As the world returns to something more recognizably normal, it seems natural to ask what the economy will look like after the pandemic. Will things ever go back to how they were, or are we facing a new – and altogether different – reality? Whenever a crisis – political, economic, or social – impacts… Read More »
Since 2005, the Securities and Exchange Commission (SEC) mandates that all publicly-traded firms inform investors about material risks that may impact future performance. These are referred to as risk factor disclosures, which are discussed within Item 1A of 10-K filings. These risk disclosures have been criticized as lengthy and boilerplate (IRRC 2016; SEC 2016); it… Read More »
Regulators such as the Securities and Exchange Commission (SEC) and Department of Justice (DOJ) are allowed to seek any remedy that is necessary to protect investors following violations of securities law. One remedy increasingly being used is the requirement that violating firms hire a corporate monitor at their own expense, who is charged with supervising… Read More »
The climate crisis presents a challenge of unprecedented scale for policymakers around the globe. Unsurprisingly, corporate governance has drawn considerable attention in this context from scholars and regulators alike. This has resulted in an abundance of policy proposals—some already implemented and others still being debated—to ensure that corporations play their part as the world transitions… Read More »
To what extent can the risk of litigation against auditors be beneficial or harmful to companies? Auditors play an important role in financial contracting by certifying the credibility and reliability of financial statements that third parties rely upon. Increased risk of liability claims against auditors by third parties could result in huge financial costs and… Read More »
Corporate indebtedness has risen sharply in the wake of the global financial crisis as low interest rates enticed many firms to issue bonds and borrow from banks. This debt surge occurred in developed countries and emerging markets alike. As a result, the total debt of non-financial companies increased from 84 percent of global GDP in… Read More »
Decentralized fundraising through Initial Coin Offerings (ICOs) for early-stage ventures is one important new business model that has only become viable through blockchain technology and smart contracts. Utility tokens, voucher-like assets providing access to a service or product that a venture promises to provide in the future, are generally considered as perfectly disintermediated peer-to-peer transactions,… Read More »
Hedging marketable risks is a strategic corporate decision. Locking in interest rates, exchange rates, and commodity prices allows the firm’s expected cash flows and margins to be protected against unexpected changes in these variables. For example, firms that strategically hedged against severe energy price changes are now relatively shielded from surging prices. Most empirical studies… Read More »
Between August and February of 2011, Pandora Media granted over six million stock options, each with an exercise price of $3.14. Pandora stated this exercise price was greater than or equal to the fair market value of its common stock. Five months later, on June 14, 2011, Pandora completed its initial public offering (IPO), issuing… Read More »
Firms rely extensively on debt financing. While debt has many benefits, value can be destroyed when lenders worry they will not be repaid. For example, a firm at risk of liquidating may lose customers who derive utility from future interactions with a stable business. Likewise, a firm may be perceived by consumers as having low… Read More »
