1) Insider Trading, Shareholder Activism, and Innovations in Governance Models – Dual Class Shares v. the Alibaba Model
This session explores three “hot button” issues in securities law and corporate governance. The Second Circuit’s decision in Newman threatens to throw a monkey wrench into many traditional insider trading prosecutions. We will discuss the implications of that decision and steps that the SEC and DoJ can take to respond, including legislation, rulemaking, and reliance on mail and wire fraud statutes. Shareholder activism has also risen to unprecedented levels, and we will discuss the causes and implications of this powerful trend. Finally, dual class shares are now quite common among successful tech companies that have recently gone public. We will explore the implications of dual class voting, and contrast dual class voting rights with Alibaba’s governance structure which vests de facto control in the hands of a committee of senior Alibaba executives.
This session will cover what journalists should know about requirements for financial literacy by corporate board members. The purpose of the income statement is not to report income; once you understand this, you’ll have mastered the basics. Topics will include controversies over revenue recognition; the single most important understanding about cash flow analysis; how some lie with accounting statistics; the convergence of US GAAP with International Financial Reporting Standards (IFRS); the important measure of income that journalists hide from their readers; and wreaking havoc with executory contracts.
3) Corporate Finance
This session will evaluate and deconstruct the key issues of corporate finance that confront directors and review how managers should make investment decisions and what tools capable directors (and journalists) might use to study and evaluate those decisions. Topics include simple and complex discounting, cash flow analysis; free cash flows, and the incorporation of probability analysis in investment decisions. Discussion will include the role of the cost of capital, how to measure the cost of capital, and how directors (and others) might think more clearly about risky projects. We will review the modern relevance of the various Modigliani-Miller (MM) financing propositions.