My second “jot” was published on Jotwell last week. Titled “Digital Engagement and the Retail Investor,” the jot summarizes and comments on Sergio Alberto Gramitto Ricci & Christina M. Sautter, Wireless Investors & Apathy Obsolescence, 100 Wash. U. L. Rev. 1653 (2023). The meat of the jot is set forth below.

The article’s insights (and embedded take-aways from Gramitto Ricci and Sautter’s earlier work) are relevant to several large-scale business law topics. Two are most salient for me: shareholder primacy and the reasonable investor standard. Each area of inquiry and debate connects with the composition or behaviors of corporate shareholders.

Whether addressing shareholder primacy as a matter of the locus of corporate governance power as among the corporation’s internal constituents (through, e.g., voting or derivative litigation) or in terms of the objective of board decision making, shareholder apathy and coordination may be important to analyses and judgments. In shareholder primacy debates, assumptions often are made about the nature and interests of corporate shareholders. Changes in the identity and engagement of shareholders may alter those assumptions.

Similarly, the reasonable investor standard (which is incorporated in materiality definitions used in, among other things, federal securities regulation) is rooted in an understanding of investor (including shareholder) identity and conduct. The standard is intended to be objective. But investment markets and investors evolve over time. Thus, objective assessments of them also must evolve. Wireless Investors & Apathy Obsolescence, taken alone or together with Gramitto Ricci and Sautter’s related work, provides evidence of changes in equity investment markets and shareholder behavior patterns that may be significant to applications of the reasonable investor standard.

If I must say so myself, the entire jot is worth a read! But more importantly, the article itself is important to many current (and likely future) conversations in corporate finance.