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That markets are less than perfectly efficient is hardly a controversial proposition; indeed, several examples of notable market efficiencies were presented to the Supreme Court this past Term when it considered the continuing vitality to the fraud-on-the-market challenge in Halliburton.  Many of those examples, however, are several years old – which is why it was so amusing for me to see two new instances of dramatic inefficiencies just in the last month.

First, the New York Times published a piece, How Our Taxi Article Happened to Undercut the Efficient Market Hypothesis, explaining how publication of an article on falling medallion prices sent the stock price of Medallion Financial – a company that issues loans secured by taxi medallions – tumbling.  This was surprising because information about taxi medallion prices is public, so the stock should not have been reacted to the news.  Josh Barro, author of both pieces, speculates that the price drop may have occurred because some of the information in his article may have been difficult for investors to obtain, particularly since false information regarding medallion prices had been (inadvertently) circulated by the New York Taxi and Limousine Commission.

(Which, by the way, suggests that courts…

Joshua Fershee has previously noted that men and women experience careers in business differently.  If women want to get to the top, they often have a longer haul than men.

Previous research has also shown that women are evaluated negatively for seeking raises (an attitude that Microsoft’s CEO inadvertently seemed to endorse) and that (at least in the tech industry) performance reviews of women tend to be more critical than those of men, and include more personality-based criticism.

Now a new study in the Harvard Business Review shows that men and women have very different expectations regarding how they balance their careers and their personal lives when they graduate from Harvard Business School – and men’s expectations are more accurate than women’s.

According to the study, in general, men who graduate from HBS expect their careers will take precedence over their spouses’ careers – and they turn out to be right.  Women expect that their careers will have equal importance – and their hopes are dashed.  (It should be noted that men’s responses differ along racial lines; men of color tend to expect a more equal division of career precedence). 

The authors conclude:

Whatever the explanation, this disconnect

…

I recently participated in an institutional investor round table where one of the topics of the day was high frequency trading. Although embarrassed to do so, I will admit that I had to do some serious groundwork on this topic because I had heretofore largely avoided it in any substantive way. If you (or your students) are in the position I was in just a few weeks ago, this post may be a good starting point to understanding a very complex and interested set of issues.

Being new to the high frequency trading debate, I needed to build a basic understanding of the issues. If you haven’t read Michael Lewis’ Flash Boys (or anything other than this delightful synopsis courtesy of the NYT Magazine) check out Forbes’ explanation of high frequency trading.  Even if YOU don’t need it, this is a great reference for students interested in the topic.  

Of course, another starting point was the flash crash of 2010, where the Dow Jones Industrial Average fell over 1000 points in a matter of minutes.  The flash crash wasn’t the start of high frequency trading, but it was an event that highlighted the role it plays in…

Professor Lucian Bebchuk runs the Harvard Shareholder Rights Project, which helps investors filed proposals to be included in corporate proxies under Rule 14a-8.  The Project has filed several precatory proposals to express shareholders’ views that corporations should destagger their boards, arguing that research demonstrates that declassified boards improve corporate returns.

In a new paper posted to SSRN, SEC Commissioner Daniel Gallagher and Professor Joseph Grundfest accuse the Project of making misleading statements regarding the benefits of declassified boards.  They suggest that Harvard could be vulnerable to lawsuits by shareholders or the SEC under Rule 14a-9, which forbids false statements in proxy solicitations.  The paper, with the provocative title “Did Harvard Violate Federal Securities Law?” is discussed in the Wall Street Journal here.

The basic argument made by Gallagher and Grundfest is that the proposals misleadingly cite only research in favor of declassified boards, and fail to cite contradictory research. 

Now, I have to say, I’m trying to evaluate how this claim would proceed if brought by a private shareholder, and I don’t like its chances.  First, as Gallagher and Grundfest admit, the proposals are precatory – so even if they succeed, they only have an effect if the…

The end of the semester is here. And, once again, I’m giving my Business Associations students a single, end-of-semester exam that counts for almost all of their grade.

My on-line Accounting for Lawyers class is different. My Accounting students have multiple assignments due each week, and they get feedback from me on each assignment. Those weekly assignments count for 30% of their final grade.

I know what the educational research says: a single end-of-semester evaluation is not as effective in promoting learning as multiple evaluations throughout the semester. My experience with regular assessment in Accounting for Lawyers confirms that. Since I began teaching Accounting for Lawyers this way three years ago, the final exams have been much better. Students are clearly learning more, and they have been rewarded with higher grades than I gave before.

So why do many law professors continue to rely on a single, end-of-semester exam?

Student expectations are a major issue. I have tried multiple exams in the past, but my students didn’t like it. After the first year of law school, they’re used to the end-of-semester format; multiple assessments require them to change their study routines. Assessment throughout the semester also changes the classroom dynamic…

Particularly in the context of benefit corporations, a lot of us have used this space to talk about whether corporate directors are in fact required to adhere to a shareholder-wealth-maximization norm.  The flipside of this inquiry is to ask what shareholder wealth maximization means from the shareholders’ viewpoint.

In his article Fictional Shareholders: For Whom are Corporate Managers Trustees, Revisited, Daniel Greenwood uses the term “fictional shareholders” to describe the mythical share-value-maximizing shareholder to whom corporate directors are theoretically beholden, who does not possess any interests, values, or priorities beyond shareholder wealth maximization.

One of the most striking examples of the “fictional shareholder” notion can be found in the D.C. Circuit’s opinion in Business Roundtable v. SEC, 647 F.3d 1144 (D.C. Cir. 2011), where the court rejected the SEC’s proxy access rule in part on the ground that some shareholders might put forth director-nominees for the “wrong” reasons – i.e., reasons specific to their idiosyncratic interests outside of their status as shareholders, unrelated to corporate wealth maximization.  See generally Grant M. Hayden and Matthew T. Bodie, The Bizarre Law and Economics of Business Roundtable v. SEC.

Of course, in real life, shareholders do in fact have interests…