Crosslisting and regulatory competition

1
Cross-listing and regulatory competition

• Bonding theory of cross-listing
• SOXs effect on foreign firms
• Foreign firm exit and political fallout
• Implications for regulatory competition
• Policy analysis
• Political analysis
• Implications for comparative corporate law
• Law and finance
• Convergence
• Need for mandatory disclosure regulation?

2
Insider trading costs

• Harm to buyers and sellers?
• Trading with and against the market
• Effect on disclosure
• Harm to owners of information
• Harm to market
• Investor perceptions of rigged game
• Bid-ask spread
• Amount of trading
• Market efficiency
• Resource allocation

3
Insider trading benefits

• Executive compensation
• Effect on incentives
• Effect on risk aversion
• Producing information
• Communicating information
• Why not just more disclosure?

4
The misappropriation theory

• Chiarella, Dirks and OHagan
• Basis of liability deception
• Illustration springloading
• What type of fiduciary duty Chestman
• Other requirements
• Materiality?
• Scienter?

5
Why federal law?

• Exchange regulation
• State law contract and fiduciary duty
• Federal law based on state duty
• Scope of state remedy
• Federal preemption
• Choice of law

6
Insider trading Is current law enough?

• Evidence of pre-merger trading.
• Changing the definition of insider trading.
• Need to increase remedies?
• Disclosure before trading?

7
Frontiers of regulation

• Outsider trading Ayres/Choi and excessive search
• Selling and . . .
• Voting (encumbered shares)
• Competing
• Suing
• Squealing
• Picketing
• Prediction markets

8
Takeover example
Sale of Mylan shares
Perry
Retention of vote
Mylan (bidder) Icahn
King (target)
9
Relation to other issues

• Jurisdictional competition
• Executive compensation
• Fiduciary duties
• Takeovers
• Market efficiency
• Disclosure regulation and fraud remedies
• Comparative corporate law
• The role of the media Wall Street