Corporate Law: Law & Finance eJournal最新文献

{"title":"The Pricing of Bank Bonds, Sovereign Credit Risk and ECB’s Asset Purchase Programmes","authors":"Ricardo Branco, João M. Pinto, Ricardo Ribeiro","doi":"10.2139/ssrn.3691310","DOIUrl":"https://doi.org/10.2139/ssrn.3691310","url":null,"abstract":"The 2008 Global financial crisis and the subsequent European sovereign debt crisis deteriorated banks funding conditions and lead to a substitution effect among bond instruments. We examine the pricing of straight, covered and securitization bonds issued by European banks in the 2000-2016 period, with a particular focus on the effect of sovereign credit risk and ECB's asset purchase programmes on spreads. We nd that (i) straight, covered and securitization bonds are priced in segmented markets, (ii) the impact of common pricing determinants on spreads differ significantly between non-crisis and crisis periods, (iii) sovereign credit risk is an important determinant of banks' cost of funding, especially in crisis periods, (iv) ECB's asset purchase programmes exhibited mixed effectiveness in improving banks funding conditions, (v) contractual bond characteristics other than credit ratings, macroeconomic factors and bank characteristics are important determinants of spreads, and (vi) there is evidence of heterogeneity across countries.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"5 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-09-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84074301","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"A New Theory of Material Adverse Effects","authors":"Robert T. Miller","doi":"10.2139/ssrn.3706580","DOIUrl":"https://doi.org/10.2139/ssrn.3706580","url":null,"abstract":"MAE clauses in business combination agreements almost never define the phrase “material adverse effect,” and so the meaning of that key expression derives primarily from a line of Delaware cases starting with In re IBP Shareholders Litigation. In that case, the court said that a material adverse effect requires an event that substantially threatens the overall earnings potential of the target in a durationally-significant manner. In implementing this standard in IBP and subsequent cases, the courts have had to determine how the target’s earnings should be measured (e.g., by EBITDA or by some other measure of cashflow), how changes in earnings should be determined (e.g., which fiscal periods should be compared with which), and how large a diminution in earnings is material. Neither IBP nor subsequent cases have provided clear and convincing resolutions of these issues. On the contrary, later cases have introduced yet new problems, such as whether it matters that the risk that has materialized and adversely affected the target’s business was known to the acquirer at signing, whether material adverse effects should be measured in quantitative ways, qualitative ways, or both, and whether a material adverse effect must be felt by the company within a certain period of time after the occurrence of the event causing the effect. This article proposes a new understanding of material adverse effects that solves all of these problems. Beginning from the foundational premise that a material adverse effect should be understood from the perspective of a reasonable acquirer, this article argues that such an effect is a material reduction in the value of the company as reasonably understood in accordance with accepted principles of corporate finance—that is, as a material reduction in the present value of all the company’s future cashflows. Hence, to determine if there has been a material adverse effect, the court has to value the company twice, once as of the date of signing and again as of the date of the alleged material adverse effect, in each case much as it would in an appraisal action. Valuing the company is easier and more reliable in the MAE context than in the appraisal context, however, not only because the court need obtain only a range of values for the company at the two relevant times (and not pinpoint valuations as in appraisal proceedings) but also because it turns out that there is a canonical way to determine if a reduction in the value of the company would be material to a reasonable acquirer. The new theory of MAEs presented here solves all of the problems in the caselaw noted above and explains why those problems could not be solved with the conceptual resources available in the existing caselaw.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"126 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74852292","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Regulating FinTech: From Legal Marketing to the Pro-Competitive Paradigm","authors":"G. Colangelo, O. Borgogno","doi":"10.2139/ssrn.3563447","DOIUrl":"https://doi.org/10.2139/ssrn.3563447","url":null,"abstract":"The increasing pace of FinTech development has triggered a worldwide race among policy makers to overhaul their own regulatory landscape in order to be as innovation-friendly as possible. Consequently, a vast array of new tools and regulatory practices have emerged over the last years. The paper provides a critical systematisation of regulatory strategies and toolkits that have emerged so far (such as regulatory sandboxes and innovation hubs), stressing the increasing role played by legal marketing as a by-product of regulatory competition. Furthermore, the article describes and supports the paradigm of pro-competitive regulation underlying Open Banking projects in the EU, UK, Australia and other jurisdictions as the true game-changer approach that can unlock the potential of FinTech innovation.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"26 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-08-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81297054","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The Impact of G-Sib Identification on Bank Lending: Evidence from Syndicated Loans","authors":"M. Behn, Alexander Schramm","doi":"10.2139/ssrn.3667089","DOIUrl":"https://doi.org/10.2139/ssrn.3667089","url":null,"abstract":"This paper uses granular data on syndicated loans to analyse the impact of international reforms for Global Systemically Important Banks (G-SIBs) on bank lending behaviour. Using a difference-in-differences estimation strategy, we find no effect of the reforms on overall credit supply, while at the same time documenting a substantial decline in borrower- and loan-specific risk factors for the affected banks. Moreover, we detect a significant decline in the pricing gap between interest rates charged by G-SIBs and other banks, which we interpret as indirect evidence for a reduction in funding cost subsidies. Overall, our results suggest that the G-SIB reforms have helped to mitigate moral hazard problems associated with systemically important banks, while the consequences for the real economy have been limited. JEL Classification: G20, G21, G28","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"22 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-08-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90928319","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Cryptocurrency Meets Bankruptcy Law: A Call for Creditor Status for Investors in Initial Coin Offerings","authors":"M. Albert, J. S. Colesanti","doi":"10.2139/ssrn.3646237","DOIUrl":"https://doi.org/10.2139/ssrn.3646237","url":null,"abstract":"In 1973, experts Homer Kripke and John Slain published a seminal study titled “The Interface Between Securities Regulation and Bankruptcy.” That lengthy analysis, contributed by, respectively, a former Securities and Exchange Commission official and a professor of law, examined the status quo and concluded that investors were receiving unfair priority vis-a-vis creditors in bankruptcy proceedings administered under the federal Bankruptcy Code. Focusing on the traditional “absolute priority rule,” the study pointed out that the Securities and Exchange Commission (SEC) support for the investor priority was unfounded and urged deference to the notion of general creditors coming first. \u0000 \u0000Since then, a host of developments has complicated both the analysis and the traditional view of Kripke and Slain. First, the pivotal determination of “rescinding shareholder” has been made complex by, inter alia, an expanded notion of “sophisticated investor” occasioned by phenomena such as “crowdfunding.” Second, stock swaps, hedges, repurchase agreements and other hybrid responses to financier discomfort have clouded the definition of “investor.” Finally, the explosive growth of cryptocurrencies (and the ventures that would sell, distribute, trade or package them) has highlighted the need for a new, softer line between creditor and investor. \u0000 \u0000Accordingly, the present authors re-visit the “absolute priority rule” with a view towards historic SEC involvement with Bankruptcy law and contemporary classification of some cryptocurrency-related entities as securities issuers. The article concludes that in light of the existing provisions and interpretations, the “absolute priority rule” examined through the lens of today’s innovative securities should be rethought to give investors in initial coin offerings creditor status. Whether the reader agrees or not is likely subordinated to the need for a conversation on the most egalitarian response – under both the securities laws and the Bankruptcy Code – to the investor’s claim for in pari passu treatment normally reserved for creditors, and likewise the general creditors’ opposition to sharing a legally enforceable priority.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"23 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"91243407","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Securities for Expense Statutes: Easing Shareholder Hopelessness?","authors":"M. Albert","doi":"10.2139/ssrn.3644675","DOIUrl":"https://doi.org/10.2139/ssrn.3644675","url":null,"abstract":"The quintessential derivative suit is a suit by a shareholder to force the corporation to sue a manager for fraud, which is admittedly an awkward and likely unpleasant endeavor and, according to the Supreme Court, a “remedy born of stockholder helplessness. Stockholders who hold no concurrent management role are indeed limited in their arsenal to combat perceived managerial neglect or malfeasance. Other than exercising their voting rights to bring about a change in management, these shareholders are at the whim of their elected and appointment champions, subject of course to the not insignificant fiduciary duties imposed on these managers. <br><br>Where ownership and control of an enterprise are vested in the same population, the need for a corrective mechanism like a derivative suit is greatly lessened because the owner/managers self-interest will arguably guide managerial conduct. But where ownership and control are in separate hands, the incentives change and managerial conduct may not conform to the owners’ view of the best course of action. This may lead to what the owners consider to be director misconduct. The existing corporate laws have not been effective in stopping this kind of director misconduct, so “stockholders, in face of gravest abuses, were singularly impotent in obtaining redress of abuses of trust.” In these situations, shareholders are arguably in need of legal strategies to protect them from abuses by management.<br><br>Presumably in an effort to limit the abuse of strike suits that would take up both managerial time and resources and corporate dollars, several significant procedural hurdles for derivative plaintiffs have arisen including the requirement of contemporaneous share ownership, a requirement that derivative plaintiffs make a “demand” on the corporation, with particularity, to take requested action, the lack of access to the discovery process, and compliance with any relevant security for expense statutes. Balancing the right of shareholders to hold their directors accountable against the need for directors to have the freedom and autonomy to discharge their statutory and fiduciary duties is no easy feat. That said, these hurdles, when combined, may erode or even undermine the ultimate utility of the derivative litigation process. <br><br>This Article provides an evaluation and analysis of one of the primary procedural roadblocks facing derivative plaintiffs as they seek to hold their corporation accountable: the security for expense statute. The theory behind these security for expense statutes is that they will act as a sieve and somehow weed out strike suits that have no merit. A major problem is these suits have no true metric to determine which suits are in fact meritorious. They all use percentage of stock or market value of stock owned as some sort of proxy for thoughtful and meritorious litigation. The theory implicitly assumes that stockholder with less than the required threshold will not bring meritorio","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"37 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79273705","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Bank Stress Test Results and Their Impact on Consumer Credit Markets","authors":"Sumit Agarwal, Xudong An, Larry Cordell, Raluca A. Roman","doi":"10.2139/ssrn.3657340","DOIUrl":"https://doi.org/10.2139/ssrn.3657340","url":null,"abstract":"Using Federal Reserve (Fed) confidential stress test data, we exploit the gap between the Fed and bank capital projections as an exogenous shock to banks and analyze how this shock is transmitted to consumer credit markets. First, we document that banks in the 90th percentile of the capital gap reduce their new supply of risky credit by 13 percent compared with those in the 10th percentile and cut their overall credit card risk exposure on an annual basis. Next, we show that these banks find alternative ways to remain competitive and attract customers by lowering interest rates and offering more rewards and promotions to select groups of borrowers. Finally, we show that consumers at banks with a gap increase their credit card spending and debt payoff and at the same time experience fewer delinquencies. We also show that our results are generalizable to other lending products such as mortgages and home equity. Overall, our results demonstrate a positive feedback loop among credit supply, credit usage, and credit performance due to the stress tests.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"32 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81331140","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The Advisory and Monitoring Roles of the Board - Evidence from Disruptive Events","authors":"E. Croci, G. Hertig, Layla Khoja, Luh Luh Lan","doi":"10.2139/ssrn.3581712","DOIUrl":"https://doi.org/10.2139/ssrn.3581712","url":null,"abstract":"We study the contribution of directors to firm resilience by assessing the relative importance of their advisory and monitoring roles at times of crisis. Based on manually collected US data, we document that four bord-related variables affect market reactions around disruptive events. Board independence and the presence of directors with industry expertise exacerbate the negative share price effect, whereas the converse is true for director busyness and board size. These reactions imply that, in times of crisis, advice-oriented boards fare better than monitoring-oriented boards.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"82 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-04-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75309787","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Empirical Test of Pecking Order Theory for the US Listed Firms","authors":"Zaur Abdullazade","doi":"10.2139/ssrn.3583126","DOIUrl":"https://doi.org/10.2139/ssrn.3583126","url":null,"abstract":"This paper is aimed at examining the appropriateness of pecking order theory in the US financial market. One of the most popular models of firm’s capital structure driven by asymmetric information is the pecking order theory (POT) of Myers (1984). It is based on the argument that firms have preference ranking over sources of funds for financing based on the corresponding information asymmetry costs (Myers et al. 1984, p.15). In recent studies, many interesting discussions have been generated about the POT. These studies attempt to detect the extent to which POT describes the financing choices of firms. The results of relevant studies as well as recent evidence in the context of the US economy are presented in this research paper. Aggregated, disaggregated and controlled variable methods are employed for testing relevance of POT by using the sample of firms over three-year period. Results of the current research can help to understand how the US listed firms determine their optimal debt levels.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"57 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-04-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84468495","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The Market Impact of Systemic Risk Capital Surcharges","authors":"Yalin Gündüz","doi":"10.2139/ssrn.3581059","DOIUrl":"https://doi.org/10.2139/ssrn.3581059","url":null,"abstract":"This paper tests whether an increase or decrease of the capital surcharge for being a global systemically important bank (G-SIB) envisaged by regulators has an impact on the CDS prices of these banks. We find evidence that the CDS spreads of a G-SIB bank increase (decrease) after the announcement of a higher (lower) capital surcharge. However, this effect is temporary, as the mean CDS spreads revert to pre-announcement level, dropping sharply after the initial rise. Our analysis contributes to the debate on whether being designated as a G-SIB bank necessarily leads to implicit \"too-big-to-fail\" subsidies. The findings imply that the investors immediately update their beliefs on the systemic risk of the bank after the bucket reallocation announcement and temporarily demand more hedging against systemic risk.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"110 3 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-04-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89752204","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}