Yakov Amihud, Markus M. Schmid & Steven Davidoff Solomon, Do Staggered Boards Affect Firm Value?, — Iowa Law Review — (forthcoming 2017)

We attempt to resolve conflicting empirical results in studies on the wealth effects of staggered boards by addressing issues of endogeneity, omitted variable bias and functional form. In a sample of up to 2,961 firms from 1990 to 2013 we find that additional variables provide significant explanatory power for the (negative) wealth effects of staggered firms found in prior studies, and their inclusion makes the effect of a staggered board on firm value insignificant. When we control for endogeneity by the instrumental variable method, we find again that the staggered board has no significant effect on firm value. Our results suggest caution about legal solutions which advocate wholesale adoption or repeal of the staggered board and instead evidence an individualized firm approach, and provide some measure of skepticism for law-related corporate governance proposals generally.

William W. Bratton, The Separation of Corporate Law and Social Welfare (2017)

It is often said today that, as a matter of economics, shareholder value enhancement proxies as social welfare enhancement. But my essay shows the association to be false. It is also said that shareholding has been democratized, aligning the shareholder interest with that of society as a whole. But this proposition also is false. Although more people have interests in shares, the shareholder interest retains substantially the same upper bracket profile that characterized it at the end of World War II.

Corporate law, thus separated from social welfare, today provides a framework well-suited to attainment of shareholder objectives, which in fact have been realized for the most part. If the practice continues to evolve in this mode, the field of corporate law can be expected to fall away from public policy margin and evolve as a narrow private law domain.

via Columbia Law School

Allen Ferrell, Hao Liang & Luc Renneboog, Socially Responsible Firms (2017)

In the corporate finance tradition, starting with Berle and Means (1932), corporations should generally be run to maximize shareholder value. The agency view of corporate social responsibility (CSR) considers CSR an agency problem and a waste of corporate resources. Given our identification strategy by means of an instrumental variable approach, we find that well-governed firms that suffer less from agency concerns (less cash abundance, positive pay-for-performance, small control wedge, strong minority protection) engage more in CSR. We also find that a positive relation exists between CSR and value and that CSR attenuates the negative relation between managerial entrenchment and value.

via Oxford