Contracts Between Firms and Shareholders

Schoenfeld, Jordan

doi:10.1111/1475-679x.12297

Cited by 22 publications

(4 citation statements)

References 139 publications

(229 reference statements)

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“…Recent work bySchoenfeld (2018) studies the determinants (but not the terms or consequences) of contracts between a wide variety of shareholders (not focusing on activists) and publicly-traded companies. In contrast to the settlement agreements in our study, the contracts in his study include a variety of provisions that pertain to financing terms, trading, directorships, payout policy, joint ventures, financial reporting, and selective disclosure.…”

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confidence: 99%

Dancing With Activists

Bebchuk

Brav

Jiang

et al. 2019

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An important milestone often reached in the life of an activist engagement is entering into a "settlement" agreement between the activist and the target's board. Using a comprehensive handcollected data set, we analyze the drivers, nature, and consequences of such settlement agreements. Settlements are more likely when the activist has a credible threat to win board seats in a proxy fight and when incumbents' reputation concerns are stronger. Consistent with incomplete contracting, face-saving benefits and private information considerations, settlements commonly do not contract directly on operational or leadership changes sought by the activist but rather on board composition changes. Settlements are accompanied by positive stock price reactions, and they are subsequently followed by changes of the type sought by activists, including CEO turnover, higher shareholder payouts, and improved operating performance. We find no evidence to support concerns that settlements enable activists to extract rents at the expense of other investors. Our analysis provides a look into the "black box" of activist engagements and contributes to understanding how activism brings about changes in target companies.

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confidence: 99%

Dancing With Activists

Bebchuk

Brav

Jiang

et al. 2019

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“…Nevertheless, not all provisions of articles of association have the same legal effect. They can be divided into mandatory and facultative provisions, 65 where within the facultative provisions, it is possible to insert the contractual clauses which would apply to all shareholders. Such contractual clauses are, for example, the composition of the management board, arbitration clauses, and others.…”

Section: Conflict Of Articles Of Association and Shareholders' Agreem...mentioning

confidence: 99%

How Can Shareholders’ Agreements Shape Corporate Governance and Directors’ Liability?

Filipović

2023

iele

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The interplay between contract and state corporate law in shaping corporate governance is not a novelty. In this article author questions the impact of private ordering through the shareholders' agreement (further in text: SA) on corporate governance and possibly on the director's duties and liabilities. The author argues that the SA might have far-reaching consequences for all the stakeholders and third persons as there are only a few limitations to its content, mainly referring to the mandatory rules of corporate law and general limitations of contract law. It means shareholders can impose additional rules for governance to directors, for transfer of shares, employment policy, and others. The author shall question whether SA can modify the articles of association. This article aims to reassess the balance between corporate and contract law instruments for the companies' governance. The author argues that analyzing corporate governance without considering contractual tools, such as SA, becomes incomplete and seriously undermines rethinking fundamental principles of corporate governance, such as the issue of directors' liability.

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“…Seminal work by Brav, Jiang, Partnoy, and Thomas (2008) shows that 13D-announcement returns for activist hedge funds average 7%. Since then, others have shown announcement returns to be a function of factors such as the target's inherent characteristics, the activist's reputation, the composition of the 13D, and early engagement between the target and the activist (Greenwood and Schor (2009), Klein and Zur (2009), Krishnan, Partnoy, and Thomas (2016), Aiken andLee (2020), andSchoenfeld (2020)). More recent research examines the trading activity of corporate insiders ahead of a 13D; these insiders acquire more shares when they detect share acquisition by activists, which gives the insiders more voting power to combat the activist (Chabakauri, Fos, and Jiang (2022)).…”

Section: Related Literaturementioning

confidence: 99%

Shining a Light in a Dark Corner: Does EDGAR Search Activity Reveal the Strategically Leaked Plans of Activist Investors?

Flugum¹,

Lee²,

Souther

2022

J. Financ. Quant. Anal.

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We provide evidence of a network of information flow between activists and other investors prior to 13D filings. We match EDGAR search activity to investor IP addresses, identifying specific investors who persistently download information on an individual activist’s campaign targets in the days prior to that activist’s 13D disclosures. This outside investor’s knowledge of pending activist campaign plans seems to benefit both parties: the informed investor, unnamed in the 13D, increases its holdings in the targeted stock prior to the price surge upon 13D disclosure, while the activist earns voting support that increases their likelihood of pursuing and winning a proxy fight.

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Contracts Between Firms and Shareholders

Cited by 22 publications

References 139 publications

Dancing With Activists

Dancing With Activists

How Can Shareholders’ Agreements Shape Corporate Governance and Directors’ Liability?

Shining a Light in a Dark Corner: Does EDGAR Search Activity Reveal the Strategically Leaked Plans of Activist Investors?

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