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date: 26 May 2020

(p. 1163) Index

(p. 1163) Index

accounting and financial reporting 489–505
accounting contributing to globalization 490–5
accounting costs 258, 259
conclusion 504–5
corporate finance 499–501
corporate governance 498–9
groups of companies 617–18
IFRS, nature of 493–5
International Accounting Standards Board (IASB) 492, 493, 494
International Accounting Standards Committee (IASC) 490–2, 493
international accounting standards, quest for 490–3
International Financial Reporting Standards (IFRS) 492–3, 494, 496, 497
legal origins of national accounting systems 495–7
local character of traditional accounting 495–504
markets in corporate activity, role of 501–2
securities regulation, legal traditions influencing 497–8
state, role of 502–4
transparency 499
Western v. Asian laws on corporate governance 728
acquisitions, tax impacts on 1150–4
accidental side-effects 1153–4
agency cost implications of acquisitions 1150–1
depreciation, tax holidays, and avoiding net losses 1152–3
net operating losses and lock-in for management entrenchment 1151–2
Pigouvian measures and management entrenchment 1151
acting in concert 412–13
agency capitalism 20
agency costs 2
acquisitions, agency cost implications of 1150–1
board as constraint on 299–301
contractarian theory, and 97–9
corporate law constraining 295
corporate partitioning: higher agency costs of debt 257–8, 259, 266, 270
disclosure managing 345
dispersed ownership system 907
executive remuneration, and 334–6
independent directors, and 316–18
labor power, managerial agency costs and 65–6
new policing mechanisms for managerial agency costs 907
performance-based pay as standard response to agency costs 1134
private credit market liquidity 482
reputation mitigating 485
shareholder representative litigation constraining 907–15
takeovers: agency costs of non-controlling shareholders 539
tax as imperfect vehicle for mitigating managerial agency costs 1130–3
agency theory
assumption that agents maximise own wealth, criticisms of 164–6
biases 162–3, 164
bounded nature of rationality 162–4
cognitive errors in governance/financial crises, role of
conflicts of interests, managing 161
(p. 1164)
cooperative nature of people’s behaviour 164–5
defects of 160 161–9
groups, decision-making buy 167–9
heuristics, use of 162
human beings acting as rational economic agents in own interests, as 160, 161
information filtering 163
inter-shareholder agency problem 825
moral judgments subject to flaws in thinking process 163
social context, relevance of 166–7
substantial executive remuneration not solving agency problem 178–81
AIM
exodus from 844–5
IPO alternative, as 843–4
listed companies at 844
operated by London Stock Exchange 843
performance 844
regulatory model 843
alternative stock markets
Alternative Investment Market (AIM) see AIM
emergence of 842–4
NASDAQ 843
American Bar Association Model Business Corporation Act 277, 296
American Law Institute 47
Principles of Corporate Governance 679
analytic models in corporate governance 14–25
director primacy model 21–2
shareholder primacy model 23–5
stakeholder model 16–18
team production 18–20
angels see business angels
appraisal actions 907–8
costs of 919, 920
disadvantages 918
Germany, in 925
hedge funds, use by 919, 921
managerial agency costs, as monitor of 919–20
managerial agency costs in merger, as monitor of 921
new role for 918–21
asset-stripping 580–2
asymmetries see information asymmetries
audit committee
compliance function 987, 988
independence requirements on audit committees 191, 311–12
banks and bank governance 1108–27
bank boards of directors 1114–17
bank boards of directors before crisis 1114–15
bank governance post-crisis 1098–1100
bank governance pre-crisis 1113–14
bank insolvency and resolution 1008–10
bank internal control 1115–16
corporate governance, conventional approach to 1101–11
corporate governance of banks 1085–91, 1110–11
diversifying exposure to credit risk 480–1
EU regulation of bank board structure and risk management 1116–17
executive pay in banks see executive remuneration in banks
financial institutions and companies that own them 1084–1100
horizontal governance issues: nonbank subsidiaries v. bank subsidiaries 1101–3
how are banks different? 1112–13
liability rules 1126–7
shareholder rights 1125–6
bankruptcy simplification 256, 259, 260
regulatory externalities 1103–6
vertical corporate governance: problem of dual boards 1091–7
Basel Committee 49
FSB, and 50–1
Guidelines/ Principles 550
behavioural perspective on corporate law and governance 159–83 (p. 1165)
affirming self-worth/perception of luck 180–1
assumption of agents maximising own wealth theory, criticisms of 164–6
behavioural perspective criticisms of agency theory 161–9
board GPS (Group, Person and System) 177–8
board on task and board interaction 174–5
board performance, understanding 173–8
bounded nature of rationality, agency theory and 162–3
benchmarking remuneration for fairness and status 181
conclusion 181–3
design and governance of executive remuneration, criticisms of 178–9
executive remuneration: incentives and behaviour 178–9
group decision-making, agency theory and 167–9
organizational role analysis, boards and 175–6, 177
preference for rules over risky responsibility 171–3
regulatory crowding out, rules effecting 170–1
rule-making in corporate law and governance 169–73
rules reducing ability to make moral judgments 171
social context to agency theory, relevance of 166–7
target setting and cheating in executive remuneration 180
board of directors/directors 275–333
accountability 827
adaptive response to bounded rationality, board as 297–8
audit committee see audit committee
bad faith 213, 699, 911, 952
bank boards of directors 1114–17
bank boards of directors before crisis 1114–15
board committees 314
board GPS (Group, Person and System) 177–8
board index 215–16
board level representation 548–9
board on task and board interaction 174–5
CEO, board relations with 151–2
closely held corporations, mandatory competences of board of 695–6
compliance function 986–7
conflicts of interest 182, 910–13
constraint on agency costs, board as 299–301
controllers’ power to appoint directors 456–7
corporate short-termism, and 427–8
corporate social responsibility, board composition/committees and 650–6
culture, and 151–9
director networks 154–7
director primacy model of corporation law or governance 21–2, 24
diversity in board composition 153–4, 313
dual board see dual board
effective boards, nature of 903–4
election of board see election of board
employment relations, and 1052–3
executive remuneration see executive remuneration
failure of board see failure of boards
fiduciary duties of directors 130, 142, 707–8, 910, 911, 914, 981, 986–7
functions and responsibilities 151, 157, 190, 276–89, 331
groups of companies, standards for directors 622–4
immunity shields 911–12, 914, 915
independence of directors see independence of directors
insider representation on board 331–2
key component in corporate governance 151, 276
liability, deterrence and 182
longer terms reducing managerial opportunism 823
management capturing 342
mandatory competences of board 695–6
minority shareholders influencing board composition 456
(p. 1166)
monitoring, horizontal 299–300
monitoring, tax rules weakening 1158–9
organizational role analysis 175–6, 177
protecting from litigation and liability risk 212
reform, new direction for 332–3
reputational capital 899
Sarbanes–Oxley Act see under Sarbanes–Oxley Act
separate ownership and control of boards 290–6
shareholders and directors, allocation of powers between 694–6
short-termism inside the corporation 426, 440–2
social ties having deterrent effect on director behaviour 313
staggered boards see staggered boards
takeovers in boardroom 427–8
unitary board see unitary board
vertical monitoring 298–9
why a board 289–301
why not a CEO 296–310
bonding
better governance by offering abroad or cross-listing on foreign exchange 810–15
effects of cross-listing independent of bonding effect 814–15
empirical evidence that US offering or cross-listing constitutes effective bond 812–14
how bonding might work and its limitations 811–12
bonuses 358
bonus cap 361–2
bonuses and stock options, favouring 1135–6
bounded rationality
agency theory, and 162–3
board as adaptive response to 297–8
bounded nature of rationality 162–4
reliance on outside specialists as rational response to 315
Brazil
Committee on Mergers and Acquisitions 882–3
regulatory dualism 882
self- regulatory dualism, problems with 883–4
rules, trade-offs and coordinating mechanisms 883–7
self-regulation 881
business angels 833, 835–6
nature of 833
pre-IPOs 87
stakeholder representatives, as 833, 835–6
business judgment rule 461, 523, 912
management rights 455–7
managerial underperformance, insulating 915
private enforcement, and 914, 926
protection from personal liability 986
Business Roundtable 8
Canada
corporations’ objectives to balance different interests 143
jurisdictional competition 126–7
capital markets 14, 235
bank-centered 13
global capital markets, corporate governance as comparative advantage in 28
intervention following poor performance 21
monitoring 20
robust capital markets, enforcement’s role in developing 928–30
robust capital markets, financial stability and 940
stock-market-based 13
strong effective domestic corporation/securities disclosure laws, and 807
capital markets, securities law, corporate governance and 1063–83
capital markets and corporate governance 1074–81
conclusions 1081–3
corporate governance and US securities law 1065–74
corporate law and corporate governance in US 1065–6
(p. 1167)
federal securities laws in US, introduction of 1067–70
federal securities laws in US, 1960s expansion of 1070–1
federal securities laws in US, retrenchment in 1970s/1980s of 1072–4
international market for corporate governance? 1074–6
US competing 1076–7
US losing its lead 1077–81
capital structure, tax effects on 1143–9
dividends 1142, 1146–9
Pigouvian effort to discourage pyramidal ownership: intercompany dividends 1142
tax advantages of leverage 1143–6
cash flow
cash flow rights, China 776–7
free cash flow 476–8
Centre for Business Research (CBR) 244–5
chief audit executive 989
chief compliance/chief legal officer 988–9
power and independence of 989
rationale for CCO position 998–9
chief executive officer 987–8
compliance obligations 988
role 987
chief risk officer 989
China
Confucianism, corporate governance and 129–30
corporate governance, function of 14
corporate law, comprehensive nature of 230–1
corporations’ objectives of social morality 144
fiduciary duties of directors 130
independent directors 314–15
national business groups see China: national business groups
state capitalism offering coordinated system 14
state resolving shareholder issues 14
veil piercing 741
China: national business groups 763–70
components 763–6
core (parent) company 763–4
finance company 764–5
networks, business group–government/party networks 768–70
networks, central–local inter-group 767–8
networks, inter-group 767
listed company 764
membership and internal governance 766–7
research institutes 766
China: party-state as controlling shareholder 770–7
appointments/removals of leader in Chinese central enterprises 774
cash flow rights 776–7
control rights in management 772–5
control rights in state enterprise assets 775–6
leader rotations in Chinese central enterprises 775
SASAC as ostensible controller 770, 771–7
SASAC’s position, consequences of 777
China: state-owned enterprises (SOEs), governance of 756–83
background to Chinese Industrial Organization 762–3
central role of SOEs 756–7
Chinese industrial organization as networked hierarchy 760–62
Chinese industrial organization, understanding 759–63
comparative corporate governance scholarship, and 778–82
convergence, and 780–2
institutional bridging 760–1
law and finance influencing corporate ownership structures 778–80
national business groups see China: national business groups
party-state as controlling shareholder 770–7
pyramidal form, success of 30
relationships’ importance of 759
clawback mechanisms 358
(p. 1168) closely held corporations: articles of association 688–90
limitation to private ordering 690
model articles 687–8
primacy of private ordering 688–9
scope of private ordering 689–90
closely held corporations, comparative corporate governance in 679–718
corporate governance guidelines 692–3
fundamental governance problems in 681–4
model articles 687–8
shareholder agreements 690–2
typical governance issues and conflicts in 683–4
closely held corporations: governance framework 684–93
integrated approaches 685–7
legislation 684–7
stand-alone models 684–5
closely held corporations: internal governance of the company 693–6
allocation of powers between shareholders and directors 694–6
corporate organs 693–4
default and mandatory competences of the shareholder meeting 695
mandatory competences of board 695–6
omnipotence v. parity theory 694–5
closely held corporations: share transfer restrictions 696–700
default rules 696–7
judicial review of consent clause 698–9
legal assessment of drag-along and tag-along clauses 699–700
types of share transfer restrictions and legal limits 697–8
closely held corporations: shareholder conflicts 706–18
abuse of rights 708–9
actions challenging the validity of shareholders’ resolutions 710
claims for compensation 711
conflict resolution through statutory or case law 714–15
contractual safeguards 714
enforcement issues 713
equitable remedies in common law jurisdictions 715–16
ex post opportunism by minority shareholders 712–13
exit rights 712
fiduciary duty and duty of loyalty 707–8
intensity of judicial review 709–10
legal remedies for minority shareholders 710–12
recent examples in continental Europe 716–17
towards more discretion in civil law countries 716
opportunities for and limits of self-protection 706–7
oppression by majority shareholder 706–12
oppression remedies 712
pros and cons of equitable remedies 717–18
role of courts in shareholder disputes 715–18
shareholder deadlocks 713–15
standards of conduct for majority shareholders 707–10
standards of conduct for minority shareholders 712–13
unfair prejudice and minority oppression 709
closely held corporations: shareholder withdrawal and expulsion 700–6
appraisal rights 703
categories of exit rights 701
(p. 1169)
expulsion of shareholder 704–6
oppression remedies 701–3
right to exit ‘at will’ 704
withdrawal rights 700–4
closely held corporations: typical characteristics 681–3
broad spectrum of shareholders and applications 683
no ready market for shares 682
share transfer restrictions 682
shareholder involvement in management 681–2
smaller number of shareholders 682
codetermination 17
Germany 31, 65, 67–8, 72, 287, 303, 548, 829
collateralized loan obligations 481–2
collective action/problems
board’s ability to monitor, collective action problems impeding 317
collective action: mergers and schemes of arrangement 584–6
facilitating M&A by overcoming collective action problems 578
institutional investors, executive remuneration and 344
Committee of European Securities Regulators (CESR) 492, 493
compensation committee 987
compensation, executive see executive remuneration
competition
incorporations, for see state competition for incorporations
jurisdictional competition 126–7
regulatory competition, role of 231
complementarity 9–15, 28
barrier to reform, as 11, 12
country-specific positive and negative complementarities 43
global complementarities 31
globalization, and 29
institutional complementarity 69
local complementarities 31
path dependent 12
varieties of capitalism 12–14
compliance function 981–1000
audit committee 987
board of directors 986–7
chief audit executive 989
chief compliance/chief legal officer 988–9
chief executive officer 987–8
chief risk officer 989
compliance beyond the firm 998–9
compliance in a theory of enforcement 982
compliance programs, policies and contracts 989–92
compliance risk as major threat 989
criminal enforcement 997–8
development of compliance function 982–4
distribution of compliance function 985–90
elements of robust compliance program 992–4
ethics beyond compliance 999–1000
globalization, growth of service providers and 983–4
internal control, concept of 984–5
investigations 995
management team 987
nature of 981, 982
private litigation, affecting 991–2
reasons to adopt compliance programs 991–2
three lines of defense 984–5
standardizing compliance activities of multinational firms 983–4
whistleblowers 995–7
conflicts of interest
derivative suits 910–13
directors 182, 910–13
disclosure 182
hedge funds 402–3
meetings, attendance at 408
related party transactions, and 515–16
shareholder activism, institutional 401–2, 408, 825
shareholder-creditor/stakeholder conflict of interests 825
shareholders 182, 401–3, 825
transparency 182
Confucianism 129–30, 142
control transfers, facilitating 254, 259, 262–3
(p. 1170) controller rights 452–8
board independence, controller management rights and 456–7
groups of companies, and see under groups of companies
management rights: business judgment rule and board composition 455–7
party-state as controlling shareholder see under China
property rule protection: preserving control 454–5
self-dealing 459, 461–3
tradeoff between minority protection and controller rights 452–3
convergence and persistence in corporate law and governance 28–55
board structure 41–4
capital market evidence on convergence 37–41
China, in 780–2
corporate governance as comparative advantage 28
current state of convergence v. persistence 29–30
decline in cross-listings 37–9
developed countries, convergence and 31, 32
divergence, forms of 41–2
effort to measure convergence directly 34–7
emerging market economies 32, 748–54
evidence of non-convergence or divergence-within-convergence 41–4
financial globalization, effect of 30–1
increased emerging-market IPOs 39–40
inversions 40–1
local actors may resist convergent legal and institutional change 29
national elites may defend domestic corporate governance regime 29
national systems, corporate governance embedded in 28–9
shareholder value, convergence on 53–5
supranational governance, EU and 51–3
coordinated market economies (CME) 13, 781
‘corporate contract’ 84–104, 231
agency cost-reducing charter amendments not initiated 97–9
contractarian theory of corporate governance, nature of 84–5, 86–8
corporate law, role of 87–8
current status of theory 85
customization and innovation not generated at IPO stage 89–91, 93–6
IPO charters, whether suboptimal 89–91, 91–3, 96–7
IPO stage 85, 86–7
IPO stage not holding up on the facts 88–97
IPO stage where contractarian theory went wrong 93–7
legal changes in corporate governance since mid-2000s 100–1
midstream stage 85, 86, 96
midstream stage not supported in contractarian theory 97–9
network benefits/theory of externalities 93–6
new implicit corporate contract 100–3
non-legal changes in corporate governance since mid-2000s 101–3
normative implications of contractarian theory 85, 87
positive claims of contractarian theory 84, 87
staggered boards in IPO charters, use of 92–3, 96–7
corporate finance 499–501
corporate governance
board of directors see board of directors/directors
collaborative corporate governance 856–63
(p. 1171)
comparative advantage, as 28
complementarity and supermodularity, and 9–25
compliance function see compliance function
contractarian theory of see ‘corporate contract’
conventional approach to 1101–11
corporate social responsibility see corporate social responsibility
corporation’s operating system, as 7–8
culture and law in see culture in corporate governance
employment relations, and see employment relations and corporate governance
endogeneity of corporate governance see endogeneity
environment of corporate governance 57–9
ideology, effects of 77–8
improved corporate governance, benefits of 32
institutional investors in see institutional investors
introduction of term 4
legal changes since mid-2000s 100–1
legal rules interacting with corporate processes/institutions, as 5–6
measuring corporate governance 214–21
mid-2000s, corporate governance since 100–3
national systems, embedded in 28–9
nature of 8
new governance patterns evolving from scratch 14
new normal, emergence of 859–63
non-legal changes since mid-2000s 101–3
path dependent nature of 9–15, 28
political representation, effects of 78–9
purposes 498–9
reform as condition to assistance in financial crisis 4, 30
risk transfer, supporting 14
transparency see transparency
corporate governance indices 203–13, 214–21
analysis of 203–4
board index 215–16
empirical findings regarding G and E indices 204–6
measurement error 218–21
nature of 215
why G and E indices fail to measure entrenchment or governance quality 206–13
corporate governance, new metrics for 839–66
Alternative Investment Market (AIM) 843–5
alternative stock markets, emergence of 842–4
(p. 1172)
collaborative corporate governance 856–63
corporate governance, emergence of a new normal 859–63
costs of being public company, increase in 840
globalization trends in financing high growth companies 841
high tech companies 839, 840, 841
delisting 839
IPO activity, stimulating 840
IPO, decline in 839–40, 841
IPO market, aging of 845–56
IPO market, changing nature of 848–9
IPO market, importance of 840–1, 846–7, 849
IPO pop 847, 851
IPO primacy as exit strategy, questioning 841
JOBS Act 840, 854–6, 857, 865
new alternative listing venues 840, 841
overregulatory trends, response to 840–1
pre-IPO (private secondary markets), emergence of 850–3
private companies and public companies, blurring line between 864–6
private companies, investment in 847–8
trade sales 848–9
corporate groups see groups of companies
corporate law
CBR research on differences and similarities in corporate law 244–5
closely held corporations see closely held corporations
compliance, corporate law of see compliance function
‘contractarian’ theory of see ‘corporate contract’
corporate governance, to see corporate law to corporate governance
insolvency law, comparative corporate see insolvency law, comparative corporate
self-regulation, and see self-regulation and corporate law
Western v. Asian laws 728–32
corporate law to corporate governance 3–27
corporate governance, complementarity, and supermodularity 9–25
corporate governance as corporation’s operating system 7–8
corporate law focus on organizational structures 4
expanding the complementarity concept: varieties of capitalism 12–14
importance of how companies performed 3–4
shareholder value as focus 4
corporate litigation in specialized business courts 959–80
corporate litigation in US 962–5
derivative lawsuits 964–5
Dutch Enterprise Chamber see Dutch Enterprise Chamber
IPOs, pricing mechanism of 965
M&A deals leading to litigation 964
M&A litigation associated with positive shareholder wealth effects 961, 977–80
measuring wealth effects of corporate litigation 963–5
speedy and effective conflict resolution, impact of 960
summary of research outcomes 961–2
trends in American corporate litigation 963–4
corporate partitioning, benefits and costs 253–8
accounting costs 258
bankruptcy simplification 256
correcting debt overhang 257
equityholder diversification 255
facilitating control transfers 254, 259
higher agency costs of debt 257–8
liquid shares 254–5
protection of going-concern value 256–7
(p. 1173)
reduced information costs for personal creditors 255–6
reduced need for equityholders to monitor each other 254
corporate short-termism see short-termism, corporate
corporate social responsibility (CSR) 344, 634–78
academic articles on corporate responsibility, number of 646
assessment of 827–30
board composition and committees 650–6
conclusion 677–8
corporate responsibility reconciliation 676–7
corporate responsibility reporting 636–7
definition 822
empirical findings 646–64
evaluating the arguments 670–7
financial performance, corporate responsibility and 647–50
implications and analysis 664–77
industrial corporations/financial intermediaries providing information on 824, 826
investors’ concern with 635
legal origins, corporate governance systems, corporate responsibility 662–4
multilateral initiatives 639–41
mutual funds 830, 831, 834
patterns of shareholder ownership 656–62
pension funds 643, 662, 826, 831–3, 836–8
private initiatives 637–9
profitability/benefits, and 827–8
shareholder primacy 664–6
shareholder v. stakeholder theory 671–6
stakeholder and shareholder-oriented firms, CSR and 822–3
stakeholder theory 667–70
significant legal requirements 641–6
substantive corporate responsibility initiatives 637–41
voluntary corporate responsibility initiatives 636–41
corporations
legal fiction, as 4, 7
nature of business operations 7
courts’ role in emerging markets corporate governance 746–7
alternative institutional arrangements 747–8
courts’ role in shareholder disputes 715–18
equitable remedies in common law jurisdictions 715–16
equitable remedies, pros and cons of 717–18
moving towards more discretion in civil law countries 716
recent examples in continental Europe 716–17
covenants 474–6
adjusting terms in response to changed circumstances 475
changes in 484–5
effect of 474
limiting borrower’s use of funds 475–6
reputation, and 476, 485
violations of covenants 474–5
credit default swaps 481–2
creditors
agency problems 606–10
conflicts of interest 825
creditor self-help and guarantees by the parent 625–6
creditors v. controlling shareholder 609
creditor v. debtor orientation 1014–15
groups of companies, transactions with creditors and 625–30
information costs 255–6, 259, 260–1, 270
ranking of claims and position of secured creditors 1020–24
reduced information costs for personal creditors 255–6
unsecured creditors 1023–4
veil-piercing 628–30
cross-listing 30, 31, 37–9
better governance by offering abroad or cross-listing on foreign exchange 810–15
effects of cross-listing independent of bonding effect 814–15
empirical evidence that US offering or cross-listing constitutes effective bond 812–14
enforcement, and 934–5
(p. 1174) culture and law in corporate governance 129–58
basic concepts of culture 131–2
board of directors 151–57
board of directors, CEO relations and 151–2
causality 137–8
consequences of culture for corporate governance 138–57
cultural value dimensions 132–8
definitions of culture 131
director networks 154–7
disclosure 146–7
distribution: dividend policy 147–9
diversity in board composition 153–4
earnings management 146–7
executive remuneration 149–50
Hofstede cultural value dimensions 133–4
individualism and collectivism 156–7
informal/social institutions, definition of 132
law and culture, general relations between 140–3
objectives of the business corporation 143–5
relations with investors and other stakeholders 145–9
relevance of culture for corporate governance 138–40
Schwartz cultural value dimensions 133–4, 135
social capital 135–7
currency
currency controls and taxes 795–6
currency exchange risks 794–5
debt and corporate governance 470–88
conclusion 487–8
covenants 474–6
debt overhang, correcting 257, 259, 262
debtor misconduct 259, 263–5
evolution of debt 486–7
free cash flow 476–8
low-costs monitoring 473–4
maturity affecting corporate governance 478–9
private credit market liquidity 479–85
reputation 476
syndication 483–4
traditional role of debt 472–9
debtor misconduct 259, 263–5
deficit reduction 5
Delaware law
appraisal actions 918–21
boards 276, 277, 289, 295
business friendly law, as 231
competition, and 114–23, 186–90
compliance, directors’ duty of 986
contraction in corporate litigation 962–3
directors, protection of 986
freezeout transactions 465–6, 523
importance of 52, 89, 91, 123, 277
independent directors 312
innovation 125
judicial quality and network effects 125
main forum of corporate litigation, as 962, 963
network effects, benefiting from 95, 125, 186–7
poison pills 194, 202, 225
related party transactions 523, 527
right of controlling shareholders to sell at a premium 457–8
sales to third parties 466–7
shareholder derivative suits 910–13
shareholder merger and acquisition suits 908–10
shareholder-oriented approach 143
short-termism, Delaware judiciary view on 428–9
special committees 522
staggered boards 211, 225–6
takeovers 558–62
trends in American corporate litigation 963–4
derivatives 14
derivative suits 910–13
breach of directors’ fiduciary duties 910, 911, 914
compliance function, and 991–2
demand requirement 911, 915, 926, 959
fee shifting 926–7
immunity shields 911–12, 914, 915
merit related factors, relevance of 960
public and private corporations, distinction between 911
(p. 1175)
‘tag- along’ derivative suits 912–13
whether impacts shareholder wealth negatively see corporate litigation in specialized business courts
director primacy model of corporation law or governance 21–2, 24
generally applicable governance structure, as 22
shareholder wealth maximization as measure 21
team production, and 21–1
disclosure
agency costs, and 345
conflicts of interest 182
culture and law in corporate governance 146–7
disclosure controls or procedures, SEXC’s 987
Dodd-Frank Act 338
enforcement, and 933–4
EU, in see under European Union (EU)
executive remuneration 345, 346–9
groups of companies 616–17
groups of companies: related party transactions 619–20
mandatory disclosure 523–5
mandatory issuer disclosure at time of offering to portfolio investors 803
MOM approval 519, 520
regulating pay governance, and see regulating pay governance and disclosure
related party transactions 523–5, 619–20
statistics on disclosure 355
diversion constraints, greater foreign ownership and 805–15
effectiveness of individual firm diversion constraints and extent of foreign ownership 808–10
bonding to better governance by offering abroad or cross- listing on foreign exchange 810–15
empirical evidence 817–19
extent of foreign ownership 815
foreign investors, special role of 815–16
how greater foreign ownership could lead to more effective diversion constraints 815–17
implications from portfolio supportive corporate governance 805–7
methods of influence 816–17
strong effective domestic corporation/securities disclosure laws and size/depth of capital markets 807
strong effective domestic corporation/securities disclosure laws and the extent of foreign ownership 807–8
Dodd-Frank Act 89, 103, 282
boards, accountability of 411–12, 421
executive remuneration 103, 338, 358–60, 421, 1121–5
Financial Stability Oversight Council 1104–6
hedge funds/managers 404, 420–1
mandated disclosure 338
purpose 420
shareholder activism, and 420–1, 422
votes on pay 351, 380, 907, 917
drag-along clauses 699–700
dual board 287–9
German dual board 287–8
dual boards outside Germany 288
vertical corporate governance: problem of dual boards 1091–7
why have dual boards 288–9
Dutch Enterprise Chamber 965–8
case characteristics of listed firms 977
case characteristics of non-listed firms 976
characteristics of lawsuits 975
court’s role and composition 966–7
decline in new cases 967
development of 965–6
governance model in Netherlands, impact on 974–7
impact of litigation on shareholder value 979
injunctive relief 972–4
inquiry procedure 966, 968–72
inquiry procedure, length of 970, 971
inquiry procedure, popularity of 972
inquiry procedure requests, increase in 967, 970, 971
(p. 1176)
jurisdiction 966
main issues considered 971–2
negative publicity, impact on firm value of 967
settlements, increase in 968
shareholder wealth effects, measuring 977–80
withdrawn cases 968
East Asian financial crisis 5, 30, 32, 45–7
election of board 301–8
inefficiency of multiple constituencies 303–6
information 302–3
interests 303
necessity of authority 302–3
why only shareholders? 306–8
emerging markets, corporate governance in 735–55
alternative institutional arrangements to courts 747–8
BRICs 737
conclusion 754–5
courts, role of 746–7
diverse nature of emerging markets 737
government and private regulation, role of 744–5
legislative change, tortuous path of 743–4
ownership concentration and business groups 739–40
ownership structures 738–42
reform efforts 740–8
state ownership and influence 740–2
emerging markets, governance, convergence and persistence in 748–54
evolving ownership structures 751–2
forms, functions, and idiosyncrasies 749–51
stakeholders and corporate governance 752–4
empirical studies of corporate law and governance 184–213
benefits and costs of indices in corporate governance research 214–27
corporate governance indices 203–13, 214–21
endogeneity see endogeneity
G and E indices, empirical findings regarding 204–6
G and E indices failing to measure entrenchment or governance quality 206–713
independent directors, whether value-enhancing 190–3
poison pills as takeover defense, impact of 196–7
state competition to provide corporate law, empirical evidence on 185–90
takeover defences, whether value-enhancing or decreasing 193–203
staggered boards, whether value-enhancing or decreasing 198–200
studies of other takeover defences 200–1
studies of state antitakeover statutes 201–3
employment relations and corporate governance 1037–62
assessment 1061–2
board structure and managerial strategy 1052–3
effects of sharing residual income and control rights between shareholders and employees 1059–61
empirical methods: leximetrics and time-series econometrics 1039–44
employment protection and innovation 1055–7
employment relations and corporate governance: theoretical perspectives 1039–42
evidence on economic effects of corporate governance and employment laws 1048–61
evidence on long-run trends in shareholder and employee protection 1045–8
shareholder rights and economic performance 1048–52
shareholder rights, product market competition and innovation 1054–5
(p. 1177)
takeover bids and hedge fund activism 1057–9
endogeneity 221–6
omitted variables 221, 223–6
reverse causation 221, 222–3
enforcement
business judgment rule, and 914, 926
compliance in a theory of enforcement 982
convergence of enforcement 732–3
convergence of substantive legal rules affects enforcement 733
enforcement affects convergence of substantive legal rules 725–6
interactions between enforcement and substantive legal rules 722–6
market controlled regulation, enforcement drivers of 898–900
minority shareholders, ex post opportunism by 713
private enforcement see private enforcement in US
self-regulation 887–9
Enron 8, 38, 100, 282, 311, 397, 492, 493
enterprise liability 272–3
entity shielding 251, 253, 268
equal-opportunity rule 458
equity intermediation 20, 22
equityholder diversification 255, 259, 262
Europe
democratic systems not in place during industrialization 81
egalitarianism 153–4
jurisdictional influences on shareholder activism 394–5
shareholder activism 391–4
shareholder activists’ attendance at meetings 408–9
social democracy 77–8
takeovers 52–3
European Union (EU)
acting in concert 412–13
Alternative Investment Fund Managers Directive 404, 421–2
Audit Directive 314
bank board structure and risk management, regulation of 1116–17
bonus cap 361–2
Capital Markets Union 840
convergence stalled 51–3
corporate law Directives 231
director independence requirements 314–15
employee representation 287, 314
executive remuneration 346–9, 350–1, 355, 360–2
gender diversity on boards and in political parties 153–4
insider dealing 415
IPO activity, stimulating 840
jurisdictional competition 126–7
jurisdictional influences on shareholder activism 394–5
mandatory bid rule 543
Market Abuse Directive 415, 936, 937
non-binding recommendations on regulating pay unsuccessful 349–50
passivity of institutional investors 374–5
regulating pay governance and disclosure: recent proposals 348–9
regulating pay governance and disclosure: 2004–2005 Recommendations 346–7
regulating pay governance and disclosure 2009 Recommendations 347–8
remuneration consultants 355
shareholder activism 391–4
shareholder activists’ attendance at meetings 408–9
Shareholder Rights Directive 348–9, 374–5
SMEs 840
soft to mandatory regulation of pay and disclosure 350–1
supranational governance 51–3
Takeover Directive 412–13, 543, 878
Transparency Directive 413, 617, 620, 936
unitary boards 285–6, 314
(p. 1178) executive remuneration 334–62
affirming self-worth/perception of luck, pay and 180–1
agency costs 334–6
bonuses 358
culture, and 149–50
deferral arrangements 357–8
director interlocks, and 154
benchmarking remuneration for fairness and status 181
design and governance of executive remuneration, criticisms of 178–9
disclosure, regulating see regulating pay governance and disclosure
financial stability, and 336–8
improper incentives of independent directors 329–31
incentives and behaviour 178–9, 329–31
malus and clawback mechanisms 358
regulating pay governance see regulating pay governance and disclosure
regulating pay structure see regulating pay structure
social issues 338–9
stock-based compensation, use of 330–1
stock-options for management pay, use of 330–1
substantial executive remuneration not solving agency problem 178–81
target setting and cheating in executive remuneration 180
US, in 101–2, 103, 149
executive remuneration in banks 1118–25
disclosure and supervision of compensation practices 1125
history and problems 1118–21
new regulation of executive compensation 1121–5
process of setting compensation 1122
substantive regulation of executive compensation arrangements 1122–5
executive remuneration: policy issues 339–46
boards and independent directors as governance mechanism 342–3
deferment of compensation 357–8
design problems 339–42
disclosure 345
FSB principles 357–8
governance mechanisms 342–4
long-term pay 341–2, 356–7
mandatory pay structure 345–6
proxies for firm performance 340
remuneration committees 343
share options 340–1
shareholders 343–4
transparency 146, 345, 349–51, 354
executive remuneration, tax influencing 1133–43
accidental by products 1141–3
bonuses and stock options, favouring 1135–6
conventional options instead of indexed options 1136–7
deferred compensation 1138–9
golden parachutes 1139, 1151
hedging stock options 1140–1
incentive stock options 1137–8
performance-based pay as standard response to agency costs 1134
Pigouvian provisions encouraging performance-based pay 1134–9
tax deferral for equity compensation 1134–5
untaxed perquisites and valuation 1142–3
venture capital and valuation 1141–2
external and internal asset partitioning 251–74
asset partitioning, nature of 251
benefits and costs of partitioning see corporate partitioning, benefits and costs
comparison of external and internal partitioning 265–6
conclusion 273–4
cost-benefit analysis favouring external partitioning 266
de-partitioning remedies 252
enterprise liability 272–3
external partition, meaning of 253
(p. 1179)
legal implications 267–9
non-partitioning functions of subsidiaries 266–7
veil piercing 252, 253, 266, 269–72, 273
exit, shareholder
categories of exit rights 701
right to exit ‘at will’ 704
shareholder conflict, exit rights in 712
shareholders protected by ‘voice’ or ‘exit’ 233, 407–9, 704, 712
‘voting with the feet’ 406
failure of boards 324–33
board’s inherent information disadvantage, compounding 328
generalist problem, compounding 329
improper incentives of independent directors, compounding 329–31
improved board performance 324–5
lost benefits of insider representation 331–2
room for improvement 325–6
time constraints 327–8
why boards fail 326–32
federal securities class actions 913–15
culture of compliance, generating 914–15
fiduciary duties
closely held companies 707–8
directors 130, 142, 707–8, 910, 911, 914, 981, 986–7
pension fund trustees 1052–3
Financial Accounting Standards Board (FASB) 491, 492
financial reporting see accounting and financial reporting
financial stability
content of regulation 938–40
executive remuneration and 336–8
regulatory structure 938
robust capital markets 940
securities regulation 937–40
Financial Stability Board 30, 45 1104–7
Basel Committee, and 50–1
regulating pay structure 357–8, 1121–5
G-20, and 49–50
foreign ownership and corporate governance 785–820
conclusion 819–20
documenting the rise in foreign ownership 785–7
foreign issuer holdings of US issuers 1993 and 2015, proportion of 785–6
greater foreign ownership, diversion constraints and see diversion constraints, greater foreign ownership and
interaction of 799–819
portfolio-supportive corporate governance see portfolio-supportive corporate governance
US investor holdings in foreign issuers 1993 and 2015, proportion of 785–6
foreign ownership, trends in non-corporate-governance factors affecting 787–91
factors favoring greater foreign ownership 788–91
greater diversification 789–91
maximising utility of passive portfolio investment 787–8
portfolio choice theory 789–90
returns to a reallocation of savings 788–9
free riding 1130
freezeout transactions 464–6
minority protection 465–6
nature of 464
(p. 1180) geopolitics 77
Germany
appraisal remedy 925
CME nation, as 13
codetermination 31, 65, 67–8, 72, 287, 303, 548, 829
corporate criminal liability 956–7
Corporate Governance Code 354, 679–80, 895, 897
Corporate Governance Code, compliance with 896–7, 898
corporations’ objectives for social benefit 144
cross-class coalitions, economy as 80–1
derivative suits 922, 923
dual/two-tier board 31, 232, 276, 287–8, 926
employee representation on boards 548–9
executive remuneration, controlling 339, 354, 925–6
ideology of firms serving multiple interests 77
hedge fund activism 924–5
international competition, providing 73
labor power 65, 66
proxy access 411
public companies, Companies Act and 230
public enforcement: criminal v. civil 955–7
reduction in block holder size and governance role for banks 906, 908, 922
related party transactions 527
representative shareholder litigation 922–4
rescission/contesting action 923
Say on Pay 926
shareholder activism 394–5
shareholder activism, impact of ownership structures on development of 398–9
shareholder activists’ attendance at meetings 408
shareholder monitoring mechanisms 924–7
stakeholder interests, increasing attention to 823
stakeholder-oriented reform, recent 826–7
takeovers 548–9, 563–5
two forms of company 231
veil piercing 629
Glass Lewis 101
mutual funds votes 380
say on pay 352
Glass-Steagall Act 396, 397
global financial crisis (2007–2008) 32, 45, 49, 282, 937
bank governance post-crisis 1098–1100
bank governance pre-crisis 1113–14
bank insolvency and resolution 1008–10
content of regulation, and 938–40
criminalising risk taking 956
regulatory structure, and 938
robust capital markets, and 940
shareholder activism during 415–17
global governance as promoting convergence 31, 44–51
Basel Committee and FSB 50–1
East Asian crisis 45–7
G-20 and FSB 49–50
global financial crisis: focus on financial firms 49
OECD Principles 47
origins 44–5
promoting governance reforms 47–9
global securities markets, non-corporate-governance factors impeding
currency controls and taxes 795–6
currency exchange risks 794–5
government impediments to transnational investments 795–9
securities regulation 796–8
specialized information concentrated nationally 791–4
technological change 793–4
transaction costs of acquiring foreign securities 798–9
globalization
complementarities, effect on 29
corporate governance as comparative advantage 28
disrupting existing industry and employment patterns 14
financial globalization 30–1
trends in financing high growth companies 841
golden parachutes 565
executive remuneration 1139, 1151
(p. 1181)
takeovers, defences to 206, 207, 211–12, 213
tax, and 1139, 1151
going-concern value, protection of 256–7, 259
greenmail 1151
groups of companies 603–32
conclusion 632–3
control transactions 631–2
empirical data on groups and their use for regulation 605–6
phenomenon of the groups of companies 603–5
related party transactions and specific disclosure 619–20
related party transactions, procedural regulation of 620–2
specific standards for balancing interests of member companies in 624–5
standards for directors and controlling shareholders 622–4
transactions with creditors see groups of companies: transactions with creditors
groups of companies: agency problems
controlling shareholder, minority shareholders, creditors, other stakeholders 606–10
creditors v. controlling shareholder 609
labor and other stakeholders v. the controlling shareholder 609–10
minority shareholders v. the controlling shareholder 607–9
groups of companies: disclosure and accounting 616–18
general disclosure under corporate group law 616–17
group accounting 617–18
related party transactions and specific disclosure 619–20
special investigation with group dimension/role of auditors and independent experts 618
groups of companies: regulatory models 610–16
regulation by areas of law 615–16
regulation by general corporate and/or civil law 610–12
regulation by special corporate group law 612–14
groups of companies: transactions with creditors 625–30
creditor self-help and guarantees by the parent 625–6
indemnification, veil-piercing, subordination, substantive consolidation 628–30
standards for directors and controlling shareholders 626–8
guarantees
intra-group guarantees 261–2, 263, 268–9, 273
voluntary partitioning, as 268
hedge funds
activism, employment relations and 1057–9
appraisal actions, use of 919, 921
criticisms of 916
effective monitors, as 915–16, 921
governance intermediaries, as 907
high tech companies 851–2
nature of 834
new establishment of 861–3
positive effects for company shareholders 403
shareholder activism 381–5, 391, 402–4
shareholder activism as element of investment strategy 403
shareholder activism, financial crisis during 416–17
short-termism, and 433
stakeholder representatives, as 833, 834–5
human rights
Business and Human Rights Resource Centre 641
corporate social responsibility see corporate social responsibility
emerging market economies 752
EU, and 642
OECD Guidelines 639
persisting problems 667–8, 752
public interest goal, as 1000
(p. 1182)
Social Accountability 8000, and 638
SEC’s ‘conflict minerals’ rule 999
selecting or terminating suppliers 145
UN Guiding Principles on Business and Human Rights 640–1
UN ‘Protect, Respect and Remedy’ framework 639, 641
incorporations, state competition for see state competition for incorporations
independence of directors 309–23
board committees 314
board independence, controller management rights and 456–7
CEO/Chairman duality 321–4
definition of independent 312, 313
director independence in Sarbanes-Oxley Act see under Sarbanes-Oxley Act
director independence in Stock Exchange Listing Standards 311–14
director independence in US state law 309–10
director independence requirements outside US 314–15
executive remuneration, independent directors and 342–3
governance rules 901–2
independent boards/directors as value-enhancing, empirical studies on 190–3
mandating director independence 309–15
majority independent board 312
MOM approval, and 523
outsiders on the board see outside directors
related party transactions, approving 521–2, 523
who is independent 312–13
information asymmetries
corporate governance, role of 804
‘lemons’ problem 482, 479, 801
litigation removing 963, 964
mandatory issuer disclosure at time of offering to portfolio investors 803
market-based antidotes to information asymmetry problem 803
overcoming information asymmetries 802–4
problem of 800–2
role of corporate governance in overcoming problems of 802–4
self-regulation, and 871
innovation
discontinuous 11, 12, 19
employment protection, and 1055–7
incremental 80
innovation systems complementary to ownership systems 69
IPO stage of contractarian theory, not generated at 89–91, 93–6
linear 11, 12, 19
market innovation, transparency of 871
shareholder rights, product market competition, and 1054–5
state competition for incorporations, and 125
insider dealing 413–15
Western v. Asian laws on 726–7
insolvency law, comparative corporate 1003–36
administrative expenses 1022
bank insolvency and resolution 1008–10
comparative approach 1005–6
contracting for assets of the debtor 1024–5
contractual resolution of financial distress 1031–3
creditor v. debtor orientation 1014–15
diversity of bankruptcy philosophies 1012–14
economic perspective of insolvency laws 1010–12
economic v. non-economic goals 1010–15
ex ante contracting about bankruptcy 1031–2
ex post renegotiation of debt structure 1032–3
governance of insolvency proceedings 1018–20
opening of insolvency proceedings 1015–18
outlook: harmonization of insolvency laws 1035–6
ranking of claims and position of secured creditors 1020–24
ranking of claims, approaches of different jurisdictions 1020–1
(p. 1183)
reasons for the jurisdictional divergences 1034–5
rescue proceedings see rescue proceedings
secured creditors 1021–2
taxonomy and objectives of insolvency laws 1006–15
taxonomy of insolvency laws: different systems 1006–8
unsecured creditors 1023–4
institutional investors 363–86
activism of 371–2, 835
conflicts of interest 401–2
corporate governance reformers, and 823–4
EU Shareholder Rights Directive, amendments to 374–5
excessive regulation hypothesis 372
executive remuneration, and 343–4
governance of money managers 367–8
growth of institutional investors 365–7, 400–2
hedge funds activists 381–5, 391, 402–4
important for providing pensions 823
inadequate incentives hypothesis 373–4
incentive problems, addressing 374–81
increase in shareholdings 101, 365
monitoring of investments pre-credit crisis insufficient 823
monitoring, tax influencing 1158–9
mutual funds, imposing obligations on 375–81
organization of share voting by institutional investors 368–71
partial deregulation of institutional investors 374
passivity of institutional investors, explaining 372–4
pension funds 365, 367, 823, 831–3, 834, 835–8
SEC proxy voting releases, effect of 378–81
shareholder activism 390–4
sustainable shareholder value as corporate objective 821–2
takeovers, and 885–6
who and what are institutional investors 364–7
institutional investors, executive remuneration and 343–4
agency problems, risk of 344
collective action problem 344
rise of shareholder engagement 344
say on pay 352
institutional investors, stakeholders and 821–38
corporate governance reformers, and 823–4
giving stakeholders a new voice 829–30
investor voice and stakeholders’ interests 836–8
prototypical stakeholder, institutional investors as 823
regulatory reforms, assessing 827–8
socially responsible investment (CSI) principles, adoption of 824
stakeholder and shareholder-oriented firms 822–3, 824
stakeholder interests, focus on 825–30
stakeholder-oriented reform, recent 826–7
stakeholder representatives, best placed 833–6
stakeholder representatives, institutional investors as 830–8
stewardship responsibilities, encouragement to pursue 824
sustainable shareholder value as corporate objective 821–2
Institutional Shareholder Service (ISS) 101
mutual funds votes 380
say on pay 352, 353
internal partitioning: legal boundaries within the firm 259–66
accounting costs 259, 265
agency costs of debt 259, 266
benefits of partitioning that internal partitioning cannot provide 259–60
benefits of partitioning that internal partitioning could provide 260–3
comparison of external and internal partitioning 265–6
debtor misconduct 259, 263–5
internal partition, meaning of 253
promotion of efficient control transfers 259, 263–5
(p. 1184) International Accounting Standards Board (IASB) 492, 493, 494
International Accounting Standards Committee (IASC) 490–2, 493
International Covenants on Civil and Political Rights 641
International Covenants on Economic, Social and Cultural Rights 641
International Corporate Governance Network 32
International Financial Reporting Standards (IFRS) 492–3, 494, 496, 497, 617, 728, 798, 932
related party transactions 512, 513
International Monetary Fund (IMF) 5, 32, 45
conditionality 45–7
Financial Sector Assessment Program 48
promoting governance reforms 47–9
International Organization of Securities Commissions (IOSCO) 491
International Standards Organization (ISO)
ISO 26000 639–40
intra-group guarantees 261–2, 263, 268–9, 273
inversions 40–1
tax, and 1155–6
investor protection
applying leximetric method to DBR data on 245–8
factions of investor protection 247
network presentation of differences in investor protection 246
IPOs
aging of IPO market 845–56
changing nature of IPO market 848–9
conflicts of interest in pre-IPO incorporation decision 111–12
corporate litigation 965
customization and innovation not generated at IPO stage 89–91, 93–6
decline in 839–40, 841
emerging-market IPOs, increase in 39–40
importance of 840–1, 846–7, 849
IPO charters 92–3, 97, 98, 99, 113
IPO charters, whether suboptimal 89–91, 91–3, 96–7
IPO pop 847, 851
IPO primacy as exit strategy, questioning 841
IPO stage in contractarian theory 85, 86–97
power over pre-IPO incorporation decisions 111
pricing mechanisms 965
staggered boards, and 92–3, 96–7
stimulating IPO activity 840
venture capitalists, and 841, 843, 845, 846–9
Japan
CME nation, as 13
corporate governance model see Japan: corporate governance model
culture, corporate governance and 129–30, 139, 157
foreign ownership 786, 787
ideology, interests of stakeholders as 77
international competition, providing 73
takeovers 565–8
Japan: corporate governance model 22, 24–5
complementarities, influence of 10–12
horizontal organization of production 19
human capital, importance of 10–11, 19
lifetime employment 10, 11, 19
main bank/keiretsu governance structure 10–12, 31
reform 12, 27
stakeholder country, perceived as 233
system slow to adapt to significant changes 14
unitary board model 286
JOBS Act 840, 854–6, 865
concerns about 857
emerging growth company, qualifying as 854
high-tech companies, benefits to 854–5
IPOs, increasing 855
lower valued companies, benefits for 857
‘on-ramp’ provisions 854–5
success of 855, 858
junk bonds 20, 24
Kaldor–Hicks efficiency 23, 24
Korea
Confucianism, corporate governance and 129–30, 142
fiduciary duties of directors 130, 142
foreign ownership 787
independent directors 314–15
IPO activity, stimulating 840
labor in post-war Europe, power of 64–72
coalitions and rent 70–2
(p. 1185)
correlation of labor power and close ownership: bidirectional causation 67–9
German codetermination 65, 67–8
institutional complementarity 69
labor power and managerial agency costs 65–6
labor’s claims on large firms’ cash flow 64–5
market regulation and corporate ownership diffusion, correlation between 71
law 159–60
civil–criminal divide, theoretical foundations of 946–52
civil law systems 143, 230–1, 232, 238
common law system 141, 230–1, 232, 238
common law system, equitable remedies in 715–16
common law system, pros and cons of equitable remedies 717–18
corporate law see corporate law
criminal enforcement of regulatory norms 997–8
culture in corporate governance, and see culture and law in corporate governance
differences between common law/civil law systems overemphasized 238
economic analysis of law, criticism of 160
equitable remedies in common law jurisdictions 715–16
institution of legality/rule of law 140
legal transplantation see legal transplantation
leximetrics see leximetrics
legal tools against tunnelling via RPTs 516–28
disclosure, mandatory 523–5
disinterested or independent directors’ approval 521–2
ex post standard-based review 526–8
independent directors and MOM approval 523
MOM approval 518–21
procedural safeguards 518–23
prohibitions 516–17
third party advice and fairness opinions 525–6
legal transplantation, channels of 142
‘lemons’ problem 479, 801
reducing 482
leximetrics 243–8
applying leximetric method to DBR data on investor protection 245–8
calculating differences without a priori categories 243–4
CBR research on differences and similarities in corporate law 244–5
employment relations 1039–44
liability
bank governance 1126–7
board of directors 182, 212, 986
business judgment rule 986
corporate criminal liability 953–4, 956–7
enterprise liability 272–3
liability rule protection for minority rights 459–60, 465
protecting directors from litigation and liability risk 212
liberal market economies (LME) 13, 781
liquid shares 254–5, 259
litigation
enforcement see under private enforcement in US
protecting directors from litigation and liability risk 212
shareholder activism 409
loan maturity 478–9
long-termism 437–40
looting 551, 580–2
takeover protection 438
loyalty, duty of 707–8
majority control and minority protection 449–69
controller rights 454–8
difficult cases 464–8
freezeout transactions 464–6
importance of control for entrepreneurs-controlling shareholders 450–2
management rights: business judgment rule and board composition 455–7
mid-stream changes to firm’s governance 463
minority protection as central issue 449
minority rights 459–64
(p. 1186)
property rule protection: preserving control 454–5
pro-rata share: identifying self-dealing 461–3
right to sell control for a premium 457–8
sale to third party 466–8
summary 468–9
tradeoff between minority protection and controller rights 452–3
type of protection 459–61
majority shareholder, oppression by see oppression by majority shareholder
malus and clawback mechanisms 358
market abuse and insider dealing 413–15
market controlled regulation: comply or explain 893–904
compliance levels 895–8
content of Codes 893–4
cultural governance 902–4
effects of regulatory technique on rule choice 900–2
enforcement drivers 898–900
foundations 894–5
meaning of 870, 877
‘market rule’ 457
markets in corporate activity, role of 501–2
median voter theory 75–6
mergers, acquisitions and restructuring 570–602
major types of M&A transactions 572–6
nature of M&A and restructuring transactions 571–2
tax impacts acquisitions on see acquisitions, tax impacts on
types of M&A transactions that have taken place 597–600
variations in types and modes, law and 600–2
mergers and acquisitions, goals of 576
antitrust, industry regulation, foreign ownership, tax 583–4
constrain conflicts of interests 578–80
cope with the effects of other regulations 582
deter/mitigate looting, asset-stripping, excessive M&A-related leverage 580–2
enhance/clarify authority, control, and baseline entitlements 577–8
facilitate M&A by overcoming collective action problems/transaction costs 578
protect dispersed owners 580
mergers and acquisitions, modes of regulation of 584–97
augmented fiduciary duties and other legal obligations 590–2
bans or structural limits 596
call rights: squeezeouts 586
collective action: mergers and schemes of arrangement 584–6
constraining M&A 586–8
facilitating M&A 584–6
fairness review, appraisals, and minimum payment requirements 592–3
notice and disclosure 586–8
regulation of deal terms, deal process, and deal-related debt 593–6
shareholder merger and acquisition suits 908–10
special approvals 588–90
minority rights 459–64
freezeout transactions, risks from 464–6
groups of companies, and see under groups of companies
liability rule protection 459–60, 465
mid-stream changes to firm’s governance, and 463
MOM approval 518–21
non-pro-rata distributions of firm’s asset, prohibition of 461–3
property rule protection 459–60, 465
related party transactions, and 510–11
sale to third party, equal consideration in 466–8
tunnelling 511
minority shareholders, ex post opportunism by 712–13
enforcement issues 713
(p. 1187)
standards of conduct for minority shareholders 712–13
models in corporate law 14–25
conclusions 25–7
director primacy model 21–2
explaining structure and performance of complex business organizations 15
law, relevance of 15
nature of models 16
right governance model as contextual and dynamic 22
shareholder primacy model 23–5
stakeholder model 16–18
team production 18–20
MOM (majority of the minority) approval 518–21
full disclosure of necessary information 519, 520
sincere voting 518, 519
veto choice available 519
voting opportunity 518, 519
mutual funds
activism 830, 831
compliance officer, cooperation with 989
diversification advantages of 834
high tech companies 851–2
imposing obligations on 375–81
socially responsible investment, and 834
stakeholder representation, and 830, 831, 834
transparency 376–7
votes 380
NASDAQ 843
listed companies at 844
Netherlands see Dutch Enterprise Chamber
networks
business group–government/party networks in China 768–70
central–local inter-group networks in China 767–8
Chinese industrial organization as networked hierarchy 760–62
Delaware law benefiting from network effects 95, 125, 186–7
inter-group networks in China 767, 768
director networks 154–7
judicial quality and network effects 125
network benefits/theory of externalities 93–6
network presentation of differences in investor protection 246
social networks, social capital and 136–7, 154–7
New Institutional Economics 132
OECD 5, 32, 45
board structure 41–2
business and finance scorecard 39
Corporate Governance Factbook 41, 48–9
divergent practice on board structure 41–2
human rights 639
IPOs 39
Principles of Corporate Governance 30, 47, 50, 130, 151
promoting governance reforms 48–9
transparency 47, 639
omitted variables 221, 223–6
IV regression results 226
literature and omitted variables 225–6
nature of problem 223–5
quality of management 224
use of shocks/legal shocks 225–6
weak instruments, problem of 24–5
omnipotence v. parity theory 694–5
oppression by majority shareholder 706–12
abuse of rights 708–9
actions challenging the validity of shareholders’ resolutions 710
claims for compensation 711
exit rights 712
fiduciary duty and duty of loyalty 707–8
intensity of judicial review 709–10
legal remedies for minority shareholders 710–12
opportunities for and limits of self- protection 706–7
oppression remedies 712
standards of conduct for majority shareholders 707–10
unfair prejudice and minority oppression 709
options
bonuses and stock options, favouring 1135–6
conventional options instead of indexed options 1136–7
hedging stock options 1140–1
incentive stock options 1137–8
management pay, stock options for 330–1
share options 340–1
(p. 1188) organizational role analysis 175–6, 177
outside directors 315–20
collective action problems impeding board’s ability to monitor 317
dependent on management for information 317, 343
increased decision- making costs 316
independence and agency costs 316–18
independence, interlocks and decision-making 315–16
informational advantages of employees 316
insiders’ relationships with 317–18
monitoring management 316–17, 321
‘one size not fitting all’ 320–1
pre-crises empirical evidence in independence/performance 318–20
structural bias as key issue 317–18
owner shielding 251, 268
ownership, nature of 23
pay
‘Say on Pay’ see ‘Say on Pay’
pension funds 365, 367, 823, 831–3
activism 389, 390, 400, 831–3
beneficiary choice 836–8
conflicts of interest 401
CSR/stewardship responsibilities, and 643, 662, 826, 831–3, 836–8
defined benefit plans 365, 835
defined contribution plans 365, 835
disclosure, supporting 338
importance of 825
improving information quality 836–7
investor voice, stakeholders’ interests and 836–8
National Association of Pension Funds remuneration guidelines 353
pension fund reform 836
pension fund trustees, asset managers and 1052
pension fund trustees, fiduciary duty of 1052–3
pension risk 835
private pension funds 835
public pension funds 367, 368, 370, 401, 831, 835
regulatory strategies, disclosure and voice as 836
short-termism 430, 447, 553
social diversity, promoting 831
social issues advocates, as 831–2
stakeholder interests, and 836–8
stakeholder representatives, as 830–2, 833, 835–8
takeover vulnerability, public pension fund ownership and 227
teaming up 418–20
transparency, improving 836–7
union-employer pension funds 368, 824, 835
performance-based pay
board performance, understanding 173–8
relative performance 340
standard response to agency costs, as 1134
Pigouvian provisions encouraging 1134–9
poison pills 74, 98, 99, 194–5
adoption at any time 194, 197, 208
bar to takeover, as 194, 200, 208
freezeouts, use in 465–6
impeding shareholder vote to replace directors 194–200
retain indefinitely 195, 197
studies on impact as takeover defense 196–7
political economy of corporate governance 56–83
American corporate executive, continuing power of 72–5
corporate governance environment 57–9
cross-class coalitions 80–1
democratic v. aristocratic roots 81
geopolitics 77
government authority 79–80
historical organization of capital ownership in US 61–4
ideology 77–8
limits of a political analytic 81–3
median/pivotal voters, elites and 75–6
political representation, nature of 78–9
power of labor in post-war Europe see labor in post-war Europe, power of
political representation, effects of 78–9 (p. 1189)
first-past-the-post 79
majoritarian systems 79
proportional representation 78–9
portfolio choice theory 789–90
diversification for lowering risk 790–1
portfolio-supportive corporate governance 800–5
conclusions 805
corporate governance, role of 804
implications of 805–7
incentives for control shareholders to create portfolio holders 802
information asymmetries, problem of 800–2
mandatory issuer disclosure at time of offering to portfolio investors 803
market-based antidotes to the information asymmetry problem 803
overcoming information asymmetry problems, role of corporate governance and 802–4
private credit market liquidity 479–85
banks diversifying exposure to credit risk 480–1
covenants, changes in 484–5
greater liquidity in private credit market 481–2
increased agency costs 482
information, availability of 479–80
reputation 485
syndication 483–4
private enforcement in US 905–22, 926–7
appraisal proceedings 907–8, 918–21
contracting space for shareholder litigation 908–15
federal securities class actions 913–15
lessening role in addressing managerial agency costs 91
shareholder derivative suits 910–13
shareholder merger and acquisition suits 908–10
shareholder representative litigation as important policing mechanism 907
private enforcement in US: non-litigation monitoring 915–22
appraisal actions, new role for 918–21
hedge funds as effective monitors 915–16
limits of governance 921
Say on Pay 917–18
private equity firms/funds 404–5
financial crisis, during 416–17
nature of 833
short-termism, and 431, 432–3
stakeholder representatives, as 833
private ordering
limitation to private ordering 690
primacy of private ordering 688–9
scope of private ordering 689–90
proxies
proxies for firm performance 340
proxy access 410–12
proxy advisory firms 352–3
SEC proxy voting releases, effect of 378–81
privatization 29
property rule protection 454–5, 457–8
meaning 454
public enforcement: criminal v. civil 946–58
blurring of criminal-civil divide 954–5
civil–criminal divide: theoretical foundations 946–52
corporate criminal liability 953–4, 956–7
financial crisis 956
intentional derelictions of duty, sanctions for 952, 956
negligence not appropriate basis for criminal sanctions 952–3
theoretical implications for corporate law 952–5
theory v. reality in US, UK and Germany 955–7
regulating pay governance and disclosure 346–55
comparative regulation 349–54
disclosure, statistics on 355
empirical data 353–5
EU Commission’s recent proposals 348–9
EU Commission 2004–2005 Recommendations 346–7
EU Commission 2009 Recommendations 347–8
EU law 346–9
governance, statistics on 354–5
remuneration committees 354–5
remuneration consultants 355
Say on Pay 351–4
see also Say on Pay
(p. 1190) regulating pay structure 356–62
Dodd-Frank see under Dodd-Frank Act
FSB principles 357–8
long-term remuneration 356–7
regulation
market-controlled regulation see market-controlled regulation
pay structure see regulating pay structure
state regulation 869–70
related party transactions (RPTs) 506–31
appropriating value through 507–9
conflict of interest transactions, and 515–16
creating value for all parties involved 509–10
effective and enduring forms, challenges of enacting 528–30
groups of companies 619–22
legal tools against tunnelling via RPTs see legal tools against tunnelling via RPTs
meaning 513–14
prohibition of RPTs 516–17
tunnelling v. conflicted transactions 512–16
rents
coalitions, and 70–2
market regulation and corporate ownership diffusion, correlation between 71
rescue proceedings 1025–31
cram down power of courts 1027
financing rescue proceedings 1027–8
full debt to equity swaps 1030–1
going concern sales 1029–30
reform proposals 1028–31
shareholders, position of 1026–7
types of proceedings 1026
reverse causation 221, 222–3
meaning of 221
rule-making in corporate law and governance 169–73
preference for rules over risks responsibility 171–3
regulatory crowding out effect 170–1
weakening of ability to make moral judgments 171
Sarbanes–Oxley Act 8, 38, 100–1, 282, 318, 983
chief executive officer, duties of 988
independence requirements on audit committees 191, 311–12
internal control reports 987, 988
independent directors 103, 191, 311
‘Say on Pay’ 33, 89, 91, 349, 357, 362, 380, 854, 903, 921, 1080, 1087
benefits, potential 917
effects of 917–18
Germany 926
institutional investors 352
ISS 352, 353
large investors, views of 352–3
proxy advisory firms 352–3
regulating pay governance and disclosure 351–4
representative associations, views of 352
say on pay policy 43–4
Sweden 351
UK 351
schemes of arrangement 585–6
secured creditors 1021–2
see also creditors
securities law, corporate governance and see capital markets, securities law, corporate governance and
securities regulation 497–8
foreign ownership, and 796–8, 807
strong effective securities disclosure laws and size/depth of capital markets 807
US, in 796–8
securities regulation, private and public enforcement of 928–45
capital flows, valuations, and cross-listing decisions 933–5
content of regulation, financial stability and 938–40
(p. 1191)
critiques 941–4
direct enforcement actions 944
empirical research 930–40
financial market performance 930–2
financial stability 937–40
reform efforts, success of 936–7
regulatory structure, financial stability and 938
resources allocated to enforcement 942–4
robust capital markets, enforcement’s role in developing 928–30
robust capital markets, financial stability and 940
self-regulation and corporate law 869–905
benefits of self-regulation 870–1
contracting zone, market actors entering 872–6
costs/disadvantages of self-regulation 871–2
endogenous self-regulation of corporate activity 870–2
endogenous self-regulation: takeover case study in UK and Brazil 877–93
enforcement 887–9
forced self-regulation 870
forms and pre-conditions 870–7
information asymmetries, and 871, 872
market controlled regulation 877
market controlled regulation: comply or explain 893–904
market controlled regulation, meaning of 870, 877
pre-conditions for self-regulation 872–7
regulatory conception of the state 874–6
regulatory space, demarcating 891–3
rules, trade-offs and coordinating mechanisms 883–7
state and market as regulators 869–70, 872–6
state regulation, advantages of 871
state regulation, alternative to 872–4
state regulation, disadvantages of 870
UK regulation/self-regulation 875–6
separate ownership and control of boards 290–6
consequences of separating ownership and control 295–6
contractarian rationale for separating ownership and control 291–5
corporation has a nexus 292–5
corporation is a nexus 292
historical perspective 290–1
locating the nexus 295
share acquisition contracts with shareholders see takeovers
share options as executive pay 340–1
dilution 341
dividend policy, impact on 341
incentives, creating 340
option grants structured to avoid incentive alignment weakness 341
relative performance 340
repricing 341
share transfer restrictions in closely held corporations 696–700
default rules 696–7
judicial review of consent clause 698–9
legal assessment of drag-along and tag-along clauses 699–700
types of share transfer restrictions and legal limits 697–8
shareholder activism 387–424
acting in concert 412–13
activism, forms of 389, 392–4, 404–9
Alternative Investment Fund Managers Directive 404, 421–2
conflicts of interest 401–2, 408
continental Europe, in 391–4
corporate raiders and takeover wave of 1980s 400
Dodd-Frank Act 420–1, 422
financial crisis, during 415–17
financial crisis, shareholder activism post 417–18
hedge funds 381–5, 391, 416–17
historical development 395–405
impact of ownership structures on development 397–9
impact of regulation on development 396–7
importance 387
institutional investors, growth and importance of 365–7, 400–2
institutional shareholder activism, promise of 371–2
jurisdictional influences on 394–5
(p. 1192)
litigation 409
market abuse and insider dealing 413–15
meaning of 388
meetings, attendance at 408–9
methods of shareholder activism 404–9
new regulatory constraints 420–2
origins and evolution of shareholder activists 399–405
passivity of institutional investors, explaining 372–4
passivity of retail investors 388–9
private equity funds 404–5, 416–17
proxy access 410–12
purchase of stock 406–7
rational apathy/dispersed shareholdings 388–9
regulatory constraints 410–15
shareholder activism in context 388–95
shareholder structure and environment 390–4
short-termism 423–4
‘teaming-up’ strategy 418–20
US/UK, in 390–1
‘voice’ 407–9, 443, 446, 824, 825, 829–30
‘voting with the feet’ see exit
shareholder conflicts 182, 706–18
conflicts of interests 182, 401–3, 825
inter-shareholder agency problem 825
majority shareholder, oppression by see majority shareholder, oppression by
shareholder deadlocks see shareholder deadlocks
shareholder deadlocks 713–15
conflict resolution through statutory or case law 714–15
contractual safeguards 714
shareholder primacy model of corporation law or governance 23–5, 53
corporate social responsibility: shareholder primacy 664–6, 671–6
meaning 23
right governance structure dependent on context 24–5
shareholder value as focus of corporate law 4, 143
shareholder value, convergence on 53–5
shareholders’ ownership 23–4
stakeholder model, and 17, 18, 31, 53, 822–3, 827
shareholder withdrawal and expulsion 700–6
appraisal rights 703
categories of exit rights 701
expulsion of shareholder 704–6
oppression remedies 701–3
right to exit ‘at will’ 704
withdrawal rights 700–4
shareholders
closely held corporations, and see under closely held corporations
conflicts of interest see shareholder conflicts
corporate social responsibility, and see under corporate social responsibility
dispersed shareholder ownership 233, 235
diversification 255, 259, 262
executive remuneration, monitoring 343–4
federal securities class actions 913–15
household share ownership, decrease in 825
incentives for control shareholders to create portfolio holders 802
insider and outsider models 233
institutional investors see institutional investors
long-run trends in shareholder and employee protection, evidence on 1045–8
mandatory issuer disclosure at time of offering to portfolio investors 803
monitoring by 1155–9
oppression by majority shareholder see oppression by majority shareholder
ownership, and 23, 233
private ordering, limitation to 690
private ordering, primacy of 688–9
private ordering, scope of 689–90
protected by ‘voice’ or ‘exit’ 233, 407–9, 704, 712, 825
(p. 1193)
reduced need for equityholders to monitor each other 254, 259
rescue proceedings see rescue proceedings
restrictions on 289–90
share acquisition contracts with shareholders see takeovers
shareholder agreements 690–2
shareholder conflicts see shareholder conflicts
shareholder deadlocks see shareholder deadlocks
shareholder derivative suits 910–13
shareholder meetings 93
shareholder meeting, default and mandatory competences of 695
shareholder merger and acquisition suits 908–10
shareholder rights, banks and 1125–6
shareholder rights, economic performance, and 1048–52
shareholder rights, product market competition and innovation 1054–5
sharing residual income and control rights between shareholders and employees, effects of 1059–61
short-termism, and see short-termism, corporate
takeover defences, and 194–200, 226–7
withdrawal and expulsion see shareholder withdrawal and expulsion
short-termism, corporate 425–48
conclusion 446–8
core causes 444–5
core short-termist concept/argument 430
Delaware judiciary view 428–9
difficulties with basic short-termist argument: concept 432–6
difficulties with basic short-termist argument: facts 436–45 432–6
economic system 426, 436–7
evidence in favour of short-termist argument 426, 431–2
interpretative error 442–4
managerial insulation, as proxy for need for 445–6
market correctives 432–3
need to attend to stakeholders, as proxy for 446
proxy, short-termist argument as 445–6
regulatory correctives 436
shareholder activism, and 423–4
short-termism inside the corporation 426, 440–2
short-term trading, growth in 426–7
short-termism in courts: limits to judicial correctives 426, 434–5
short-termist argument, influence of 427–9
short-termist view 430–2
stock-market long-termism 437–40
takeovers in boardroom 427–8
trade-offs 433–4
single- factor governance models see analytic models in corporate governance
social capital 135–7
centrality of social networks 136–7
meaning of 135–6
social capital theory 154–5
social networks, and 154–7
social welfare
corporations and 17, 23, 24
economic measure as 17
socially responsible investment (CSI) principles 824
squeezeouts 574, 578, 582, 602
call rights 586
post-bid squeezeouts 589
short- form “squeezeout” procedures 593
staggered boards
IPO charters, use of 92–3, 96–7
reverse causation 222
takeover defence, as 195, 197–8, 200, 209–10
takeover defence, studies on whether value-enhancing or decreasing as 197–200
stakeholder model of corporation law or governance 16–18, 143
corporation as major social institution 16–17
corporate social responsibility: stakeholder theory 667–70, 671–6
(p. 1194)
distributional issues 17, 18
economic measure of social welfare 17
effect of staggered board on probability of takeover 227
equitable share of gains from corporation’s activity needed 17
increasing attention to stakeholder interests 823
link between stakeholder model and production missing 17–18
shareholder primacy model, and 17, 18, 31, 822–3, 826
stakeholders
definition 822
giving stakeholders a new voice 829–30
investor voice and stakeholders’ interests 836–8
prototypical stakeholder, institutional investors as 823
stakeholder and shareholder-oriented firms 822–3, 824
stakeholder interests, focus on 825–30
stakeholder-oriented reform, recent 826–7
stakeholder representatives, best placed 833–6
stakeholder representatives, institutional investors as 830–8
state
deferential state 881–2
regulation, and 869–70
see also self-regulation and corporate governance
role of 502–4
state ownership and influence in emerging markets 740–2
state competition for incorporations 105–28
board domination 109
competition for incorporations outside us 125–6
competitive strategy 117–19
competitive strategy, refinements to 119–20
conflicts of interest in mid-stream decisions 110–11
conflicts of interest in pre-IPO incorporation decision 111–12
directional debate: to bottom or top? 107–13
empirical evidence on the directional debate 112–13, 185–7
empirical evidence on whether states compete 121–2, 187–90
extreme v. nuanced versions in directional debate 107–8
federalism debate: innovation 125
federalism debate: judicial quality and network effects 125
federalism debate: other interest groups 124
federalism debate: pro-management/pro-shareholder dimension 123–4
federalism debate: rules v. standards 125
federalism debate: what federal law would look like 122–6
incorporation decision as choice of corporate law 186
multiplicity of settings for choice 108–12
power over pre-IPO incorporation decisions 111
power to effect mid-stream incorporation decisions 108–10
shareholder approval 109–10
whether states compete 114–15
why states do not compete 115–17
who competes and how 114–22
stock options
bonuses and stock options, favouring 1135–6
hedging 1140–1
incentive stock options 1137–8
management pay, stock options for 330–1
supermodularity 6, 13
forms of political economy, and 13
meaning 11
Sweden
corporations’ objectives of profit for shareholders 144
group agency problems 611
say on pay 351
shareholder activism 391, 394
shareholder-oriented company law 144
(p. 1195) Switzerland
democratic system in place during industrialization 81
executive remuneration, controlling 339
syndication 483–4
tag-along clauses 699–700
tag-along derivative suits 912–13
Takeover Code, UK 398, 546, 554–8, 554–58, 870, 896
buy-in, importance of 883
compliance with 880
compliance, significant financial stakes in 889–93
coordinating mechanism, institutional investors as 885–6
deferential state 881–2
earlier attempts to regulate takeover market 878–9
endogenous self-regulation, as 877–8
enforcement 887–9
extensive, demanding rules of 879–80
financial advisers, role of 889–91
financial incentives of pivotal players, importance of 884–5
hostile activity, conditions for 887
mandatory bid rule 555, 594, 892–3
nature of code 878
non-frustration rule 556–8, 632, 633, 891–2, 892–3
pro-shareholder rule book 891
rules, trade-offs and coordinating mechanisms 883–7
state body, as 880
state passivity, assumption of 881–2
sui generis regulation 881, 882
Takeover Panel 870, 878, 880
censures 887
cold shoulder statements 887, 888, 890
deference towards 880
effective command and control regulator, as 878
enforcement 887–9
sanctions 887
surveillance culture, as 888–9
takeovers 532–69
agency costs of non-controlling shareholders 539
Brazil see Brazil
conclusions 568–9
constituency statutes 74, 546–7
efficiency arguments for takeovers 540–3
employment relations, and 1057–9
friendly takeovers 74
G and E indices, empirical findings regarding 204–6
G and E indices failing to measure entrenchment or governance quality 206–713
German national system 563–5
inefficient takeovers see takeovers, inefficient
Japan national 565–8
mandatory bid rule 543, 551–2, 555, 608, 631–2, 892
state antitakeover statutes, studies of 201–3
target shareholders gaining from hostile takeovers 193
UK national system 554–8
US national system 558–63
nature of 532–3
regulation of see takeovers, regulation of
takeovers, defences to 73–4, 193–203
asymmetries of knowledge 871
empirical studies on whether value-enhancing or decreasing 193–203
fair price charter provisions or statute 200, 20, 208
golden parachutes 206, 207, 211–12, 213
impact of defences 226–7
impeding shareholder vote to replace directors 194–200
IPO charters 92–3, 97, 98, 99, 113
poison pills 74, 98, 99, 194–5, 197, 200, 208
poison pills, studies on impact of 196–7
prohibition on removal of directors without cause 195, 201
restriction on shareholders’ ability to vote between meetings 195, 201, 210
self-regulation, and 871
shareholders, and 226–7
short-termism, and 438
staggered boards 195, 197–8, 209–10
(p. 1196)
staggered boards, studies on whether value-enhancing or decreasing 198–200
studies of other takeover defences 200–1
supermajority vote requirements to approve a merger 200, 207, 208, 209
takeovers, inefficient 543–54
acquirer empire building 549–51
controlling and non-controlling shareholders 551–2
inefficient sales of control resulting from intended efficient control shifts 552–4
inefficient transfers of control involving wealth transfers between acquirer/target shareholders 549–52
wealth transfers 543–5
wealth transfers, employees and 545–9
takeovers, regulation of 533–9
agency costs of non-controlling shareholders 539
Brazil see Brazil
centralized management 535–8
coordination costs of target shareholders 534–5
goals of takeover regulation 539–54