Firms Gone Dark
Thanks to Robert Bartlett, Lucian Bebchuk, Richard Epstein, Larry Ribstein, Amanda Rose, and other participants in the Symposium, The Going-private Phenomenon: Causes and Implications at The University of Chicago Law School. Ching-Tang Chen, Joey Hipolito, Alex Jadin, Amad Judeh, Thomas King, I-Jung Lee, and Tal Niv provided extremely valuable research assistance. I am also thankful to Larry Goldstein of Santa Monica Partners for helpful conversations on the challenges faced by investors in firms that have gone dark. Financial support from the Boalt Hall Fund is gratefully acknowledged.
The securities laws have permitted hundreds of firms to exit the mandatory disclosure system even though these firms’ shares continue to be publicly traded and may be held by thousands of investors. Such exiting firms are said to “go dark” because they subsequently tend to provide little information to public investors. This Article describes the going-dark phenomenon and considers its implications for the longstanding debate over the desirability of mandatory disclosure. The Article also puts forward a new approach to regulating firms seeking to go dark: giving public shareholders a veto right over exit from mandatory disclosure.
He thanks Russ Ryan, Will Horvath, and the University of Chicago Law Review Online team.
District courts should consider the value of percolation in a given case as part of their analysis in deciding whether to grant a § 1404(a) motion. The value of doing so is even more pronounced in cases with a clear pattern of repeat-player defendants moving for transfer for no apparent reason other than convenience—and perhaps a more amenable court. In such cases, district courts should directly weigh the benefits of percolation against those of judicial economy.
We thank Lucian Bebchuk, Alon Brav, Ryan Bubb, Ed Cheng, Quinn Curtis, Elisabeth de Fontenay, Jared Ellias, Jill Fisch, Joe Grundfest, Cam Harvey, Scott Hirst, Colleen Honigsberg, Marcel Kahan, Louis Kaplow, Jonathan Klick, Brian Leiter, Saul Levmore, Dorothy Lund, John Morley, Mariana Pargendler, Elizabeth Pollman, Roberta Romano, Paolo Saguato, Holger Spamann, George Vojta, and Michael Weber for valuable suggestions and discussions. This Article has benefited from comments by workshop participants at Columbia Law School, George Mason University Antonin Scalia Law School, Georgetown University Law Center, Harvard Law School, Stanford Law School, UC Berkeley School of Law, the University of Chicago Law School, the University of Oxford Faculty of Law, the University of Pennsylvania Carey Law School, the University of Toronto Faculty of Law, the University of Virginia School of Law, and the Washington University School of Law, as well as at the American Law and Economics Association Annual Meeting, the Corporate & Securities Litigation Workshop, the Labex ReFi-NYU-SAFE/LawFin Law & Banking/Finance Conference, and the Utah Winter Deals Conference. Robertson gratefully acknowledges the support of the Douglas Clark and Ruth Ann McNeese Faculty Research Fund. Katy Beeson and Levi Haas provided exceptional research assistance. All errors are our own.
We thank Lucian Bebchuk, Alon Brav, Ryan Bubb, Ed Cheng, Quinn Curtis, Elisabeth de Fontenay, Jared Ellias, Jill Fisch, Joe Grundfest, Cam Harvey, Scott Hirst, Colleen Honigsberg, Marcel Kahan, Louis Kaplow, Jonathan Klick, Brian Leiter, Saul Levmore, Dorothy Lund, John Morley, Mariana Pargendler, Elizabeth Pollman, Roberta Romano, Paolo Saguato, Holger Spamann, George Vojta, and Michael Weber for valuable suggestions and discussions. This Article has benefited from comments by workshop participants at Columbia Law School, George Mason University Antonin Scalia Law School, Georgetown University Law Center, Harvard Law School, Stanford Law School, UC Berkeley School of Law, the University of Chicago Law School, the University of Oxford Faculty of Law, the University of Pennsylvania Carey Law School, the University of Toronto Faculty of Law, the University of Virginia School of Law, and the Washington University School of Law, as well as at the American Law and Economics Association Annual Meeting, the Corporate & Securities Litigation Workshop, the Labex ReFi-NYU-SAFE/LawFin Law & Banking/Finance Conference, and the Utah Winter Deals Conference. Robertson gratefully acknowledges the support of the Douglas Clark and Ruth Ann McNeese Faculty Research Fund. Katy Beeson and Levi Haas provided exceptional research assistance. All errors are our own.
We thank Lucian Bebchuk, Alon Brav, Ryan Bubb, Ed Cheng, Quinn Curtis, Elisabeth de Fontenay, Jared Ellias, Jill Fisch, Joe Grundfest, Cam Harvey, Scott Hirst, Colleen Honigsberg, Marcel Kahan, Louis Kaplow, Jonathan Klick, Brian Leiter, Saul Levmore, Dorothy Lund, John Morley, Mariana Pargendler, Elizabeth Pollman, Roberta Romano, Paolo Saguato, Holger Spamann, George Vojta, and Michael Weber for valuable suggestions and discussions. This Article has benefited from comments by workshop participants at Columbia Law School, George Mason University Antonin Scalia Law School, Georgetown University Law Center, Harvard Law School, Stanford Law School, UC Berkeley School of Law, the University of Chicago Law School, the University of Oxford Faculty of Law, the University of Pennsylvania Carey Law School, the University of Toronto Faculty of Law, the University of Virginia School of Law, and the Washington University School of Law, as well as at the American Law and Economics Association Annual Meeting, the Corporate & Securities Litigation Workshop, the Labex ReFi-NYU-SAFE/LawFin Law & Banking/Finance Conference, and the Utah Winter Deals Conference. Robertson gratefully acknowledges the support of the Douglas Clark and Ruth Ann McNeese Faculty Research Fund. Katy Beeson and Levi Haas provided exceptional research assistance. All errors are our own.
For years, academic experts have championed the widespread adoption of the “Fama-French” factors in legal settings. Factor models are commonly used to perform valuations, performance evaluation and event studies across a wide variety of contexts, many of which rely on data provided by Professor Kenneth French. Yet these data are beset by a problem that the experts themselves did not understand: In a companion article, we document widespread retroactive changes to French’s factor data. These changes are the result of discretionary changes to the construction of the factors and materially affect a broad range of estimates. In this Article, we show how these retroactive changes can have enormous impacts in precisely the settings in which experts have pressed for their use. We provide examples of valuations, performance analysis, and event studies in which the retroactive changes have a large—and even dispositive—effect on an expert’s conclusions.
We would like to thank the participants of the How AI Will Change the Law Symposium, cohosted by the Coase-Sandor Institute, the University of Chicago Law Review Online, and Oxford Business Law Blog, for their helpful comments.
We would like to thank the participants of the How AI Will Change the Law Symposium, cohosted by the Coase-Sandor Institute, the University of Chicago Law Review Online, and Oxford Business Law Blog, for their helpful comments.
Artificial intelligence (AI) has the potential to alter the interpretation of the duties of care, skill, and diligence. As these duties form the foundation for the BJR and equivalent provisions, the development of AI is also expected to impact the BJR. There is a broadening importance, in an increasingly data-driven business environment, of the requirement to gather sufficient information before making a decision and to use information in a valid manner. Changes are both quantitative (how much information to collect) and qualitative (which types of information to collect). The changes also relate to the methods of decision-making, including the role of measures and statistics over intuition.