Corporate governance - Vigil

Plaintiffs filed 119 new federal securities class action cases in the first half of 2016, a 17 percent increase over the last half of 2015, according to Securities Class Action Filings—2016 Midyear Assessment, a new report released by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse.

Trian Fund Management LP exited one of its oldest stakes in the second quarter, selling its position in Tiffany & Co.

Employee stock options (ESOs) represent an integral component of modern employee compensation packages, particularly for highly innovative firms and those that operate in the high-tech industry (see e.g., Core and Guay (2001), Ittner et al. (2003), and Chang et al. (2015)). However, these types of firms also make attractive acquisition targets, and the natural question arises as to what happens to ESOs held by rank-and-file employees once their firms get acquired.

In our article, Do Creditor Rights Increase Employment Risk? Evidence from Loan Covenants, which was recently accepted for publication in the Journal of Finance, we provide evidence that binding financial contracts have a large impact on employees and are an amplification mechanism of economic downturns.

The U.S. Court of Appeals for the D.C. Circuit [on August 9, 2016] upheld the constitutionality of SEC administrative proceedings in Raymond J. Lucia Cos. v. Securities and Exchange Commission . This is a significant victory for the SEC. In recent years, the SEC has brought increasing numbers of enforcement actions as administrative proceedings, rather than in federal court. A number of litigants have fought back and attempted to challenge the SEC’s choice of forum, in part because the administrative process affords much more limited opportunities to conduct discovery and lacks other protections that exist in federal court.

Culture in a corporate context can be defined as a combination of the values, attitudes and behaviours manifested by a company in its operations and relations with its stakeholders. These stakeholders include shareholders, employees, customers, suppliers and the wider community and environment which are affected by a company’s conduct.

From our discussions with chairmen, chief executives, investors and a broad range of stakeholders and professional organisations we make the following observations about corporate culture: