August 17, 2012
In response to a proposed rule being considered by the Securities and Exchange Commission that narrows the timeframe in which shareholders must disclose when they hold five percent or more of a company’s holdings, Harvard Law School Professor Lucian Bebchuk LL.M. '80 S.J.D. '84 published an op-ed in the New York Times DealBook on Aug. 15 entitled, “Don’t Discourage Outside Shareholders.” In his op-ed, Bebchuk writes that such a change could “unduly discourage the creation and activism of outside shareholders, who play an important role in corporate governance.”
“The Securities and Exchange Commission would do well to conduct a comprehensive examination of the rules governing the balance of power between incumbent directors and outside shareholders,” he writes. “In the meantime, however, the S.E.C. should not impose a hard 5 percent cap. Existing research and evidence raise significant concerns that such a tightening would hurt investors and the economy.”
The William J. Friedman and Alicia Townsend Friedman Professor of Law, Economics, and Finance and director of the Program on Corporate Governance at HLS, Bebchuk recently co-authored a study on “The Law and Economics of Bookholder Disclosure,” with Columbia Law Professor Robert J. Jackson Jr.
Bebchuk is the co-author, with HLS Professor Jesse Fried, of “Pay without Performance: The Unfulfilled Promise of Executive Compensation” (Harvard University Press, 2004). His research—which focuses on corporate governance, law and finance, and law and economics—is available on his SSRN page.