Found 5 article(s) for author 'Shareholders'

The Agency Costs of Controlling Shareholders

The Agency Costs of Controlling Shareholders. Lucian Bebchuk, 2018, Paper, “Economists, legal scholars and courts focus on the wedge between controllers’ cash flow and voting rights as perhaps the most important source of agency costs. In this Paper, however, we argue that another important source of agency costs is the nature and scale of other businesses owned by the controlling shareholder. Controllers’ ownership of other businesses—especially in related industries— provides them with opportunities and motive to divert value from one business to another…Link

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Political, Social, and Environmental Shareholder Resolutions:

Political, Social, and Environmental Shareholder Resolutions. Joseph Kalt, June 2018, Paper, “The increased use of politically-charged shareholder resolutions has garnered considerable attention in recent years, as shareholder meetings have become venues for discussion and debate regarding corporate positions and actions on issues of the day. Recent proxy seasons have seen corporate management being asked to address issues as diverse as deforestation, corporate clean energy goals, climate change, the uses of antibiotics and pesticides, political contributions, human rights risks through the supply chain, indigenous rights and human trafficking, cybersecurity, the development and reporting of sustainability metrics, and tax fairness.Link

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Do Founders Control Start-Up Firms that Go Public?

Do Founders Control Start-Up Firms that Go Public? Jesse Fried, May 2018, Paper, “Startup founders, who generally must cede control to obtain VC financing, are widely believed to regain control in the event of an IPO, à la Facebook’s Mark Zuckerberg. Indeed, the premise that founders expect to be able to reacquire control if there is an IPO underlies the leading finance theory for why venture capital cannot thrive without a robust stock market. But little is known about how frequently founders regain control via IPO. Using a sample of over 18,000 VCbacked firms, we show that founders generally do not reacquire control via IPO. In almost 60% of firms that go public, the founder is no longer CEO at IPO.Link

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Empowering Minority Shareholders and Executive Compensation: Evidence from a Natural Experiment

Empowering Minority Shareholders and Executive Compensation: Evidence from a Natural Experiment. Jesse Fried, August 2016, Paper, “We use a recent regulatory change in Israel to examine the efficacy of minority shareholder approval. In 2011, the level of minority shareholder support required for approving related party transactions, including executive compensation paid to controlling shareholders or to their relatives, increased from a third to a majority of the minority votes cast, and a new rule required renewal of this approval every three years. Comparing changes in compensation following approvals before and after the reform, we find that only the new type of approval constrains compensation, and that this effect is present only when the firm does not choose the timing of the vote.Link

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The Myth that Insulating Boards Serves Long-Term Value

The Myth that Insulating Boards Serves Long-Term Value. Lucian Bebchuk, September 2013, Paper. “According to an influential view in corporate law writings and debates, pressure from shareholders leads companies to take myopic actions that are costly in the long term, and insulating boards from such pressure serves the long-term interests of companies as well as their shareholders. This board insulation claim has been regularly invoked in a wide range of contexts to support existing or tighter limits on shareholder rights and involvement. This paper subjects this view to a comprehensive examination and finds it wanting…” Link verified June 19, 2014

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