Publications 

5 October 2015

Will a New Paradigm for Corporate Governance Bring Peace?

The decades-long conflict that is currently raging over short-termism and activist hedge funds strikes me as analogous to the Thirty Years’ War of the 17th Century, albeit fought with statistics (“empirical evidence”), op-eds and journal articles rather than cannon, pike and sword. I decided, after some thirty-six years in the front line of the army […]

24 September 2015

Dossier 1

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22 September 2015

A New Paradigm for Corporate Governance

Recently, there have been three important studies by prominent economists and law professors, each of which points out serious flaws in the so-called empirical evidence being put forth to justify short-termism, attacks by activist hedge funds and shareholder-centric corporate governance. These new studies show that the so-called empirical evidence omit important control variables, use improper […]

13 September 2015

The Game Of ‘Activist’ Hedge Funds: Cui Bono?

This paper aims to describe the contemporary tactics and objectives of activist Hedge Funds as well as the actions taken by targeted companies as a result of their intervention. While doing so, we explored the consequences of activism over time when compared to a random sample of firms with similar characteristics at the time of […]

28 August 2015

To Govern in the Interest of the Corporation

In Canadian business law, directors have a duty to act in the best interest of the corporation, which includes the duty to assess, fairly and equitably, the impact of the corporation’s actions and decisions on its stakeholders. But which of the stakeholders’ expectations should be taken into account? How should a board arbitrate between the […]

1 July 2015

Capturing long-term investors the Toyota way

In the on-going quest for innovative capital structures, Toyota has recently provided an interesting twist and tied in knots a number of institutional investors. Toyota believes that developing the next generation technologies will require massive investments over many years. It also believes that the current state of investment practices, the prevalence of roaming funds and […]

23 June 2015

Activism, Short-Termism, and the SEC

Today, I’d like to pull together some themes that I have been thinking, speaking, and writing about during my tenure and address them more holistically. Specifically, I’d like to share with you some thoughts about shareholder activism, short-termism, and the SEC. I. What is activism? Like many others, I view activism broadly: it is simply […]

17 June 2015

The free advice of activist investors is worth plenty to shareholders

At 8:38 a.m. on June 11, the activist investment firm Elliott Management—run by billionaire Paul Singer—disclosed that it controlled a 7.1% interest in software vendor Citrix Systems, and wanted to meet with management to discuss its proposal to overhaul the company. More than seven hours passed before Fort Lauderdale-based Citrix CTXS, +0.86% produced a noncommittal, […]

1 June 2015

The Lessons of DuPont: Corporate Governance For Dummies

“Among practitioners, it is a customary cliché to say that all proxy contests—just like all trials—are unique and idiosyncratic. There is some truth to that easy generalization, but it also misses the forest for the trees. Some obvious truths stand out in the recent battle between Trian Fund Management and DuPont that will apply to […]

27 May 2015

Dual-class of shares: with the proper framework, a benefit for all

A recent piece in the Financial Post (“Time for regulators to take major look at dual class shares”, Barry Critchley, May 14, 2015) reports on the cogitations of a law professor who proposes as an “optimal solution” to abolish existing dual class of shares and prohibit such capital structure at IPO time, no less! Of […]

26 May 2015

Firms Send More Cash Back To Shareholders

“U.S. businesses, feeling heat from activist investors, are slashing long-term spending and returning billions of dollars to shareholders, a fundamental shift in the way they are deploying capital. Data show a broad array of companies have been plowing more cash into dividends and stock buybacks, while spending less on investments such as new factories and […]

26 May 2015

Companies Send More Cash Back to Shareholders

U.S. businesses, feeling heat from activist investors, are slashing long-term spending and returning billions of dollars to shareholders, a fundamental shift in the way they are deploying capital. Data show a broad array of companies have been plowing more cash into dividends and stock buybacks, while spending less on investments such as new factories and […]

25 May 2015

The case for and against activist hedge funds

A subset of so-called hedge funds, henceforth known as “activists”, has latched on the idea that many corporations are not managed or governed in a manner likely to maximize value for shareholders. With the capital they have obtained from pension funds and other institutional investors, they take a small position in the equity of publicly […]

7 May 2015

Why Run Away from the Evidence?

“Martin Lipton is a founding partner of Wachtell, Lipton, Rosen & Katz, and this post is based on a Wachtell Lipton memorandum. The post puts forward criticism of an empirical study by Lucian Bebchuk, Alon Brav, and Wei Jiang on the long-term effects of hedge fund activism; this study is available here, and its results […]

20 April 2015

The DuPont Proxy Battle: New Myths, Old Realities—and Even Newer Data About Hedge Fund Activism

A watershed moment is coming for shareholder activism and corporate governance generally, as the proxy contest brought by Trian Management Fund, seeking effectively to break up DuPont, enters its final stages (with the vote being less than a month away). Technically, the contest is to elect four Trian Fund nominees to the DuPont board, but, […]

11 April 2015

Further Recognition of the Adverse Effects of Activist Hedge Funds

“Despite the continued support of attacks by activist hedge funds by the Chair of the SEC, and many “Chicago school” academics who continue to rely on discredited statistics, there is growing recognition by institutional investors and prominent “new school” economists of the threat to corporations and their shareholders and to the economy of these attacks […]