Corporate governance - Vigil

We investigate whether mutual fund shareholders are particularly supportive of “overlapping directors,” individuals who serve simultaneously on at least one corporate board and at least one mutual fund board. Overlapping directors may have a conflict of interest because of their dual fiduciary duty to both the fund and the company of which they are board members.

In this study, we investigate whether investors are willing to trade off wealth for societal benefits. We take advantage of unique institutional features of the municipal securities market to provide insight into this question. Since 2013, states and other governmental entities have issued over $23 billion of green bonds to fund eco-friendly projects. Comparing green securities to nearly identical securities issued for non-green purposes by the same issuers on the same day, we observe economically identical pricing for green and non-green issues.

In In Re Appraisal of Panera Bread Company (Dec. 31, 2019), the Delaware Court of Chancery found that the sale process relating to the $7.5 billion acquisition of Panera Bread Company by JAB Holdings B.V. was sufficient for the court to rely on the deal price to determine appraised fair value. The court also found that JAB provided sufficient evidence for the court to deduct from the deal price the value of certain expected merger synergies (pursuant to the statutory mandate to exclude from fair value any value “arising from the merger itself”). The appraisal result was about 3.7% below the deal price. Finally, in a matter of first impression, the court ruled that JAB–which had prepaid the appraisal claimants based on the full deal price, was not entitled under the appraisal statute to a refund on the prepayment.

A large stream of literature in economics, finance, and accounting suggests that managers’ decisions are influenced by their labor market prospects. Absent perfect information about managers’ ability, the labor market often takes a firm’s current and past performance as a signal of the quality of its CEO. While prior research has primarily focused on financial performance as a measure of corporate performance, recent studies show that various stakeholders have been increasingly focusing on social performance as a performance metric. 

Institutional Shareholder Services Inc. (ISS), the leading provider of end-to-end corporate governance and responsible investment solutions to the global financial community, has announced the launch of a new thematic specialty Climate Voting Policy, providing investors with a solution to integrate climate-related factors into their voting decisions, and starting in March 2020  to coincide with the kick-off of annual shareholder meeting seasons in most major global markets.

UK-based insurance broker Aon Plc said on Monday it would buy Willis Towers Watson for nearly US$30 billion in an all-stock deal that further consolidates an industry struggling with high disaster claims. Media had first reported the possibility of a merge, worth as much as US$80 billion at the companies’ current valuations, in March last year. The deal would be the largest yet in a global insurance industry that has faced challenges ranging from Brexit and the trade tensions between the United States and China to the fallout of climate change.

The FBI has identified BEC fraud as the No. 1 financial threat to businesses in the US. Business email compromise is a type of Internet-based fraud that typically targets employees with access to company finances—using methods such as social engineering and computer intrusions. The objective of the fraud is to trick the employee into making a wire transfer to a bank account thought to belong to a trusted partner, but that in fact is actually controlled by the fraudster.

Progressive rhetoric increasingly equates the business model of Wall Street with fraud, particularly as national elections draw near. The demonization of Wall Street is a common activity of the progressive left, a tactic designed to convince followers that the time has come to tame the id of big business. Indeed, it is difficult to recall a more dramatic crescendo of anti-corporate invectives from progressives in recent history. In Wall Street and Progressivism, we argue that this kind of wholesale dismissal and condemnation of the private sector produces real casualties.

A large stream of literature in economics, finance, and accounting suggests that managers’ decisions are influenced by their labor market prospects. Absent perfect information about managers’ ability, the labor market often takes a firm’s current and past performance as a signal of the quality of its CEO.

Job opportunities in the Middle East are set to double with the Fourth Industrial Revolution. New research lays out how that will affect women. Advancing the role of women in society and the economy is a key driver for change in the Middle East. Increased female participation in professional and technical jobs can turbocharge economic growth in a region that will be significantly affected by the Fourth Industrial Revolution—making their participation all the more critical.

The dawn of a new decade brings with it the certainty of ongoing challenges to the conduct of public company directors based on alleged breaches of fiduciary duty. This post is a brief reminder for directors of Delaware corporations (and of corporations organized in states that generally follow Delaware law in this area) of the basic fiduciary duty rules that govern their conduct. If these rules are understood and followed, directors should be able to avoid fiduciary duty breaches and protect themselves from exposure to potential liability.

On 13 February 2020, in the little town of Laurel, Mississippi, poultry processing company Sanderson Farms held its annual general meeting. On the proxy statement that day was a shareholder resolution requesting that the company publicly report on climate-related water risks to its business according to Sustainability Accounting Standards Board (SASB) standards. Sanderson’s Board stood against the resolution, urging shareholders to reject it.

A lot has changed in twenty years. We’ve seen the integration of the internet into securities markets, which has transformed the way businesses raise capital. A boom in investment advisory businesses—including the introduction of robo-advisers—has brought many first-time investors into the markets. At the same time, a seismic shift in investor preferences toward passive investing has led to the exponential growth of ETFs and index funds.

Recent months have seen institutional investors, multinational organizations and the private sector emphasize the lack of (and importance of) comparable and decision-useful ESG disclosures.  Some of the key issues in considering ESG disclosures are: (1) Choice of Framework and Content.  Despite the growing recognition of the need for standardized reporting metrics, companies continue to face a myriad of choices as to how and where to present ESG disclosures. 

In an article posted on the Harvard Law School Forum on Corporate Governance blog, Professor Lucian Bebchuk rejects stakeholder governance and, in so doing, attacks the committed positions of influential institutions as varied as the Business Roundtable, the World Economic Forum, BlackRock, State Street, Vanguard, the UK Financial Reporting Council, and the European Union High-Level Expert Group on Sustainable Finance.

Among the major developments in investment management over the past decade, the dawn of the Age of ESG—environmental, social, and governance factors—represents a true paradigm shift in the relationships between public companies and their investors. It is now common practice for shareholders to look beyond the traditional bottom line and evaluate how companies are performing in their stewardship of stakeholder resources, attention to environmental and social risks, and disclosure of sustainability strategies.