Since the publication in 1932 of Berle and Means’ The Modern Corporation and Private Property, “capitalist” societies have been engaged in a forlorn quest for an appropriate definition of the role, justification and “raison d’être” of large corporations. Except for the legal fiction of shareholders as owners, corporations of the 1950’s, 60’s and 70’s, were […]

SS is finally leashed: SEC Amends Rules for Proxy Advisors On July 22, 2020, the Securities and Exchange Commission (SEC) adopted amendments to better regulate the activities of proxy advisors, such as ISS and Glass Lewis, and to ensure that clients of proxy voting advice businesses have reasonable and timely access to more transparent, accurate […]

Mr. Ben Axler, Chief Investment Officer and founder of Spruce Point Capital responds (Financial Post, December 17th, 2019) to my article on short sellers of his kind (Financial Post, December 13th, 2019). He trots out the worn-out argument that short sellers only reveal the sordid truths hidden in the bosom of corporations. In short, “professional” […]

When any individual investor or fund comes to the conclusion after careful analysis that a company is over-valued, it may very well sell short the shares of that company. Fair enough. If the analysis proves right, facts on the ground will confirm it eventually and the stock price will drop. But that’s not the game plan […]

A recent court case meant to clarify the definition of a corporation intensifies questions about the tax treatment of carried interest, a prized perk for private equity and hedge fund managers. The IRS argued for a broad definition of the term “corporation” in the case. But the legal issue that could come up in the […]

By all indications mergers and acquisitions (M&A) activity is on the rise. In the first five months of 2019, companies announced over $1 trillion in mergers and acquisitions, a 14% increase from the same period in 2018. This is generally good for the economy, the consumer and the shareholders alike. In fact, all Americans benefit […]

In September 2019, CEOs of large U.S. corporations have embraced with suspect enthusiasm the notion that a corporation’s purpose is broader than merely “creating shareholder value”. Why now after 30 years of obedience to the dogma of shareholder primacy and servile (but highly paid) attendance to the whims and wants of investment funds? Simply put, […]

The old pink lady of Fleet Street made history of sorts this week, donning a yellow front page that contained a five-word declaration that it was pursuing a New Agenda. Despite its reputation and self-declared role as a defender of free markets, the Financial Times of London has frequently flirted with assorted compromises. But nothing […]

There are now 69 dual-class companies listed on the Toronto Stock Exchange, down from 100 in 2005. Only 23 Canadian companies went public since 2005 with a dual-class of shares while 16 of the 100 have since converted to a single-class and another 38 have disappeared since 2006 for other reasons (acquisitions, mergers, bankruptcies and […]

Activist hedge funds have become capital market and financial media darlings. The Economist famously called them “capitalism’s unlikely heroes” in a cover story, and the FT published an article saying we “should welcome” them. But they are utterly reviled by CEOs. And at best, their performance is ambiguous. The most comprehensive study of activist hedge fund performance that I have read […]

By the late 2000s, independent directors were in the majority on the boards of almost every type of U.S. organization. While this achievement may have improved corporate governance, it was not the panacea that some had anticipated, as subsequent events like the financial crisis of 2008 brought down even some of the best governed corporations. […]

[ … ] Following an examination of Canadian industrial companies, Allaire (2016) suggested that financial performances of these Canadian DCS companies would outperform the peers over 5-, 10-, and 15-year periods (see Exhibit 1). Allaire considered that the superior financial performance would help these firms maintain their headquarters in Canada and argued that such share structures […]

In this snapshot review by Willis Towers Watson of U.S. say-on-pay and other compensation-related votes, WTW found that average support for say on pay remained high at 91%.  In addition, where ISS identified “high” levels of concern leading to negative recommendations on say on pay, 84% related to pay-for-performance concerns (compared to 75% in 2017).  WTW analyzed the […]

Pershing Square, an activist hedge fund owned and managed by William Ackman, began hostile maneuvers against the board of CP Rail in September 2011 and ended its association with CP in August 2016, having netted a profit of $2.6 billion for his fund. This Canadian saga, in many ways, an archetype of what hedge fund […]

Presentation made in October 2017,  by Eric C. Schneider, Senior Vice President for Policy and Research of the Commonwealth Fund, for the Conference on the governance of the healthcare system, organised by the Institut for Governance (IGOPP).

Yvan Allaire has a great analysis of Dow Jones’ overreaction to Snapchat’s IPO and the dual class stock phenomenon in general: ”In July 2017, Dow Jones, goaded by the reaction to Snapchat having gone public with a class of shares without voting rights, announced that, after extensive consultation, it had decided to henceforth eliminate companies […]