This article studies the impact of exogenous legal change on whether and how lawyers across four different deal types revise their contracts’ governing law clauses in order to solve the problem that the legal change created. The governing law clause is present in practically every contract across a wide range of industries and, in particular, it appears in deals as disparate as private equity M&A transactions and sovereign bond issuances. Properly drafted, the clause increases the ex ante economic value of the contract to both parties by reducing uncertainty and litigation risk. We posit that different levels of agency costs are the motivating factors that influence beneficial innovations in governing law clauses as well as their mirror opposite, costly encrustations. Our data show that lawyers who draft private equity M&A deals pay more attention to the deal terms than lawyers producing corporate and sovereign bond contracts. Because agency costs are low in the private equity setting, we observe significantly more innovation in private equity deals as compared to sovereign and corporate bond transactions where the agency problems of drafting lawyers are much greater. More surprising, we also find that contracts drafted by private equity M&A lawyers have more obsolete and encrusted terms than the contracts of the other deal types. Our conjecture is that the lawyers' dominant drafting strategy is to find examples of a desired term in other documents and import that language verbatim into the contract together with other redundant and obsolete terms including, on occasion, terms that may harm the clients' interests if retained in the contract.
{"title":"Are M&A Lawyers Really Better?","authors":"Stephen Choi, G. Gulati, R. Scott","doi":"10.2139/ssrn.3653463","DOIUrl":"https://doi.org/10.2139/ssrn.3653463","url":null,"abstract":"This article studies the impact of exogenous legal change on whether and how lawyers across four different deal types revise their contracts’ governing law clauses in order to solve the problem that the legal change created. The governing law clause is present in practically every contract across a wide range of industries and, in particular, it appears in deals as disparate as private equity M&A transactions and sovereign bond issuances. Properly drafted, the clause increases the ex ante economic value of the contract to both parties by reducing uncertainty and litigation risk. We posit that different levels of agency costs are the motivating factors that influence beneficial innovations in governing law clauses as well as their mirror opposite, costly encrustations. Our data show that lawyers who draft private equity M&A deals pay more attention to the deal terms than lawyers producing corporate and sovereign bond contracts. Because agency costs are low in the private equity setting, we observe significantly more innovation in private equity deals as compared to sovereign and corporate bond transactions where the agency problems of drafting lawyers are much greater. More surprising, we also find that contracts drafted by private equity M&A lawyers have more obsolete and encrusted terms than the contracts of the other deal types. Our conjecture is that the lawyers' dominant drafting strategy is to find examples of a desired term in other documents and import that language verbatim into the contract together with other redundant and obsolete terms including, on occasion, terms that may harm the clients' interests if retained in the contract.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"159 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122553691","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}
Nothing in either corporate or securities law requires companies to notify investors what they will be voting on before the record date for the meeting. We show that, overwhelmingly, they do not. The result is “hidden agendas:” in 88% of shareholder votes, investors cannot find out what they will be voting on before the record date. This poses an especially serious problem for investors who engage in securities lending: they must decide whether the expected benefit of voting exceeds the expected benefit of continuing to lend their shares (or making them available for lending) without knowing what they will be voting on. All investors who engage in share lending are affected, but the problem is particularly acute for large investment managers that have fiduciary duties related to voting. At present, they must discharge these duties in the dark. We propose a straightforward solution: an amendment to the Securities and Exchange Commission’s proxy rules requiring public companies to file proxy statements at least five days before the record date for the meeting. This simple change would give investors the information they need to make an informed decision about whether to retain the right to vote or not. If we believe that shareholder voting is important, and that investment managers and others should decide whether to vote, we should give them the information they need to do so.
公司法或证券法都没有要求公司在会议记录日期之前通知投资者他们将投票表决的内容。我们表明，绝大多数情况下，他们没有。其结果是“隐藏议程”:在88%的股东投票中，投资者无法在记录日期之前找到他们将投票的内容。这给从事证券借贷的投资者带来了一个特别严重的问题:他们必须决定投票的预期收益是否超过在不知道自己将投票的情况下继续出借(或提供出借)股票的预期收益。所有参与股票借贷的投资者都会受到影响，但对于那些负有与投票有关的受托责任的大型投资管理公司来说，问题尤其严重。目前，他们必须在黑暗中履行这些职责。我们提出了一个直截了当地的解决方案:对美国证券交易委员会(Securities and Exchange Commission)的代理规则进行修订，要求上市公司至少在会议记录日期前5天提交代理声明。这一简单的改变将为投资者提供他们所需的信息，以便他们就是否保留投票权做出明智的决定。如果我们认为股东投票很重要，投资经理和其他人应该决定是否投票，我们就应该向他们提供他们这样做所需的信息。
{"title":"Hidden Agendas in Shareholder Voting","authors":"S. Hirst, Adriana Z. Robertson","doi":"10.2139/ssrn.3833304","DOIUrl":"https://doi.org/10.2139/ssrn.3833304","url":null,"abstract":"Nothing in either corporate or securities law requires companies to notify investors what they will be voting on before the record date for the meeting. We show that, overwhelmingly, they do not. The result is “hidden agendas:” in 88% of shareholder votes, investors cannot find out what they will be voting on before the record date. This poses an especially serious problem for investors who engage in securities lending: they must decide whether the expected benefit of voting exceeds the expected benefit of continuing to lend their shares (or making them available for lending) without knowing what they will be voting on. All investors who engage in share lending are affected, but the problem is particularly acute for large investment managers that have fiduciary duties related to voting. At present, they must discharge these duties in the dark. We propose a straightforward solution: an amendment to the Securities and Exchange Commission’s proxy rules requiring public companies to file proxy statements at least five days before the record date for the meeting. This simple change would give investors the information they need to make an informed decision about whether to retain the right to vote or not. If we believe that shareholder voting is important, and that investment managers and others should decide whether to vote, we should give them the information they need to do so.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"68 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-04-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115799615","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}
The article explores the consequences of the Citizens United through the lens of the equity doctrine of unconscionable contracts. This expands on the argument regarding shareholders’ Right of Association addressed in the Citizens United decision I create a hypothetical around the contracts used by companies that manage retirement funds. My argument is that a consequence of Citizens United is that these contracts now include a person giving up their Constitutional Right Not to Associate with a corporation’s political activities. Such a price, and the fact that it is not revealed as a price, makes such contracts unconscionable. I conclude the article with a twist: the Constitution, viewed as a social contract, has been made unconscionable by Supreme Court cases such as Citizens United.
{"title":"A Right For Retirement: Unconscionable Contracts, The Right (Not) to Associate, and Citizens United","authors":"P. Miller","doi":"10.2139/ssrn.3709509","DOIUrl":"https://doi.org/10.2139/ssrn.3709509","url":null,"abstract":"The article explores the consequences of the Citizens United through the lens of the equity doctrine of unconscionable contracts. This expands on the argument regarding shareholders’ Right of Association addressed in the Citizens United decision I create a hypothetical around the contracts used by companies that manage retirement funds. My argument is that a consequence of Citizens United is that these contracts now include a person giving up their Constitutional Right Not to Associate with a corporation’s political activities. Such a price, and the fact that it is not revealed as a price, makes such contracts unconscionable. I conclude the article with a twist: the Constitution, viewed as a social contract, has been made unconscionable by Supreme Court cases such as Citizens United.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"55 37 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-03-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129803724","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}
In December 2020, Nasdaq asked the Securities and Exchange Commission to approve new diversity rules. The aim is for most Nasdaq-listed firms to have at least one director self-identifying as female and another self-identifying as an underrepresented minority or LGBTQ+. While Nasdaq claims these rules will benefit investors, the empirical evidence provides little support for the claim that gender or ethnic diversity in the boardroom increases shareholder value. In fact, rigorous scholarship—much of it by leading female economists—suggests that increasing board diversity can actually lead to lower share prices. Adoption of Nasdaq’s proposed rules would thus generate substantial risks for investors.
{"title":"Will Nasdaq's Diversity Rules Harm Investors?","authors":"J. Fried","doi":"10.2139/SSRN.3812642","DOIUrl":"https://doi.org/10.2139/SSRN.3812642","url":null,"abstract":"In December 2020, Nasdaq asked the Securities and Exchange Commission to approve new diversity rules. The aim is for most Nasdaq-listed firms to have at least one director self-identifying as female and another self-identifying as an underrepresented minority or LGBTQ+. While Nasdaq claims these rules will benefit investors, the empirical evidence provides little support for the claim that gender or ethnic diversity in the boardroom increases shareholder value. In fact, rigorous scholarship—much of it by leading female economists—suggests that increasing board diversity can actually lead to lower share prices. Adoption of Nasdaq’s proposed rules would thus generate substantial risks for investors.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"62 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-03-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125885608","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}
Ohio’s corporation laws were suboptimal in the 1920s. The statutory framework was jerry-built, legislators reacting in haste to address the latest corporate scandal or controversy, with no doctrinal foundation other than a residual (if receding) animosity to corporations, corporations being associated with special privileges and monopoly. Yet the state’s economy in the Second Industrial Revolution was robust and Ohio c. 1920 was politically ascendant (both major parties nominating Ohioans as their presidential standardbearers).
Ohio’s early twentieth-century corporate law reformers believed the task at hand was not to enter into a “race” to attract corporate charters - - they were adamant about the dangers of “chartermongering” - - but to allow Ohio-based business persons active in the state’s robust economy to use a flexible, enabling set of corporate statutes to arrange the legal aspects of their enterprises, rather than chartering in some other jurisdiction. If Ohio was competing with Delaware and other “charter mongering” states, it was a defensive competition. The reformers’ intention was to have a state other than Ohio be the state “whose corporation laws are [most] unpopular with business interests.”
In 1926, after years of calls for corporation law reform, the Ohio State Bar Association appointed a special committee to effect reform. That five person special committee was comprised of prominent corporate practitioners from around the state, two of whom had written treatises on Ohio corporation law and one of whom had been Chief Justice of the Ohio Supreme Court. Two prominent academic legal experts were engaged as consultants to the special committee, Professor Robert Stevens of Cornell Law School, principal draftsperson to the Uniform Business Corporation Act, and A.A. Berle, Jr., at that time a corporate finance practitioner in New York’s innovative financial markets and sometime Harvard Business School adjunct professor who was also a prolific author in legal academic and other journals. Harvard’s William Z. Ripley, of Wall Street and Main Street fame, also assisted the special committee.
The special committee anchored their Ohio General Corporation Act of 1927 (the “1927 act”) in a contractarian theory of the corporation. At this point in their respective careers, Stevens and Berle were contractarians. While the special committee borrowed from the corporation laws of several American jurisdictions, particularly New York, Florida and Maryland, in crafting the 1927 act, its most significant and, to the legal historian, striking doctrinal borrowings were from the English Companies Act. Reflecting a trans-Atlantic doctrinal orientation, the special committee expressly modelled the 1927 act on the then-effective English Companies Act. As a result, “private ordering” of the sort then permitted under English company law was to be made available to Ohio businesspersons, entrepreneurs and their legal advisors.
Pr
俄亥俄州的公司法在20世纪20年代并不理想。这个法律框架是草草建立起来的，立法者匆忙地对最新的公司丑闻或争议做出反应，除了对公司的残余(如果正在消退)敌意之外，没有任何理论基础，公司与特权和垄断联系在一起。然而，在第二次工业革命中，该州的经济是强劲的，俄亥俄州在1920年左右的政治上是上升的(两个主要政党都提名俄亥俄州人为他们的总统旗手)。二十世纪初，俄亥俄州的公司法改革家认为，当前的任务不是参加一场吸引公司特许状的“竞赛”——他们坚决反对“特许状买卖”的危险——而是允许活跃在俄亥俄州强劲经济中的商人使用一套灵活的、有利的公司法规来安排他们企业的法律方面，而不是在其他司法管辖区包租。如果说俄亥俄州是在与特拉华州和其他“兜售特许状”的州竞争，那也是一种防御性竞争。改革者的意图是让俄亥俄州以外的一个州成为“其公司法最不受商业利益欢迎”的州。1926年，经过多年的公司法改革呼吁，俄亥俄州律师协会任命了一个特别委员会来实施改革。这个五人特别委员会由来自全州各地的杰出企业从业者组成，其中两人写过关于俄亥俄州公司法的论文，其中一人曾担任俄亥俄州最高法院的首席大法官。两位杰出的学术法律专家被聘为特别委员会的顾问，他们是康奈尔法学院的罗伯特·史蒂文斯教授，《统一商业公司法》的主要起草人，以及小A.A.伯利，他当时是纽约创新金融市场的公司金融从业者，有时是哈佛商学院的兼职教授，也是法律学术和其他期刊的多产作者。哈佛大学的威廉·z·里普利(William Z. Ripley)也协助了特别委员会。特别委员会将1927年的《俄亥俄州通用公司法》(1927年法案)建立在公司契约论的基础上。在他们各自职业生涯的这个阶段，史蒂文斯和伯利都是契约主义者。虽然特别委员会在起草1927年的法案时借鉴了几个美国司法管辖区的公司法，尤其是纽约、佛罗里达和马里兰州的公司法，但对法律历史学家来说，最重要的、也是最引人注目的理论借鉴来自英国的《公司法》。为了反映跨大西洋的理论取向，特别委员会明确以当时生效的英国《公司法》为模板，制定了1927年的法案。因此，俄亥俄州的商人、企业家和他们的法律顾问可以使用当时英国公司法所允许的那种“私下订货”。私人公司——已经放弃向公众发行证券的权力的公司——在20世纪20年代根据英国公司法成立的公司中占明显多数。美国学者已经注意到英国的私人公司和美国的“封闭公司”在本质上的相似之处。在1927年的法案中，特别委员会打算为俄亥俄州中小型企业(数量远远超过公开上市的俄亥俄州公司)背后的企业家提供与他们的“封闭式公司”相关的“私人订购”灵活性，就像英国企业家对他们的私人公司所享有的那样。1927年法案的契约主义基础在该法案对越权原则的法定处理中是显而易见的，这种处理与史蒂文斯教授对《统一商业公司法》的处理密切相关。根据1927年的法案，“私人订购”不仅适用于治理问题(特别委员会称之为公司的“室内管理”)，也适用于公司融资问题，企业家和他们的法律顾问在证券设计方面几乎可以自由支配。与史蒂文斯教授同时代的《统一商业公司法》(Uniform Business Corporation Act)不同，1927年的法案最终没有将现在所说的“注意义务”编入法典。不编纂的决定是深思熟虑的，而不是疏忽。到了20世纪20年代，在这种情况下，俄亥俄州的法律已经确定了一种行为标准，克肖教授称之为“根据情况调整的普通护理”。当1927年的法案条款涉及到“注意义务”时，特别委员会对董事们是相当保护的。特别委员会意识到，俄亥俄州有大量的原告股东提起诉讼，指控公司管理不善，特别是在宣布非法股息的情况下。 它试图通过首先将适用的法律要求与当时的当代会计准则相协调，然后为董事提供基于依赖会计师编制的财务报告和报表或由公司管理人员认证的类似报告和报表的法定疏忽索赔的辩护(类似于英国公司法下的辩护)，来解决董事在宣布股息时因疏忽而承担的法定责任问题。现在所说的董事的“忠诚义务”在1927年的法案中也没有被写入法律。俄亥俄州关于董事自我交易的法律中有几条线索。根据俄亥俄州法律，未达到法定无利害关系董事人数的董事会授权的交易无效，但有利害关系的董事有权向公司寻求量子补偿。其他涉及董事及其公司的利益冲突交易，如“共同董事”交易，受到密切的司法审查，但在证明该交易对公司公平的情况下被维持(或在证明不公平的情况下被宣告无效)。在俄亥俄州，有关董事利益冲突的法律没有从严格的无效认定转向马什教授的“自我交易叙述”中所叙述的那种公平分析，而这种叙述被克肖教授伪造了。1927年的法案一经颁布，就被誉为一项重要的立法成就，“因为它代表了美国在企业事务上的许多最佳思想”。许多司法管辖区将俄亥俄州法典的概念纳入其自己的法律。但从大萧条开始的这段时期，挫伤了人们对俄亥俄州的合同主义和“私人订购”企业模式的热情。联邦法院就公司治理问题，特别是在破产法和证券法方面，发布了引人注目的判决(这些判决至今仍被引用)，取代或至少使州公司法黯然失色。在州一级，1933年的伊利诺伊州公司法没有效仿俄亥俄州，它有更多的强制性条款，并最终成为1950年《示范商业公司法》的支柱。1927年法案的理论框架在俄亥俄州一直保持完整，直到20世纪60年代，特拉华州的公司法典(如特拉华州1967年的赔偿法规)和更重要的商业公司法(Model Business Corporation act)的概念开始被纳入俄亥俄州的法规。为了保护俄亥俄州上市公司不受收购，为了保护俄亥俄州上市公司董事不因为抵御收购而采取的行动而承担责任索赔，以及法官制定的仅适用于紧密控股公司的判例的发展，使得1927年法案的契约主义、亲“私人订购”结构进一步模糊不清。在一个重要的意义上，1927年的法案预见了基于合同的“私人订购”，这是当代公司法和替代商业实体实践中最显著的特征。虽然1927年的法案并没有作为法律产品很好地“推销”给其他司法管辖区的律师或商人，因此在俄亥俄州之外几乎不为人所知，但这种“营销”从来都不是撰写立法的特别委员会的意图。在对英国的先例和实践进行了长期而明智的跨大西洋审查之后，它的较为温和的意图是使俄亥俄州的商人、企业家和他们的法律顾问能够“私下订购”一个适合他们特殊商业需求的公司框架。
{"title":"A Trans-Atlantic Doctrinal Orientation Made Concrete: Ohio’s First 'Modern' Business Corporation Act (1927)","authors":"E. Steiner","doi":"10.2139/ssrn.3761336","DOIUrl":"https://doi.org/10.2139/ssrn.3761336","url":null,"abstract":"Ohio’s corporation laws were suboptimal in the 1920s. The statutory framework was jerry-built, legislators reacting in haste to address the latest corporate scandal or controversy, with no doctrinal foundation other than a residual (if receding) animosity to corporations, corporations being associated with special privileges and monopoly. Yet the state’s economy in the Second Industrial Revolution was robust and Ohio c. 1920 was politically ascendant (both major parties nominating Ohioans as their presidential standardbearers). <br><br>Ohio’s early twentieth-century corporate law reformers believed the task at hand was not to enter into a “race” to attract corporate charters - - they were adamant about the dangers of “chartermongering” - - but to allow Ohio-based business persons active in the state’s robust economy to use a flexible, enabling set of corporate statutes to arrange the legal aspects of their enterprises, rather than chartering in some other jurisdiction. If Ohio was competing with Delaware and other “charter mongering” states, it was a defensive competition. The reformers’ intention was to have a state other than Ohio be the state “whose corporation laws are [most] unpopular with business interests.”<br><br>In 1926, after years of calls for corporation law reform, the Ohio State Bar Association appointed a special committee to effect reform. That five person special committee was comprised of prominent corporate practitioners from around the state, two of whom had written treatises on Ohio corporation law and one of whom had been Chief Justice of the Ohio Supreme Court. Two prominent academic legal experts were engaged as consultants to the special committee, Professor Robert Stevens of Cornell Law School, principal draftsperson to the Uniform Business Corporation Act, and A.A. Berle, Jr., at that time a corporate finance practitioner in New York’s innovative financial markets and sometime Harvard Business School adjunct professor who was also a prolific author in legal academic and other journals. Harvard’s William Z. Ripley, of Wall Street and Main Street fame, also assisted the special committee. <br><br>The special committee anchored their Ohio General Corporation Act of 1927 (the “1927 act”) in a contractarian theory of the corporation. At this point in their respective careers, Stevens and Berle were contractarians. While the special committee borrowed from the corporation laws of several American jurisdictions, particularly New York, Florida and Maryland, in crafting the 1927 act, its most significant and, to the legal historian, striking doctrinal borrowings were from the English Companies Act. Reflecting a trans-Atlantic doctrinal orientation, the special committee expressly modelled the 1927 act on the then-effective English Companies Act. As a result, “private ordering” of the sort then permitted under English company law was to be made available to Ohio businesspersons, entrepreneurs and their legal advisors. <br><br>Pr","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"36 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131878178","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}
The global spread of the COVID-19 pandemic and the complete lockdown in India to prevent its spread has severely impacted both social and economic aspects of life and has also fueled the depression in India’s economy. Unemployment is highest in recent decades, and the worst hit are the underprivileged and the unorganized sector workers. During these testing times, the efforts and policies of the State are not enough to curb the plethora of problems, the assistance of corporate giants in the attempt to emancipate the situation is needed now more than ever. In its pursuit to restore social welfare and in the interests of magnum bonum, the Government of India through the Ministry of Corporate Affairs has released several notifications with respect to Schedule VII of the Companies Act, 2013 to facilitate the participation of corporations in improving the COVID-19 situation.
{"title":"CSR in Times of COVID-19: Notifications Issued by the Ministry of Corporate Affairs With Regard to Schedule VII of the Companies Act, 2013","authors":"Aniket Raj","doi":"10.2139/SSRN.3759989","DOIUrl":"https://doi.org/10.2139/SSRN.3759989","url":null,"abstract":"The global spread of the COVID-19 pandemic and the complete lockdown in India to prevent its spread has severely impacted both social and economic aspects of life and has also fueled the depression in India’s economy. Unemployment is highest in recent decades, and the worst hit are the underprivileged and the unorganized sector workers. During these testing times, the efforts and policies of the State are not enough to curb the plethora of problems, the assistance of corporate giants in the attempt to emancipate the situation is needed now more than ever. In its pursuit to restore social welfare and in the interests of magnum bonum, the Government of India through the Ministry of Corporate Affairs has released several notifications with respect to Schedule VII of the Companies Act, 2013 to facilitate the participation of corporations in improving the COVID-19 situation.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"97 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134109680","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. Donaldson, E. Morrison, Giorgia Piacentino, Xiaocong Yu
We develop a model of a firm in financial distress. Distress can be mitigated by filing for bankruptcy, which is costly, or preempted by restructuring, which is impeded by a collective action problem. We find that bankruptcy and restructuring are complements, not substitutes: Reducing bankruptcy costs facilitates restructuring, rather than crowding it out. And so does making bankruptcy more debtor-friendly, under a condition that seems likely to hold now in the United States. The model gives new perspectives on current relief policies (e.g., subsidized loans to firms in bankruptcy) and on long-standing legal debates (e.g., the efficiency of the absolute priority rule).
{"title":"Restructuring vs. Bankruptcy","authors":"J. Donaldson, E. Morrison, Giorgia Piacentino, Xiaocong Yu","doi":"10.2139/ssrn.3698161","DOIUrl":"https://doi.org/10.2139/ssrn.3698161","url":null,"abstract":"We develop a model of a firm in financial distress. Distress can be mitigated by filing for bankruptcy, which is costly, or preempted by restructuring, which is impeded by a collective action problem. We find that bankruptcy and restructuring are complements, not substitutes: Reducing bankruptcy costs facilitates restructuring, rather than crowding it out. And so does making bankruptcy more debtor-friendly, under a condition that seems likely to hold now in the United States. The model gives new perspectives on current relief policies (e.g., subsidized loans to firms in bankruptcy) and on long-standing legal debates (e.g., the efficiency of the absolute priority rule).","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"38 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-09-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114757191","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}
Accepted views of a classic academic work can quite readily distort the original text. Michael Jensen and William Meckling’s widely cited 1976 article “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure” exemplifies the pattern. The article has been cited as a key inspiration for various significant governance changes affecting publicly traded firms, including moving the maximization of shareholder value to the top of the managerial priority list. Jensen and Meckling in fact had little to say about altering the corporate landscape, in substantial measure because they were favorably disposed toward the public company. This chapter canvasses the wide gap between what Jensen and Meckling supposedly said about the public company and what they actually said and explains how this discrepancy occurred.
{"title":"What Jensen and Meckling Really Said About the Public Company","authors":"B. Cheffins","doi":"10.2139/ssrn.3679405","DOIUrl":"https://doi.org/10.2139/ssrn.3679405","url":null,"abstract":"Accepted views of a classic academic work can quite readily distort the original text. Michael Jensen and William Meckling’s widely cited 1976 article “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure” exemplifies the pattern. The article has been cited as a key inspiration for various significant governance changes affecting publicly traded firms, including moving the maximization of shareholder value to the top of the managerial priority list. Jensen and Meckling in fact had little to say about altering the corporate landscape, in substantial measure because they were favorably disposed toward the public company. This chapter canvasses the wide gap between what Jensen and Meckling supposedly said about the public company and what they actually said and explains how this discrepancy occurred.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"70 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126170087","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 case study discusses the corporate restructuring of ABB India Limited with Hitachi. The case delves into the details about the restructuring, restructuring motives and the benefits of the restructuring. Modalities of the deal with projected synergy gain has also been explored and explained via a typical slump sale process. We conclude the case using a brand versus burden analysis by summarizing post-deal market reaction.
{"title":"ABB India Corporate Restructuring Process through Slump Sale","authors":"Kaushik Ghosh, M. Mukhopadhyay","doi":"10.2139/ssrn.3649459","DOIUrl":"https://doi.org/10.2139/ssrn.3649459","url":null,"abstract":"This case study discusses the corporate restructuring of ABB India Limited with Hitachi. The case delves into the details about the restructuring, restructuring motives and the benefits of the restructuring. Modalities of the deal with projected synergy gain has also been explored and explained via a typical slump sale process. We conclude the case using a brand versus burden analysis by summarizing post-deal market reaction.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-07-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130138249","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 : 2020-07-11DOI: 10.47577/tssj.v10i1.1192
Ovidiu Ioan Dumitru, N. Vavură
Corporate Governance has developed immensely in the last decades mainly due to the negative effects on shareholders’s of management decisions leading to a continuous conflict to be solved by the policymakers and academics. After the publication of the Cadbury Report, we noticed an increase interest in drafting corporate governance codes, the American and European legislators being the most active, but recent financial crisis reduced confidence in the results of corporate governance quality, some authors asserting even that the poor implementation of the policies in the area have leaded to the crisis. This paper wants to show the diversity of corporate governance standards present today in different national legal systems, by comparing its main elements like protection of shareholders and stakeholders’ interests, board structures and operations and control, oversight and reporting.
{"title":"A Short Comparative Study of Corporate Governance in European National Legal Systems","authors":"Ovidiu Ioan Dumitru, N. Vavură","doi":"10.47577/tssj.v10i1.1192","DOIUrl":"https://doi.org/10.47577/tssj.v10i1.1192","url":null,"abstract":"Corporate Governance has developed immensely in the last decades mainly due to the negative effects on shareholders’s of management decisions leading to a continuous conflict to be solved by the policymakers and academics. After the publication of the Cadbury Report, we noticed an increase interest in drafting corporate governance codes, the American and European legislators being the most active, but recent financial crisis reduced confidence in the results of corporate governance quality, some authors asserting even that the poor implementation of the policies in the area have leaded to the crisis. This paper wants to show the diversity of corporate governance standards present today in different national legal systems, by comparing its main elements like protection of shareholders and stakeholders’ interests, board structures and operations and control, oversight and reporting.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-07-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133659169","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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