International perspectives on legal actions against board members, shareholder activism and governance/business regulation substitution
In this paper attention will first be drawn to and explanations sought for the dramatically higher levels of shareholder litigation against directors in the US as compared with other countries. This part will be based on papers I published on this topic in 2009 and 2012.
The second point of focus will be on analyzing global patterns of shareholder activism by hedge funds. Attention will be drawn to how levels of hedge fund activism have increased in various countries over the past dozen years and potential explanations for the trend will be canvassed. This part will draw on a paper published in 2011 and on research done by Dionysia Katelozou for a recently completed PhD under the presenter’s supervision.
The third topic focused on will explain, with particular reference to financial firms (eg banks), how regulation of business activities can substitute corporate governance and vice versa. The presenter will use a paper that forms the basis for a conference in Israel. An explanation will be provided why standards of corporate governance became a higher priority with US financial firms in the wake of deregulation occurring in the 1970s and 1980s. The point will be made that the Dodd-Frank Act, the primary US regulatory response to the financial crisis, involved a mixed response, combining some corporate governance reform with the (re)introduction of restrictions on the business activities of major financial firms (e. the Volcker rule). Though the analysis will be on the US, it will be argued that the basic governance/business regulation substitution point can be generalized to other countries.