Corporate governance - Vigil

The coming year is set to see more vocal index funds and an activist focus on small and mid-caps

While 2015 was a record year for combinations, 2016 started with a thud, and results lagged for the first three quarters of the year. But in October, US companies unleashed an unprecedented wave of deals, making it the busiest month ever for domestic mergers and acquisitions (M&A). Will this momentum be sustained? According to the results of our newest survey of 1,000 corporate executives and private equity investors, activity is poised to accelerate, perhaps significantly, extending the increase in deal-making seen during the final months of 2016—and potentially reversing the slide of the early part of the year

A hybrid model can balance the short term with long-term continuity.

The New York Times recently took issue with Rex Tillerson, the President-elect’s nominee for Secretary of State, and the current CEO of ExxonMobil. Why? “Tillerson Put Company’s Needs Over U.S. Interests,” accused the front page headline. The article details how the company puts shareholders’ interests before the interests of the United States and of impoverished citizens of countries around the world.

In 1976, [Directors & Boards]’s founding year, two influential academic works in corporate governance appeared: Berkeley law professor Melvin Eisenberg urged transforming the board from an advisory role to a monitoring model and mandating significant internal control systems, while University of Rochester economists Michael Jensen and William Meckling portrayed the firm as a nexus of contracts whose optimal design is for participants to choose.

Posted by HLS Forum on Corporate Governance and Financial Regulation, on Friday, December 30, 2016 Editor's Note: This roundup contains a collection of the posts published on the Forum during the week of December 22–December 29, 2016.

The Conference Board Measure of CEO Confidence™, which had declined slightly in the third quarter of 2016, increased sharply in the fourth quarter. The Measure now reads 65, up from 50 in the third quarter of 2016 (a reading of more than 50 points reflects more positive than negative responses). 

The Conference Board recently released the 2016 edition of Sustainability Practices, a comprehensive dataset and analysis capturing the most recent disclosure of environmental and social practices of business corporations.

UK Prime Minister Theresa May has recently backtracked on her proposals to increase employee representation on boards. It was an idea which had largely been confined to the wilderness of UK governance for several decades after seeing its heyday in the 1970s with the publication of the Bullock Report. Mrs May’s proposal has been

On December 27, 2016, the Tenth Circuit Court of Appeals found that the appointment of administrative law judges by the Office of Administrative Law Judges of the U.S. Securities & Exchange Commission violated the Appointments Clause of the U.S. Constitution. This holding is in direct conflict with an August 9, 2016 decision by the District of Columbia Court of Appeals. The table is set for a showdown at the U.S. Supreme Court.

Donald Trump selected billionaire investor Carl Icahn and economist Peter Navarro for his economic team, both of whom could jolt Washington’s approach to trade and regulation.

Alden Global Capital has taken a 25% stake in Fred’s, a position it was building before the pharmacy chain announced a deal to buy 865 Rite Aid Stores that sent its shares soaring.