Insolvency Law in Emerging Markets

Gurrea‐Martínez, Aurelio

doi:10.2139/ssrn.3606395

Cited by 7 publications

(12 citation statements)

References 36 publications

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“…Finally, it should be kept in mind that if the efficient market hypothesis is controversial in countries with sophisticated capital markets such as the United States, there will be more reasons to be sceptical about the validity of this hypothesis in countries with less sophisticated markets and actors. 54 Fifth, while the use of dual-class shares can indeed isolate firms from activist investors, this can actually destroy rather than increase value. On the one hand, shareholder activists perform a valuable monitoring function in the market.…”

Section: The Risks and Costs Of Dual-class Share Structuresmentioning

confidence: 99%

“…On the one hand, shareholder activists perform a valuable monitoring function in the market. 55 Therefore, they can reduce agency problems and increase the value of firms. 56 On the other hand, shareholder activists can also implement value-enhancing strategies.…”

Section: The Risks and Costs Of Dual-class Share Structuresmentioning

confidence: 99%

“…58 Therefore, isolating companies from shareholder activists may end up destroying value. 59 Sixth, it should be taken into account that, even if, at an early stage, founders have a unique vision that can create value for everyone, this vision can become obsolete, or the founders can become incompetent or less enthusiastic at some point in the future. 60 Therefore, the fact that founders might be entitled to keep running the firm forever might not be the most value-maximizing option for society.…”

Section: The Risks and Costs Of Dual-class Share Structuresmentioning

confidence: 99%

“…192 For that purpose, companies seeking to go public with dualclass shares may show the robustness of their corporate governance system, especially from the perspective of minority investors. 193 These measures may include the empowerment of minority shareholders (even including some independent directors directly appointed by minority shareholders), 194 and the use of majority of minority approvals for certain transactions. 195 In my view, subjective factors-such as the uniqueness of the business model or the particular expertise of the foundershould not be assessed by the stock exchange, since only the marketplace will judge the attractiveness of the company's strategy and business model.…”

Section: Choosing the Optimal Response To The Dual-class Share Puzzlementioning

confidence: 99%

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Theory, Evidence, and Policy on Dual-Class Shares: A Country-Specific Response to a Global Debate

Gurrea‐Martínez

2021

Eur Bus Org Law Rev

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Dual-class shares have become one of the most controversial issues in today's capital markets and corporate governance debates. In the past years, academics, regulators, policymakers and stock exchanges from all over the world have been discussing whether companies should be allowed to go public with dual-class shares and, if so, which restrictions should be imposed. After analysing the regulatory approach to dual-class shares existing in several jurisdictions around the world, this article shows that countries seem to have adopted three primary models to deal with dual-class share structures: (i) the imposition of bans traditionally existing in the United Kingdom, Australia and several jurisdictions in Asia, Europe and Latin America; (ii) the permissive model allowing dual-class structures without any significant restrictions, as it happens in the United States, Sweden, and the Netherlands; and (iii) the restrictive approach implemented in Singapore, Hong Kong, Canada, India and Mainland China. It will be argued that, despite the global nature of the debate on dual-class shares, regulators should be careful when analysing foreign studies and approaches since the optimal regulatory model to deal with dual-class shares depends on a variety of local factors. Namely, this article argues that, in countries with sophisticated markets and regulators, strong legal protection for minority investors, and low private benefits of control, regulators should allow companies to go public with dual-class shares with no restrictions or minor regulatory intervention. By contrast, in countries without sophisticated markets and regulators, high private benefits of control, and weak legal protection for minority investors, dual-class shares should be prohibited or subject to higher restrictions. Finally, intermediate solutions should be adopted for countries with mixed features. Therefore, the key question to be addressed from a policy perspective is not whether companies should be allowed to go public with dual-class shares, as many authors and regulators have been discussing in the past years, but whether dual-class class shares should be allowed and, if so, under which conditions, taking into account the particular features of a country.

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Section: The Risks and Costs Of Dual-class Share Structuresmentioning

confidence: 99%

Section: The Risks and Costs Of Dual-class Share Structuresmentioning

confidence: 99%

Section: The Risks and Costs Of Dual-class Share Structuresmentioning

confidence: 99%

Section: Choosing the Optimal Response To The Dual-class Share Puzzlementioning

confidence: 99%

See 2 more Smart Citations

Theory, Evidence, and Policy on Dual-Class Shares: A Country-Specific Response to a Global Debate

Gurrea‐Martínez

2021

Eur Bus Org Law Rev

Self Cite

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“…86 As a result, changing the way insolvency law has been traditionally taught and understood in many countries can also reduce the stigma traditionally associated with this area of law. 87…”

Section: Reducing the Stigma Of Insolvencymentioning

confidence: 99%

Implementing an insolvency framework for micro and small firms

Gurrea‐Martínez

2021

Intl Insolvency Rev

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Micro‐, small‐, and medium‐sized enterprises (MSMEs) represent the vast majority of businesses in most countries around the world. Despite the economic relevance of these firms, most insolvency jurisdictions do not provide adequate responses to MSMEs. Moreover, with a few exceptions, the academic literature on insolvency law has not traditionally focused on the treatment of MSMEs in insolvency. This article seeks to contribute to the debate by exploring the primary features and problems of MSMEs in insolvency as well as the weaknesses of the ordinary insolvency framework to deal with MSMEs. It also provides a general overview of the primary reforms and policy recommendations taking place around the world to deal with MSMEs in insolvency. The article concludes by suggesting several strategies to design an efficient insolvency framework for MSMEs.

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The Rise of Pre-Packs as a Restructuring Tool: Theory, Evidence and Policy

Gurrea‐Martínez

2022

Eur Bus Org Law Rev

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Insolvency Law in Emerging Markets

Cited by 7 publications

References 36 publications

Theory, Evidence, and Policy on Dual-Class Shares: A Country-Specific Response to a Global Debate

Theory, Evidence, and Policy on Dual-Class Shares: A Country-Specific Response to a Global Debate

Implementing an insolvency framework for micro and small firms

The Rise of Pre-Packs as a Restructuring Tool: Theory, Evidence and Policy

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