Agriculture as an asset class: reshaping the South African farming sector

International audienc

Improving Social Impact Bonds: Assessing Alternative Financial Models to Scale Pay-for-Success

Social Impact Bonds (SIBs) represent a new and innovative tool for promoting social welfare. If implemented correctly, they could represent a new frontier for public-private partnerships and philanthropic-private contracts. The limitations on the private provisioning of social welfare programs are decreasing, and recent technology allows for more accurate cost-benefit analysis and the measurement of more meaningful performance indicators. Taken together, these factors increase the technical feasibility of SIBs

Understanding the (IR)Relevance of Shareholder Votes on M&A Deals

Has corporate law and its bundles of fiduciary obligations become irrelevant? Over the last thirty years, the American public corporation has undergone a profound metamorphosis, transforming itself from a business with dispersed ownership to one whose ownership is highly concentrated in the hands of sophisticated financial institutions. Corporate law has not been immutable to these changes so that current doctrine now accords to a shareholder vote two effects: first, the vote satisfies a statutory mandate that shareholders approve a deal, and second and significantly, the vote insulates the transaction and its actors from any claim of misconduct incident the approved transaction. This article takes issue with the courts and commentators who have so elevated the impact of shareholder approval to insulate misconduct. We develop why it is not reasonable to believe that the shareholders’ competencies extend to adjudging managerial misconduct, why that conclusion is inconsistent with other modern corporate law developments, and why such shareholder ratification is likely both coerced and poorly considered. We also point out that the position of courts and commentators who pronounce the death of corporate fiduciary law is deeply qualified by the deep conflicts of interest institutional investors face when voting as well as the very real threat that today’s ecology that supports shareholder activism is likely to change so that the voice of the discontented shareholder will be at least more muted in the future. Finally, we provide strong empirical support based on a sample of 852 merger deals from 2000 to 2015 that there is a very large thumb on the scale that pushes all deals toward approval, regardless of any allegations of wrongdoing. We observe substantial ownership changes at target corporations, sometimes as high as 40 to 50% of their stock, from long-term investors to hedge funds upon the announcement of a deal and before the consummation of the transaction with a shareholder vote. This change reflects the merger arbitrageurs’ actions. We further show that this change in ownership has a positive and statistically significant impact on the likelihood of merger deals garnering the required shareholder approval. We conclude that the Delaware courts need to rethink their obsession with the shareholder vote, renounce the current doctrinal trends that are taking them in the wrong direction, and return to their historic role of evaluating whether directors have satisfied their fiduciary duties in M&A transactions

Firm Acquisitions and Technology Strategy: Corporate versus Private Equity Investors

Over the last few years, worldwide mergers and acquisitions (M&A) have increased sharply both in terms of value and volume. This development has not only been driven by corporate acquirers but also to an increasing extent by private equity investors. In this paper, we analyze differences in acquisition motives for corporate and private equity investors. We pay particular attention to the importance of technological assets in M&A transactions and distinguish between the technological value of patents and their potential to block competitors in technology markets. Our empirical results for European firm acquisitions in the period from 1999 to 2003 show that both corporate and private equity investors pay a higher price for target firms with valuable patents. However, patents with a potential to block technology competitors seem to be only of interest to corporate investors, especially if these are closely related to the patent portfolio of the acquirer. --M&A,technology,patents,corporate and private equity investors

Stabilizing Neighborhoods Impacted by Concentrated Foreclosures: Scattered-Site Rental Housing Challenges and Opportunities

The negative impacts of concentrated foreclosures have been destabilizing communities across the country. Community development corporations (CDCs) and other nonprofits that are active in these neighborhoods face falling property values, decreased lending activity and other consequences that are complicating their efforts at community revitalization through acquisition, rehabilitation and resale of vacant and foreclosed housing stock. Given the current crisis in the housing and credit markets, community development corporations aiming for neighborhood stabilization may wish to acquire foreclosed single-family properties and operate them as scattered-site rental units instead. This study presents the challenges that nonprofits pursuing such a plan are likely to face. It discusses the main management, financing and political issues associated with developing and operating scattered-site rental housing while providing a foundation upon which CDCs considering such activities can evaluate their capacity and willingness to meet the challenges. The paper explores how local market conditions, internal organizational capacity and the current policy environment affect nonprofit efforts to acquire, rehabilitate and rent foreclosed properties. The study includes operational and advocacy recommendations for improving the context in which scattered-site rental housing can be managed. The paper also considers the unique difficulties of the current situation and concludes that comprehensive revitalization efforts that emphasize cross-sectoral partnerships and enjoy strong local government support are most likely to exert a positive impact on a community

Venture Capitalism, New Markets and Innovation-led Economic Growth

This paper explores the new market-mediating mechanisms linking SU invention on the one hand and economic growth on the other. Two such mechanisms come to our mind under venture capitalism (of which venture capitalism is directly involved only in the first): 1) a systemic rather than haphazard link between radical inventions and the emergence of new product markets; and 2) a link between new product markets) on the one hand and invention & unbundled technology markets on the other. The first highlights not only the volatility and precariousness of the R&D companies which operated prior to venture capitalism, but also, and related to this, the weak links that existed then between radical invention and the emergence of new markets. There are two aspects of 2) above: 2a) derived demand for improvements in the product and process technology underlying a market (and industry); and 2b) a demand for a substitute, disruptive technology which could replace the existing one. In both cases market size signals the ‘benefits’ to be derived from improving or substituting the underlying technology.

Corporate governance and hedge fund management

Conventional thinking about governance issues for hedge funds is to view them as mutual funds or money managers. This article proposes an alternative view -- that hedge fund governance is best understood by looking at limited partnerships or public firms that are similar in terms of either their assets or liabilities. This reasoning suggests that most hedge funds can be classified into only two groups for the purpose of understanding governance issues: funds that engage in proprietary trading and those that are more like private equity partnerships. ; The analysis implicitly explains why proprietary-trading-like hedge funds replaced the unlimited liability partnerships of the Wall Street investment houses that preceded them: Unlimited liability partnerships require higher opportunity costs of capital than hedge funds with strong incentive contracts. ; Similarly, the separation of ownership and control associated with proprietary trading in a public firm suggests that this organizational form is viable only for those entities that have substantial franchise values based on reputation. From this perspective, private-equity-like hedge funds are much like niche firms in the larger private equity universe ; The analysis in this article provides the scaffolding for assessing the net burden of regulation, the author concludes, but the real heavy lifting requires a more detailed explication of the nature of and limits to contractibility in these markets.Hedge funds ; Corporate governance

Corporate ownership and the theory of the multinational enterprise

This paper makes a contribution to the theory of the multinational enterprise (MNE) and, in particular, to why firms undertake foreign direct investment (FDI) rather than alternative strategies. We argue that FDI and its strategic alternatives involve different patterns of costs and returns over time, and hence different levels of risk and uncertainty. Traditional theories of the MNE conceptualize the firm as a risk-neutral decision-making entity with short-term efficiency objectives, and hence do not take these issues into account. This may be reasonable for firms with passive professional managers and widely-dispersed shareholders, operating in countries with the Anglo-American system of corporate governance. But many firms operate under quite different systems of corporate governance where concentrated shareholdings are commonplace and markets for corporate control are weak or non-existent. In these cases, shareholders exert considerable influence on all aspects of firm strategy including FDI. Furthermore, different groups of shareholders (State, family, institutions) are likely to have different objectives, different attitudes towards risk, and different decision-making time horizons. We thus suggest that the traditional theories of the MNE need to be extended to embrace consideration of corporate ownership (and other governance dimensions)