Industry employment of active regulators has long raised the concern that it weakens oversight, as regulators might receive financial compensation from firms in exchange for reduced oversight. In response, most public regulators have implemented policies that require regulators to resign from industry employment upon taking office, effectively prohibiting industry employment for active regulators. In contrast,… Read More »
Companies are becoming increasingly vocal about corporate sustainability. Nine out of ten S&P 500 companies voluntarily issued a sustainability report in 2019, detailing their commitments to environmental, social, and governance (ESG) objectives. For example, in Coca Cola’s 2020 ESG report, the company set a goal by 2030 to be “50% led by women” and to match its… Read More »
Around 50-60 percent of international trade involves bilateral “trade credit” extended by the exporter to the importer, or vice versa, and 60-70 percent of this credit is denominated and settled in currencies that are foreign to both the importer and exporter. Foreign currency (FX)-denominated trade, in turn, exposes these firms to exchange rate or “FX”… Read More »
Understanding the forces that govern firms’ auditor choice decisions has long attracted attention from regulators, academics, and practitioners. High-quality auditors can provide greater assurance of the credibility of financial reporting. This improved assurance mitigates agency costs arising from adverse selection and moral hazard between firms and their capital providers, and in turn improves resource allocation and contracting… Read More »
The reports about increased insolvency risk during the recent COVID-19 pandemic highlight the importance of banks’ balance sheet resilience. In times of crisis, regulators are most concerned about the build-up of non-performing loans (NPLs) – many historical examples show that excessive levels of NPLs can seriously endanger financial stability (e.g., in Japan, Italy, Mexico, or Asia). Evidence from the… Read More »
In its “I.G.I.” decision of 30.1.2020 (C-394/18), the Court of Justice of the European Union (CJEU) held that the European creditor protection rules for divisions do not prevent creditors of the company being divided from filing an actio pauliana[1] in accordance with national law. We think this decision is not correct. The I.G.I. decision involved the partial… Read More »
The low-carbon transition is likely to induce drastic changes in our economies that will affect how we produce and consume. Changes in the “real” economy will almost certainly impact the financial structures built upon it, including the balance sheets of states, households, and corporations. The assets that compose these balance sheets may dramatically fall in… Read More »
Injunctions are among the costliest remedies available during patent litigation, as alleged infringers are prohibited to make, use, or sell an item that infringes on a covered patent. Injunctions can result in a devastating impact on a firm when the affected product is important to its business. As patent litigation—and threatened injunctions—has increased dramatically since the 1990s,… Read More »
The following is an edited comment letter that was submitted by Bernard S. Sharfman and James R. Copland to the U.S. Department of Labor with respect to the Department’s proposed rule, Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights (RIN 1210-AC03) The Employee Retirement Income Security Act (ERISA) requires a fiduciary to… Read More »
In November 2021, the President’s Working Group on Financial Markets (PWG) issued a report analyzing the rapid expansion and growing risks of the stablecoin market.[1] Stablecoins are digital assets that claim to maintain a “stable” value with reference to a designated currency (typically the U.S. dollar) or some other asset, index, or formula. PWG’s report concluded that… Read More »
