« Is 2015, Like 1985, an Inflection Year? »
Martin Lipton, Wachtell, Lipton, Rosen & Katz | The Harvard Law School Forum« In an October 2015 post, I posed the question: Will a New Paradigm for Corporate Governance Bring Peace to the Thirty Years’ War? As we approach the end of 2015, I thought it would be useful to note some of the most cogent recent developments on which the need, and hope, for a new paradigm is based. These developments include, among other things, the accumulation of a critical mass of academic research that discredits the notion that short-termism, activist attacks and shareholder-centric corporate governance tend to create rather than destroy long-term value.
In January a Report of the Commission on Inclusive Prosperity, co-chaired by Lawrence Summers and Ed Balls, identified activism and short-termism as being a threat to the American economy and society. The report noted that reforming corporate governance and moving away from quarterly reporting are critical
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During 2015, five important papers were published by prominent economists, law professors, a renowned jurist and The Conference Board, each of which points out serious flaws in the so-called empirical evidence and policy arguments being put forth to justify short-termism, attacks by activist hedge funds and shareholder-centric corporate governance.
- Emiliano Catan and Marcel Kahan, The Law and Finance of Anti-Takeover Statutes,
- Yvan Allaire and François Dauphin, The Game of ‘Activist’ Hedge Funds: Cui bono?
- John C. Coffee, Jr. and Darius Palia, The Wolf at the Door: The Impact of Hedge Fund Activism on Corporate Governance,
- The Conference Board, Is Short-Term Behavior Jeopardizing the Future Prosperity of Business?
- Leo Strine, Jr., Chief Justice of the Supreme Court of Delaware, Securing Our Nation’s Economic Future: A Sensible, Nonpartisan Agenda To Increase Long-Term Investment And Job Creation In The United States »
