Rocking the Boat: How Relative Performance Evaluation Affects Corporate Risk Taking

Courtesy of Truc (Peter) Thuc Do, Huai Zhang, and Luo Zuo Relative Performance Evaluation (RPE) allows a firm to compensate its managers according to the firm’ performance relative to the performance of peer firms. A typical RPE contract has two distinct features. First, relative rather than absolute performance matters. Under an RPE contract, the CEO […]

The Resilience of French Companies to the COVID-19 Crisis

Courtesy of Alexandre Garel and Arthur Petit-Romec The COVID-19 outbreak has massively disrupted the life of individuals and imposed huge financial costs on almost all firms. As first diagnosed by Ramelli and Wagner (2020), on February 24, the U.S. stock market started to oscillate wildly and many firms saw much of their equity destroyed by […]

Do Directors Drive Corporate Sustainability?

Courtesy of Peter Iliev and Lukas Roth Climate change and providing equal opportunities are some of the biggest challenges the world faces in achieving a better and more sustainable future for all. In recent years, firms’ environmental and social sustainability policies have moved into the spotlight. Policymakers, investors, and special interest groups push firms to […]

Responsible Banking Should Not Remain Just a Global Slogan

Courtesy of Mete Feridun As the COVID-19 pandemic continues to threaten the global economy and financial markets, the global banking sector is approaching a tipping point for changing its overall culture and behaviour towards a more responsible banking model. This is because it is increasingly clear that recovery from the COVID-19 crisis will take longer […]

Beyond Board Duties: A Comparative Look at Monitoring, Risk Management & Compliance

Courtesy of Virginia Harper Ho* One of the most important functions of modern corporate boards is their risk oversight role, a responsibility that comes to the fore whenever corporate scandals emerge.  In most jurisdictions, risk oversight is enforced partly as a matter of fiduciary duty. But, as the COVID-19 pandemic has made clear, board monitoring […]

Director Networks and Firm Value

Courtesy of Tor-Erik Bakke, Jeffrey Black, Hamed Mahmudi, and Scott Linn Are the professional networks of corporate directors valuable? More connected directors may have better information and more influence, which can increase firm value. However, directors with larger networks may also be busy or spread value-decreasing management practices. To identify the effect of director networks […]

“Basel V” Should Target the “Green Swan”

Courtesy of Mete Feridun Recently, the Bank for International Settlements (BIS) coined the term “green swan” to refer to the tail risks posed by climate change to financial stability. Although inspired by Nassim Nicholas Taleb’s “black swan,” the moniker of unexpected risks, the BIS argues that the green swan is hardly similar to the black […]

The New Geographies of Corporate Law Production

Courtesy of Dionysia Katelouzou and Peer C. Zumbansen Writing about the past trajectories and future prospects of corporate law production amidst the COVID-19 crisis presents several challenges, above all with regard to motivation and justification. Should reflections on how in the past, companies have been run, and in the future, might be run, be of […]

The Death of Trust Across the Finance Industry

Courtesy of Peter Limbach, P. Raghavendra Rau, and Henrik Schürmann The financial sector plays a crucial role in a country’s economic development. For example, better developed financial systems are associated with faster economic growth, increased levels of technological innovation, and reduced poverty. A well-functioning financial system depends on the reliability of contracts and contractors. This […]

Theorizing Transnational Fiduciary Law

Courtesy of Seth Davis & Gregory Shaffer What do asset protection trusts in the Cook Islands and Alaska, the UN Environment Program’s “Fiduciary Duty for the 21st Century” report, and the Mitsubishi UFJ Trust and Banking Corporation have in common? They are all examples of transnational fiduciary law.[1] Fiduciary law is a global phenomenon. It […]