Corporate governance - Vigil

On September 13, 2016, the New York State Department of Financial Services (DFS) proposed a broad set of cybersecurity regulations for banks, insurers, and other financial institutions.[1] The proposal is largely consistent with existing guidance (e.g.

How does corporate investment risk-taking change when a firm has high leverage or approaches distress? In high-leverage states of the world, equity holders benefit from successful outcomes of high-risk projects, while losses from unsuccessful outcomes are borne by debt holders. This asymmetry between who receives the gains and losses from a project could make it optimal for equity holders to maximize the amount of risk a firm undertakes when leverage is high. This hypothesized increased risk-taking in a firm’s investments, referred to as risk-shifting or asset substitution, could result in an overall cost to the firm (Jensen and Meckling (1976)).

It is my pleasure to participate in this year’s International Bar Association Annual Conference at the request of your president, David Rivkin, whom I first came to highly admire from our days as very young lawyers. He is a tremendous lawyer and leader. In reviewing your conference program, I was struck by the significant overlap with issues currently on the SEC’s agenda.

The fact that obvious information should be incorporated into the price of a stock seems…obvious. If information seems obvious at first glance, but in fact requires significant thought to understand, this information may not be reflected in a stock’s price. In this case the apparent obviousness of a given piece of information causes a person to feel as if they understand it and dismiss it without given the thought necessary to truly understand its content.

Our new article, What Do Private Equity Firms Say They Do?, is the largest survey of private equity (PE) investors to date. While there has been much academic work on the effects of private equity, there has been relatively little analysis of actions taken by PE fund managers. We seek to fill this gap by surveying 79 private equity investors with combined assets under management of more than $750 billion about their practices in firm valuation, capital structure, governance, and value creation. Because PE investors are highly educated, have strong incentives to maximize value, and have been very successful, their practices likely also have been successful. We ask a simple question—do private equity investors do what the academy says are best practices?

The avalanche of accounting scandals in the late 1990s and early 2000s triggered major changes in the corporate accounting world. The Sarbanes-Oxley Act of 2002 (SOX) stampeded in, promising tightened audit regulation aimed at easing the minds of frightened market participants.

It’s one thing to manage diversity, but too few leaders understand the importance of tapping into the diverse talent of their workforce to increase performance. Despite strong initiatives in diversity and inclusion, most companies find their leaders still struggle with creating the kind of environment in which all employees—regardless of their aspects of diversity—can contribute their best work and experience continuous growth. It’s not enough to simply seek and hire diverse talent; you must also be able to remove barriers to performance and position everyone for success. By operating from their own cultural norms, many leaders are not aware of how their own inherent thinking and perspectives influence the way they react and relate to others in ways that can be exclusionary. So what can be done?

On Sept. 13, 2016, the New York State Department of Financial Services (“NYDFS”) issued a proposed regulation that would impose new, rigorous cybersecurity requirements on banks, consumer lenders, money transmitters, insurance companies and certain other financial service providers (each, a “Covered Entity”) regulated by the NYDFS (the “Proposed Regulation”). Given New York’s importance in the financial services industry, not only would the effect of the Proposed Regulation be felt immediately across the country, other regulators may follow New York’s example.

For directors of public companies with foreign operations, “FCPA” is a dreaded acronym. In recent years, compliance with the Foreign Corrupt Practices Act has become a key area of focus for boards and management. Enforcement of the FCPA has increased markedly since 2004, and the U.S. Securities and Exchange Commission and the Department of Justice have made it clear that they intend to prosecute individuals as well as public companies. The stakes can be enormous for companies, with penalties reaching hundreds of millions (or billions) of dollars, and they are frightening for individuals, who face the possibility of multi-year prison sentences along with substantial financial penalties.

Despite a weekend of Brexit brainstorming by the Cabinet at the Prime Minister’s country retreat, we are still no closer to understanding the Government’s preferred trading model for Brexit Britain.

Torres-Spelliscy's Corporate Citizen? analyzes legal cases that led to Citizens United. Read how we got here and how we can change it. Book Review

Designing a regulatory framework that ensures the safety of users and the public while facilitating the commercial use and consumer enjoyment of disruptive innovation is a challenging undertaking.