Boards","authors":"Ann L. Owen, Judit Temesvary","doi":"10.2139/ssrn.2893189","DOIUrl":"https://doi.org/10.2139/ssrn.2893189","url":null,"abstract":"Previous literature has shown mixed results on the role of female participation on bank boards and bank performance: some papers find that more women on boards enhance financial performance, while others find negative or no effects. Applying instrumental variables methods to data on approximately 90 U.S. bank holding companies over the 1999–2015 period, we argue that these inconclusive results are due to the fact that there is a non-linear, U-shaped relationship between gender diversity on boards and various measures of bank performance: female participation has a positive effect once a threshold level of gender diversity is achieved. Furthermore, this positive effect is only observed in better capitalized banks. Our results suggest that continuing the voluntary expansion of gender diversity on bank boards will be value-enhancing, provided that they are well capitalized.","PeriodicalId":22151,"journal":{"name":"SRPN: Corporate Governance (Topic)","volume":"154 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2017-10-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"91461444","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Spanish Abstract: Esta es una presentación PPT que discute el futuro del gobierno corporativo (GC) y como el negocio exitoso del siglo XXI será diferente de su contra-parte del siglo XX. La presentación contiene siete mensajes clave: 1. El mundo está pasando por cambios estructurales que están llevando las partes interesadas a tener expectativas cada vez más altas sobre el rol de las empresas en la solución de los problemas de la sociedad; 2. Sin embargo, muchas compañías todavía no se han dado cuenta de estos cambios profundos en el mundo y continúan siendo administradas como si aún estuvieran en el siglo XX; 3. Esta vieja forma de gobernar las empresas es lo que ha dado lugar a problemas relevantes recientemente, como los grandes escándalos corporativos, la adopción del gobierno corporativo como herramienta de marketing, y una menor confianza del público en las grandes empresas; 4. Los cambios estructurales requieren soluciones estructurales: es necesario adoptar un nuevo paradigma para el GC basado en la búsqueda de un propósito más elevado, el liderazgo consciente y una cultura ética que despierte lo mejor de las personas; 5. Hay una creciente evidencia de que este nuevo paradigma vale la pena: incluso desde el punto de vista financiero. English Abstract: This is a PPT presentation that discusses what is coming next on corporate governance (CG) and in which ways the successful business of the 21st century will differ from its successful 20th century counterpart. The presentation is divided into five key messages: 1. The world is going through structural changes that are leading stakeholders to have increasingly higher expectations on the role of companies in solving society's problems; 2. However, many companies have not yet realized these profound changes in the world and continue to be managed as if they were still in the 20th century; 3. This old way of governing business has given rise to relevant issues recently, such as major corporate scandals, the adoption of corporate governance as a marketing tool, and the low public confidence in large corporations; 4. Structural changes require structural solutions: it is necessary to adopt a new paradigm for CG based on the pursuit of a higher purpose, conscious leadership and an ethical culture that awakens the best out of people. 5. There is growing evidence that that adopting this new approach to CG pays off: even from the financial viewpoint.
{"title":"Visión de Futuro: Gobierno Corporativo de la Empresa Exitosa del Siglo XXI (Looking Forward: Corporate Governance of the Successful 21st Century Company) (Presentation Slides)","authors":"Alexandre Di Miceli da Silveira","doi":"10.2139/SSRN.3011302","DOIUrl":"https://doi.org/10.2139/SSRN.3011302","url":null,"abstract":"<b>Spanish Abstract:</b> Esta es una presentación PPT que discute el futuro del gobierno corporativo (GC) y como el negocio exitoso del siglo XXI será diferente de su contra-parte del siglo XX. La presentación contiene siete mensajes clave: 1. El mundo está pasando por cambios estructurales que están llevando las partes interesadas a tener expectativas cada vez más altas sobre el rol de las empresas en la solución de los problemas de la sociedad; 2. Sin embargo, muchas compañías todavía no se han dado cuenta de estos cambios profundos en el mundo y continúan siendo administradas como si aún estuvieran en el siglo XX; 3. Esta vieja forma de gobernar las empresas es lo que ha dado lugar a problemas relevantes recientemente, como los grandes escándalos corporativos, la adopción del gobierno corporativo como herramienta de marketing, y una menor confianza del público en las grandes empresas; 4. Los cambios estructurales requieren soluciones estructurales: es necesario adoptar un nuevo paradigma para el GC basado en la búsqueda de un propósito más elevado, el liderazgo consciente y una cultura ética que despierte lo mejor de las personas; 5. Hay una creciente evidencia de que este nuevo paradigma vale la pena: incluso desde el punto de vista financiero. <b>English Abstract:</b> This is a PPT presentation that discusses what is coming next on corporate governance (CG) and in which ways the successful business of the 21st century will differ from its successful 20th century counterpart. The presentation is divided into five key messages: 1. The world is going through structural changes that are leading stakeholders to have increasingly higher expectations on the role of companies in solving society's problems; 2. However, many companies have not yet realized these profound changes in the world and continue to be managed as if they were still in the 20th century; 3. This old way of governing business has given rise to relevant issues recently, such as major corporate scandals, the adoption of corporate governance as a marketing tool, and the low public confidence in large corporations; 4. Structural changes require structural solutions: it is necessary to adopt a new paradigm for CG based on the pursuit of a higher purpose, conscious leadership and an ethical culture that awakens the best out of people. 5. There is growing evidence that that adopting this new approach to CG pays off: even from the financial viewpoint.","PeriodicalId":22151,"journal":{"name":"SRPN: Corporate Governance (Topic)","volume":"2 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2017-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89649026","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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