Forthcoming Corporate Law Papers
posted by Dave Hoffman
Like Fred Tung, I spent the latter half of last week in NY, at Fordham’s Murphy Conference on Corporate Law. There were lots of great papers, but I wanted to focus readers on two of particular interest (at least for me):
- Frank Partnoy presented the co-authored Hedge Fund Activism, Corporate Governance, and Firm Performance, which examines the relationship between hedge fund announcements of activist investing strategies and near-term improvement in target companies’ share prices. The impressive thing about the project (apart from the unique database) was the finding of a strong relationship between the fund’s announced strategy and market reactions. At first, this didn’t click for me – why would investors bump a share price before they know if the intervention will be successful? But I guess that there is a signaling story here. Additionally, the paper seemed to uncover pre-announcement insider leaking by hedge fund managers, although Partnoy et al. did not press the point. This, in turn, suggests that hedge fund managers are seeking to maximize long-term (relational) over short-term gains. (Because, as one manager comments in the paper, if they were seeking short term gains, why would they dilute the value of the investment by leaking?).
- Jill Fisch presented her working paper, Cause for Concern: Causation and Federal Securities Fraud , about the relationship between Dura and a good understanding of how causation works in the ordinary tort regime. The paper is unfortunately not yet up on SSRN, but when it comes up, you should check out it. Fisch argues, in part, that we ought to measure securities damages by looking at the buying shareholder’s expectancy, instead of merely a company’s fraud-inflated value. This would clarify the waters of securities doctrine, which, post-Dura, seems to be an ungodly mess of mud. Maybe it is time for a consolidated securities court?
October 22, 2007 at 11:03 am
Posted in: Corporate Law
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