These are some of the compliance-related stories that recently caught my attention.
The Knowledge Transfer Equation by V. Mary Abraham
But how do we transfer knowledge effectively? The answer Davenport & Prusak offer may not be exactly what you were looking for:
“The short answer, and the best one, is: hire smart people and let them talk to one another.” [More…]
Regulatory Changes and the Cost of Capital for Banks by Anna Kovner, Peter Van Tassel, and Brandon Zborowski in Liberty Street Economics
Measuring the cost of capital requires a model because expected (as opposed to realized) stock returns are not observed empirically. In this blog post, we use the Capital Asset Pricing Model (CAPM) to estimate the cost of capital. The CAPM provides a benchmark estimate of expected stock returns from an equilibrium model that is often used by market participants. Our staff report provides additional cost of capital estimates from related multifactor models. [More…]
How the S.E.C. Is Trying to Push Traditional Corporate Governance Upon Tesla by Peter J. Henning in DealBook
The S.E.C. may be doing the dirty work for Tesla’s directors by getting Mr. Musk to move the company toward a more traditional management structure so that he is not the focal point of its operations. Whether or not it succeeds, it will be worth watching. [More…]
N.Y. Appellate Court: Coverage Precluded for Disgorgement “Penalty” by Kevin LaCroix in the D&O Diary
In the latest development in nearly decade-long legal battle, a New York intermediate appellate court has held in light of the U.S. Supreme Court’s 2017 decision in Kokesh v. SEC that amounts Bear Stearns paid under an SEC disgorgement order represent a “penalty” for which coverage is precluded under the bank’s insurance policy. This ruling, which overturned a trial court order holding that the disgorgement amount was covered, represents a substantial reversal of fortune for the claimants in this long-running and high-profile insurance coverage dispute. While further proceedings in the case seem likely, the ruling nevertheless represents a setback for policyholders seeking to establish insurance coverage for disgorgement amounts. The intermediate appellate court’s September 20, 2018 opinion can be found here. [More…]
The Long and Short of It: Do Public and Private Firms Invest Differently? (.pdf) by Naomi Feldman, Laura Kawano, Elena Patel, Nirupama Rao, Michael Stevens, and Jesse Edgerton
Using data from U.S. corporate tax returns, which provide a sample representative of the universe of U.S. corporations, we investigate the differential investment propensities of public and private firms. Re-weighting the data to generate observationally comparable sets of public and private firms, we find robust evidence that public firms invest more overall, particularly in R&D. Exploiting within-firm variation in public status, we find that firms dedicate more of their investment to R&D following IPO, and reduce these investments upon going private. Our findings suggest that public stock markets facilitate greater investment, on average, particularly in risky, uncollateralized investments [More…]
Och-Ziff Case Teaches Another Costly Lesson About Hiding Bad News by Sue Reisinger in Corporate Counsel
Och-Ziff Capital Management Group, one of the world’s largest hedge funds, agreed Tuesday to pay nearly $29 million to settle a class action suit accusing the company of not disclosing a material fact—an African bribery investigation carried out by federal prosecutors from 2014 to 2016. [More…]
