A Financial Force to be Reckoned With? An Overview of Sovereign Wealth Funds

Sovereign Wealth Funds (SWFs) represent a new form of investment organizational structure and have grown to over $5.7 trillion assets under management by February 2016, making them a financial force potentially worth reckoning with...

Shifting Influences on Corporate Governance: Capital Market Completeness and Policy Channeling

Corporate governance scholarship is typically portrayed as driven by single factor models, for example, shareholder value maximization, director primacy or team production. These governance models are Copernican; one factor is...

China as a "National Strategic Buyer": Towards a Multilateral Regime for Cross-Border M&A

Unlike the case of cross-border trade, there is no explicit international governance regime for cross-border M&A; rather, there is a shared understanding that publicly traded companies are generally for purchase by any bidder...

Beyond Ownership: State Capitalism and the Chinese Firm

Chinese state capitalism has been treated as essentially synonymous with state-owned enterprises (?SOEs?). But drawing a stark distinction between SOEs and privately owned enterprises (?POEs?) misperceives the reality of China?s...

Choice as Regulatory Reform: The Case of Japanese Corporate Governance

The State as Owner - China's Experience

This essay explores China’s experience with state ownership of business enterprise. After a short historical survey of the rise, fall, and re-emergence of the state-owned enterprise (SOE) as a form of business organization, the...

RPTs in SOEs: Tunneling, Propping, and Policy Channeling

This essay, prepared for a volume on related-party transactions (RPTs), explores the economic, legal and policy challenges associated with RPTs in state-owned enterprises (SOEs). We show that RPTs in SOEs differ from RPTs in...

Sovereign Wealth Funds and Corporate Governance: A Minimalist Response to the New Mercantilism

Party Building or Noisy Signaling? The Contours of Political Conformity in Chinese Corporate Governance

We examine responses by Chinese firms to a “party-building” policy launched by the Chinese Communist Party (CCP) in 2015 to reform China’s state-owned enterprises (SOEs). The policy requires SOEs to follow a model template of...

Hedge Fund Activism in Europe

The paper analyzes 362 European activist interventions by hedge funds, focus funds and other activist investors from 2000 to 2008. The sample includes both public and private interventions. The private interventions are based upon...

Where Do Firms Incorporate? Deregulation and the Cost of Entry

We study how deregulation of corporate law affects the decision of entrepreneurs of where to incorporate. Recent rulings by the European Court of Justice (ECJ) have enabled entrepreneurs to select their country of incorporation...

Corporate Governance and Control

Corporate governance is concerned with the resolution of collective action problems among dispersed investors and the reconciliation of conflicts of interest between various corporate claimholders. In this survey we review the...

Reciprocity in Takeovers

The European Commission has proposed a Takeover Directive that aims to make the control of European corporations more contestable. The European Parliament and Germany will not adopt the Directive unless it provides for reciprocity in...

Loyalty Shares with Tenure Voting - Does the Default Rule Matter? Evidence from the Loi Florange Experiment

The contractual theory of the firm predicts that companies adopt charters that maximise firm value, regardless of the default rule. We test this proposition around an exogenous switch of the default from one share-one vote to tenure...

Does Mandatory Shareholder Voting Prevent Bad Acquisitions?

Shareholder voting on corporate acquisitions is controversial. In most countries acquisition decisions are delegated to boards and shareholder approval is discretionary, which makes existing empirical studies inconclusive. We...

Returns to Shareholder Activism: Evidence from a Clinical Study of the Hermes U.K. Focus Fund

This article reports a unique analysis of private engagements by an activist fund. It is based on data made available to us by Hermes, the fund manager owned by the British Telecom Pension Scheme, on engagements with management in...

Corporate Governance Through Voice and Exit

How do active managers engage with portfolio firms? And, what role does monitoring and engagement play in their trading decisions? We use proprietary data from a large UK active asset manager with a long-standing commitment to...

The Impact of Hedge Fund Activism: Evidence and Implications

Hedge fund activism has increased almost hyperbolically. Some view this optimistically as a means for bridging the separation of ownership and control; others are more pessimistic, seeing mainly wealth transfers from bondholders or...

The Agency Costs of Activism: Information Leakage, Thwarted Majorities, and the Public Morality

Few doubt that hedge fund activism has radically changed corporate governance in the United States -- for better or for worse. Proponents see activists as desirable agents of change who intentionally invest in...

Mapping the Future of Insider Trading Law: Of Boundaries, Gaps, and Strategies

The current law on insider trading is arbitrary and unrationalized in its limited scope in a number of respects. For example, if a thief breaks into your office, opens your files, learns material, nonpublic information, and trades on...

Why Do Auditors Fail? What Might Work? What Won't?

Auditing failures and scandals have become commonplace. In response, reformers (including the Kingman Review in the U.K and a recent report of the U.K.’s Competition and Market Authority) have proposed a variety of remedies,...

Litigation Governance: Taking Accountability Seriously

Both Europe and the United States are rethinking their approach to aggregate litigation. In the United States, class actions have long been organized around an entrepreneurial model that uses economic incentives to align the interest...

Ratings Reform: The Good, The Bad, and The Ugly

Both in Europe and in the United States, major steps have been taken to render credit rating agencies more accountable. But do these steps address the causes of the debacle in the subprime mortgage market that triggered the 2008-2009...

Global Settlements: Promise and Peril

In 2010, Morrison v. National Australia Bank Ltd. destabilized the world of securities litigation by denying those who purchased their securities outside the U.S. the ability to sue in the U.S. (as they had previously often done)....

The Future of Disclosure: ESG, Common Ownership, and Systematic Risk

The U.S. securities markets have recently undergone (or are undergoing) three fundamental transitions: (1) institutionalization (with the result that institutional investors now dominate both trading and stock ownership); (2)...

Are CEOs Born Leaders? Lessons from Traits of a Million Individuals

What makes a CEO? Our study combines a near-exhaustive sample of CEOs of Swedish companies with data on their cognitive and non-cognitive ability and height at age 18. On average, CEOs, particularly large-company CEOs, have much higher...

Regulatory Pressure and Bank Directors' Incentives to Attend Board Meetings

The primary way in which directors obtain necessary information is by attending board meetings. Bank directors, in particular, are strongly urged to attend meetings by regulators. We investigate whether such pressure is sufficient...

Boards, and the Directors Who Sit on Them

Boards of directors are intellectually interesting; the literature on boards has academic impact, and there is substantial scope for this literature to have policy impact. I illustrate these points by combining a select review of...

Women in Finance

Across countries, banks have less gender diverse boards than other firms. Bank board diversity is particularly low in countries with greater gender gaps in PISA math scores and lower average math scores. We find similar results using...

Asking Directors About Their Dual Roles

This paper uses a large survey of directors to investigate variation in directors' dual roles as advisors and monitors of management. I examine whether the advisory role encourages information exchange between the CEO and the board, as...

A Theory of Friendly Boards

This paper analyzes the consequences of the board's dual role as an advisor as well as a monitor of management. As a result of this dual role, the CEO faces a trade-off in disclosing information to the board. On the one hand, if he reveals...

Shareholders and Stakeholders around the World: The Role of Values, Culture, and Law in Directors’ Decisions

This study sets out to examine the relative importance of legal and cultural institutions and personal values in directors’ discretion. We present first evidence on the way personal and institutional factors together guide public...

Barriers to Boardrooms

Boardroom diversity policies link societal and corporate governance objectives. To understand whether they can meet both objectives, we argue one must understand why female directors are relatively underrepresented. We document...

The Advisory and Monitoring Roles of the Board - Evidence From Disruptive Events

We study the contribution of directors to firm resilience by assessing the relative importance of their advisory and monitoring roles at times of crisis. Based on manually collected US data, we document that four bord-related...

Empowering the ECB to Supervise Banks: A Choice-Based Approach

Optional Rather than Mandatory EU Company Law: Framework and Specific Proposals

Company and Takeover Law Reforms in Europe: Misguided Harmonization Efforts or Regulatory Competition?

Decision-Making during the Crisis: Why did the Treasury let Commercial Banks fail?

Limited attention has been paid to the comparative fate of banks benefiting from TARP Capital Purchase Program (CPP) funding and less fortunate banks subject to FDIC resolution. We address this omission by investigating two...

Governments as Investors of Last Resort Credit Crisis Comparative Case Studies

Using Basel II to Facilitate Access to Finance: The Disclosure of Internal Credit Ratings

On-Going Board Reforms: One-Size-Fits-All and Regulatory Capture