Showing archive for: “Corporate Governance”
Incentive pay for bank regulators
Now that regulating banker pay has been studied exhaustively, here’s something else worth studying: bank regulator pay. Fred Tung and Todd Henderson are on the case, in Pay for Regulator Performance. Here’s the abstract: Few doubt that executive compensation arrangements encouraged the excessive risk taking by banks that led to the recent Financial Crisis. Accordingly, ... Incentive pay for bank regulators
One is not a partnership
Bob Hillman and Don Weidner have a nice little paper in the form of a dialog about what you have when a partner withdraws leaving only one “partner”: Partners Without Partners: The Legal Status of Single Person Partnerships. Here’s part of the abstract: Although we have differing views on whether a single person partnership is ... One is not a partnership
Delaware bans LLC creditor derivative suits
On Friday the Delaware Supreme Court decided the important case of CML V, LLC v. Bax (see Francis Pileggi’s helpful summary). The court, per CJ Steele, held that a creditor lacks standing to sue an insolvent LLC derivatively. The court reasoned that when the Delaware LLC Act says in §18-1002 that a plaintiff in an ... Delaware bans LLC creditor derivative suits
Natural Disasters and Payday Lending
There has been plenty of Hurricane Irene blogging, and some posts linking natural disasters to various aspects of law and policy (see, e.g. my colleague Ilya Somin discussing property rights and falling trees). Often, post-natural disaster economic discussion at TOTM turns to the perverse consequences of price gouging laws. This time around, the damage from ... Natural Disasters and Payday Lending
The effect of Van Gorkom and 102(b)(7)
Yaniv Grinstein and and Stefano Rossi have an interesting paper, Good Monitoring, Bad Monitoring, on the effect of corporate law, and specifically of the famous Delaware case Smith v. Van Gorkom and the Delaware legislature’s subsequent “fix” of that result. Here’s the abstract: We estimate the value of monitoring in publicly traded corporations by exploiting ... The effect of Van Gorkom and 102(b)(7)
UCLA’s Milken gift
The NYT discusses a controversy at UCLA (mainly, it seems, involving objections by Lynn Stout) to the $10 million gift it just announced from Lowell Milken, Michael’s brother. Lowell was accused many years ago in connection with his brother’s securities violations and escaped prosecution because of his brother’s plea deal. Steve Bainbridge comments in response ... UCLA’s Milken gift
Remedying Skilling
The WSJ comments on bills in Congress to “remedy” the Supreme Court’s decision in U.S. v. Skilling by explicitly criminalizing agent conduct that doesn’t involve bribery or kickbacks: The biggest objection to such laws is their injustice, but they also harm the economy by introducing legal uncertainty that deters or delays business investment. A Congress ... Remedying Skilling
Another move to over-fiduciarize investing
The WSJ comments on a dumb proposal by the Employee Benefits Security Administration to broaden the definition of “fiduciary” to cover brokerage services with respect to retirement accounts. As the WSJ notes, For decades the finance industry has provided investors roughly two kinds of services: the “advisory” model, in which an investment professional makes trading ... Another move to over-fiduciarize investing
Popular Criticism of the Proxy Access Case
Bob Monks has a lot to say about Business Roundtable v. SEC. Some notable quotes: “The DC Circuit now has really made a reputation over four or five years of throwing out SEC regulations. Their reason for doing it is that the SEC has failed to generate cost-benefit information that conforms with their interpretation of ... Popular Criticism of the Proxy Access Case
Uncorporate Kodak!
There are reports in the press that corporations are sitting on a huge cash pile — $1.2 trillion. Apple has over 70 billion. Today’s WSJ discusses Kodak (remember film?) which is burning through money it’s collected in patent litigation in a so far futile effort to compete in selling computer printers. Since the government can’t ... Uncorporate Kodak!
Chancellor Strine on LLC law
We got our first LLC opinion from Chancellor Strine in his new position atop the Delaware Chancery Court. It’s worth close attention in its own right as a case of first impression, and as an indication of the new Chancellor’s general approach to these cases. The case is Achaian, Inc. v. Leemon Family LLC. Francis ... Chancellor Strine on LLC law
Short-selling and market efficiency
Another day, another paper showing evidence of the negative effect on market efficiency of bans on short-selling. Today it’s Yerkes, Regulatory Trading Restrictions, Overvaluation, and Insider Selling. Here’s the abstract: A contentious debate is emerging over the regulatory response to the financial crisis. This paper takes advantage of a rare opportunity to empirically test sweeping ... Short-selling and market efficiency
