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
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