Friday, April 26, 2013
Below is the Call for Papers for a new workshop dedicated to bringing together corporate law scholars who write on litigation issues.
Call for Papers: The University of Illinois College of Law and the University of Richmond School of Law invite submissions for the First Annual Workshop for Corporate & Securities Litigation. This workshop will be held on Friday, November 8, 2013, in Chicago, Illinois.
OVERVIEW: This annual workshop will bring together scholars focused on corporate and securities litigation to present their works-in-progress. Papers addressing any aspect of corporate and securities litigation or enforcement are eligible. Appropriate topics include, but are not limited to, securities litigation, fiduciary duty litigation, or comparative approaches to business litigation. We welcome scholars working in a variety of methodologies, including empirical analysis, law and economics, law and sociology, and traditional doctrinal analysis. Authors whose papers are selected will be invited to present their work at a workshop hosted by the University of Illinois College of Law in Chicago, Illinois, on Friday November 8, 2013. Local costs (lodging and workshop meals) will be covered. Participants are asked to pay for their own travel expenses. The workshop is designed to maximize discussion and feedback. All participants will have read the selected papers. The author will provide a brief introduction to the paper, but the majority of the individual sessions will be devoted to collective discussion of the paper involved.
SUBMISSION PROCEDURE: If you are interested in participating, please send an abstract of the paper you would like to present to Jessica Erickson at email@example.com not later than Friday, May 31, 2013. Please include your name, current position, and contact information in the e-mail accompanying the submission. Authors of accepted papers will be notified by Friday, June 28.
QUESTIONS: Any questions concerning the workshop should be directed to the organizers—Professor Verity Winship (firstname.lastname@example.org) and Professor Jessica Erickson (email@example.com).
Wednesday, April 24, 2013
Macia and Moeller of TCU have posted their paper, Signaling and Risk Allocation in Merger Agreements. They argue that targets use firm specific MAC carveouts to signal their unobservable quality. By declining to include firm specific MAC carveouts (e.g. carveouts relating to restatements or CEO retention, etc), high quality firms are able to create a separation from low quality firms that tend to include more firm specific MAC carveouts. It's an interesting paper. I will ignore (not really) their subtle finance dig:
[T]here are only few rigorous academic studies about MAC clauses, arguably because of a lack of readily available data. Instead, MAC clauses have been almost exclusively studied by practitioners and legal scholars.
Ahem...ok, temper in check. Here's the abstract:
Acquirers and targets allocate interim risk in merger agreements through Material Adverse Change (MAC) clauses and exclusions [bjmq: e.g. carveouts]. While virtually all acquisitions have MAC clauses, there is broad cross-sectional variation in the number and type of MAC exclusions. Using comprehensive hand-collected data, we find that acquisitions with fewer firm-specific MAC exclusions, i.e., stronger abandonment options for the acquirers, are associated with higher acquirer announcement returns, higher combined surplus gains, higher target announcement returns, and better prior target performance. Fewer firm-specific MAC exclusions appear to be credible signals of higher target quality and are more prevalent when information asymmetries are likely high and signaling is particularly beneficial. In contrast, more market-wide MAC exclusions are not associated with higher acquirer or target gains although acquirers tend to assume the largely exogenous, market-wide interim risk when the expected completion periods are longer.
Monday, April 22, 2013
In 2011, we blogged about the derivative litigation in Delaware challenging News Corp's acquisition of Shine ("I just bought my daughter's company", and "More troubles for Murdoch") and now that case has been settled. It's not often these days that you get litigation challenging actions by the buyer's boards. Typically, it's sellers' boards who are going to be on the hook. This case, though, provided a nice opportunity for plaintiffs to chase a big fish while also have the burdens of proof on their side.
You'll remember, the acquisition of Shine Group Ltd involved the acquisition of Mr. Murdoch's daughter's production company for $675 million. Sure, why not? Except there are public shareholders. Oh, them...
Now, the case has been settled (Settlement MOU). Here's what the plaintiffs got:
1. a $139 million settlement payment (including attorney fees)
2. Corporate governance and compliance enhancements as follows, including
- Creation of a Compliance Steering Committee for the corporation
- The independent directors will approve the hiring of a Chief Compliance Officer for the corporation
- Creation of an anonymous whistleblowing hotline
- Annual public disclosure of direct political contributions made to candidates, parties, or PACs
- Designation of a lead independent director
- Reforms to board nomination process
- Adoption of specific policies with respect to related party transactions [Really? They didn't have that already!? I'm shocked.]
- Board appointment of CEO, CFO, COO, and GC
I wonder which of these is going to hurt more? The cash or the governance changes? One question and I suppose it's already been contemplated by the parties, do they have to disclose the cash equivalent value of FoxNews as a political contribution? I guess not.