LAW & ECONOMICS WORKSHOP
presents
Marcel Kahan
New York University Law School
Embattled CEOs
(Marcel Kahan and Edward Rock)
Tuesday, March 9 2010
4:10 – 6:00 p.m.
Solarium (Room FA2) – Falconer Hall
84 Queen’s Park
In this article, we argue that chief executive officers of publicly-held corporations in the United States are losing power to their boards of directors and to their shareholders. This loss of power is recent (say, since 2000) and gradual, but nevertheless represents a significant move away from the imperial CEO who was surrounded by a hand-picked board and lethargic shareholders. After discussing the concept of power and its dimensions, we document the causes and symptoms of the decline in CEO power in several areas: share ownership composition and shareholder activism; governance rules and the board response to shareholder activism; regulatory changes related to shareholder voting; changes in the board of directors; and executive compensation. We argue that this decline in CEO power represents a long-term trend, rather than a temporary response to economic and political conditions. The decline in CEO power has several important implications, including implications with respect to the possibility of a regulatory backlash against certain newly empowered shareholder groups, future development in Delaware’s corporate law, the type of persons who will serve on corporate boards in the future, the type of shareholder initiatives that will be introduced and the corporate response to them, the convergence of corporate laws across countries, the source of resistance to acquisitions and the legal regulation of target defenses, the desirability of legal reforms expanding shareholder voting rights, and the relationship between CEOs and private equity firms.
Marcel Kahan is the George T. Lowy Professor of Law at the New York University School of Law. His main areas of teaching and research are hedge funds, corporate governance, M&A, and bondholder rights. He has written over 40 articles for law reviews, finance journals, and professional publications. His articles have been awarded the Merton Miller Prize for the best paper submitted to the Journal of Business and the De Brauw Prize for the best paper in the ECGI Law Working Paper series and eleven articles have been selected as among the best corporate and securities articles by the Corporate Practice Commentator. Professor Kahan has been Visiting Professor at Harvard Law School, Columbia Law School, and the Hebrew University. He is a member of the Board of Directors of the Center for Law and Business at NYU School of Law (1997-present) and a Research Associate at the European Corporate Governance Institute.
For more workshop information, please contact Nadia Gulezko at n.gulezko@utoronto.ca.
