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Steve Bainbridge
Interests: Law, corporate governance, economics, politics, religion, education, books, food, and wine
Recent Activity
WaPo: A fifth of undergrads now say it’s acceptable to use physical force to silence a speaker who makes “offensive and hurtful statements.” That’s one finding from a disturbing new survey of students conducted by John Villasenor, a Brookings Institution senior fellow and University of California at Los Angeles professor. ... when students were asked whether the First Amendment protects “hate speech,” 4 in 10 said no. This is, of course, incorrect. Speech promoting hatred — or at least, speech perceived as promoting hatred — may be abhorrent, but it is nonetheless constitutionally protected. Somedays I wonder if this is... Continue reading
Posted 2 days ago at ProfessorBainbridge.com
Amihud, Yakov and Schmid, Markus and Davidoff Solomon, Steven, Settling the Staggered Board Debate (September 8, 2017). University of Pennsylvania Law Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3034492: We address the heated debate over the staggered board. One theory claims that a staggered board facilitates entrenchment of inefficient management and thus harms corporate value. Consequently, some institutional investors and shareholder rights advocates have argued for the elimination of the staggered board. The opposite theory is that staggered boards are value enhancing since they enable the board to focus on long-term goals. Both theories are supported by prior and conflicting studies and... Continue reading
Posted 3 days ago at ProfessorBainbridge.com
It's a good summary of the background, the history of the personal benefit requirement, and the Second Circuit decision. Continue reading
Posted 5 days ago at ProfessorBainbridge.com
.@jfershee discussing @ProfBainbridge and director vs shareholder primacy at @UTKLaw #BPLB conference. #corpgov pic.twitter.com/G1YRTCX7IK— Marcia Narine Weldon (@narineweldon) September 16, 2017 Continue reading
Posted 5 days ago at ProfessorBainbridge.com
Brian Leiter is outraged: Shameful. As a result, it will shut down entirely. CORRECTION: The Center will not, contrary to the NLJ headline, shut down entirely, but it has been stripped of one of its previous academic functions. (Thanks to several readers who wrote to me about this.) Candidly, it's never been clear to me why clinics at taxpayer-subsidized law schools should have unfettered discretion to sue state officials. In effect, it puts the taxpayers on both sides of the suit, which amounts to a lose-lose proposition. It's especially puzzling when we consider that law school clinics suing the state... Continue reading
Posted 5 days ago at ProfessorBainbridge.com
Gupta, Vishal and Han, Seonghee and Mortal, Sandra and Silveri, Sabatino and Turban, Daniel B., Do Women CEOs Face Greater Threat of Shareholder Activism Compared to Male CEOs? A Role Congruity Perspective (August 25, 2017). Journal of Applied Psychology, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3027096: We examine the glass cliff proposition that female CEOs receive more scrutiny than male CEOs by investigating whether CEO gender is related to threats from activist investors in public firms. Activist investors are extra-organizational stakeholders who, when dissatisfied with some aspect of the way the firm is being managed, seek to change the strategy or operations... Continue reading
Posted 6 days ago at ProfessorBainbridge.com
President Trump has nominated Columbia law professor Robert Jackson to the SEC. Jackson will be one of the two Democratic Commissioners, if confirmed. Although I respect Jackson's considerable intellect, it is a nomination that deeply concerns me. Along with his mentor Lucian Bebchuk, Jackson has been a consistent proponent of federalization of corporate governance, shareholder empowerment, and politicizing disclosure by requiring, inter alia, corporate disclosure of political campaign contributions. We fundamentally disagree on a slew of issues. As the saying goes, it's not personal. It's strictly business. Here's a sampling of posts over the years in which I've taken issue... Continue reading
Posted 6 days ago at ProfessorBainbridge.com
I recommend: One-Pan Wonders: Fuss-Free Meals for Your She... by Cook's Country https://t.co/H0U9H6YKqA via @amazon— Professor Bainbridge (@ProfBainbridge) September 13, 2017 I recommend: Keurig K55 Single Serve Programmable K-Cup Pod C... by Keurig https://t.co/TS1VYWufPp via @amazon— Professor Bainbridge (@ProfBainbridge) September 13, 2017 I recommend: Rösle Stainless Steel Egg Topper with Silicon... by Rosle https://t.co/JeM1WhlEor via @amazon— Professor Bainbridge (@ProfBainbridge) September 13, 2017 I recommend: Fagor LUX Multi-Cooker, 4 quart, Champagne - Ele... by Fagor https://t.co/jdE8jg1tjZ via @amazon— Professor Bainbridge (@ProfBainbridge) September 13, 2017 I recommend RSVP 8 Piece Egg Cup & Spoon Set by RSVP for $16.95 https://t.co/7ThrPZI1sy via @amazon—... Continue reading
Posted Sep 13, 2017 at ProfessorBainbridge.com
The strongest argument against dual class stock rests on conflict of interest grounds. There is good reason to be suspicious of management's motives and conduct in certain mid-term dual class recapitalizations.[1] Dual class transactions motivated by their anti-takeover effects, like all takeover defenses, pose an obvious potential for conflicts of interest. If a hostile bidder succeeds, it is almost certain to remove many of the target's incumbent directors and officers. On the other hand, if the bidder is defeated by incumbent management, target shareholders are deprived of a substantial premium for their shares. A dual class capital structure, of course,... Continue reading
Posted Sep 13, 2017 at ProfessorBainbridge.com
One of the most common arguments against dual class stock is based on notions of corporate democracy. Some argue that shareholder participation in corporate decision making on a one-vote per share basis is desirable in and of itself. This notion makes for powerful rhetoric, but its premise is refuted both by history and modern practice. As the preceding post demonstrated, deviations from the one-vote/one-share standard were historically commonplace. Moreover, the analogy between modern public corporations, even those with a single class of voting shares, and democratic institutions is simply inapt: The corporation law does not operate on the theory that... Continue reading
Posted Sep 13, 2017 at ProfessorBainbridge.com
Dual class stock is back in the news. Institutional investors are seeking ways to delegitimize this governance structure, with some success as reported by the Council of Institutional Investors: Following the egregious no-vote IPO of Snap Inc. and requests by CII and other concerned investor groups, three major index providers opened public consultations on their treatment of no-vote and multi-class structures. The FTSE Russell consultation resulted in a decision to exclude past and future developed market constituents whose free float constitutes less than 5 percent of total voting power. S&P Dow Jones' consultation resulted in a broader, but only forward-looking... Continue reading
Posted Sep 9, 2017 at ProfessorBainbridge.com
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 with dual-class shares from its indices, in particular the S&P 500 Index. ... The surging popularity of this type of capital structure has agitated institutional investors and other types of shareholders that pretend, with no legal support, to be the owners of the companies. Skirmishes... Continue reading
Posted Sep 8, 2017 at ProfessorBainbridge.com
My friend and sometime coauthor Todd Henderson coauthored a very interesting article on Lawyer CEOs, which I am embarrassed to say has been up on SSRN since February but which I have just now read. As is always true of Todd's work, it rewards reading: Abstract: We examine the value of CEOs with specialized professional skills by focusing on CEOs with law degrees and their effect on corporate litigation. We find that lawyer CEOs are associated with both lower litigation frequency and less severe litigation. This relation is observed for most of nine types of common corporate litigation. This reduction... Continue reading
Posted Sep 7, 2017 at ProfessorBainbridge.com
My friend and UCLA colleague Steven Bank is presenting a very interesting paper tomorrow at a faculty colloquium, entitled When Did Tax Avoidance Become Respectable? Abstract: No matter how many tax scandals are revealed in the media – and there have been many in the past year, involving a diverse set of taxpayers ranging from Donald Trump to Apple – what is most remarkable is that, by and large, the public has considered them relatively non-scandalous. This was not always the case. During the 1930s, even the most innocuous tax avoidance maneuvers, such as buying tax-exempt bonds, were attacked as... Continue reading
Posted Sep 7, 2017 at ProfessorBainbridge.com
EW offers up a list of 30 books "of books out there about fantastic lands, bloody history, political intrigue, family backstabbing, and fire-breathing dragons" to tide us over for the interminable wait. I "borrowed" that idea to offer up a list of my own (in no particular order). It's mostly fantasy, but with some SF too. I tried to pick series that create a future history filled with intrigue: Books to Read if You Need More 'Game of Thrones' - The Fellowship of the Ring: Being the First... by J.R.R. Tolkien https://t.co/24LDC7ejXy— Professor Bainbridge (@ProfBainbridge) August 28, 2017 Books to... Continue reading
Posted Aug 28, 2017 at ProfessorBainbridge.com
Conversely, if shareholder activism results in good governance and it doesn't result in greater board diversity, what does that say about diversity? From Bloomberg: Shareholder activists say they shake up companies by bringing in new, better ideas. What they don’t bring, it turns out, is women. Or people of color. Firms targeted by activists end up with more white men on their boards, often replacing women and minorities in the process, according to a study by proxy voting firm ISS. The researchers looked at 380 board seats spread across 93 companies in the Standard & Poor’s 1500 Index targeted by... Continue reading
Posted Aug 28, 2017 at ProfessorBainbridge.com
He argues there is little relief in sight. If Delaware had listened to me, of course, it would have validated fee shifting bylaws and we'd have gotten some relief from this wave of often meritless litigation. Continue reading
Posted Aug 25, 2017 at ProfessorBainbridge.com
SJW investors are likely to demand increasing disclosures and corporation action on environmental, social and governance matters. Which is a big reason that SEC deregulation needs to also include reworking the shareholder proposal rule to prevent investor micromanaging. Continue reading
Posted Aug 23, 2017 at ProfessorBainbridge.com
Can Shareholders Sue CEOs For Corporate Social Activism? https://t.co/4J3SxWcCqw— Professor Bainbridge (@ProfBainbridge) August 23, 2017 Suing The CEO For Social Activism Is Likely To Be Challenging Under Nevada Law https://t.co/7E8ZE5kLp4— Professor Bainbridge (@ProfBainbridge) August 23, 2017 Continue reading
Posted Aug 23, 2017 at ProfessorBainbridge.com
In a post with the above title, Joshua Fershee writes: Over at Above the Law, Prof. Kerriann Stout wrote 10 Things That Will Absolutely Piss Off Your Law Professor. She notes it is not an exhaustive list, but it is a good one and worth a read. This year, I added a new bit of information to my first day of class about how to interact with me about absences and workload. I recommend reading both posts. Continue reading
Posted Aug 23, 2017 at ProfessorBainbridge.com
"Kokesh Footnote 3 Notwithstanding: The Future of the Disgorgement Penalty in SEC Cases" UCLA School of Law, Law-Econ Research Paper No. 17-12 STEPHEN M. BAINBRIDGE, University of California, Los Angeles (UCLA) - School of Law Email: bainbrid@law.ucla.edu Disgorgement of ill-gotten gains long has been a basic tool in the Securities and Exchange Commission’s (SEC) penalty toolkit, despite a paucity of statutory authorization. Because disgorgement lacked a statutory framework, courts have had to flesh out the sanction via interstitial rulemaking. In Kokesh v. SEC, the US Supreme Court took up the seemingly technical—but surprisingly important—question of what statute of limitations applies... Continue reading
Posted Aug 23, 2017 at ProfessorBainbridge.com
The Economist reports: The dispute revisits a question the Supreme Court answered 40 years ago in Abood v City of Detroit Board of Education: whether public-sector unions may charge a fee to non-members for the cost of negotiating their contracts. The unanimous court in Abood began with the premise that many states require all workers in a particular sector to be represented by a union and that members and non-members alike benefit from their work. Given this arrangement, the court reasoned, so-called “agency” or “fair-share” fees preserve “labour peace” and prevent employees from hitching a free ride on the backs... Continue reading
Posted Aug 21, 2017 at ProfessorBainbridge.com