Making Sense of Magna

In 2010, Magna International Inc. (Magna) obtained court approval of an arrangement to buy back its super-voting shares, which placed control in the hands of a shareholder with 0.6 per cent of the equity, at a 1,800 per cent premium to non-voting shares. I agree with the decision to approve but disagree with some of the court\u27s reasons. Magna\u27s board failed to provide a clear description of the possible benefits of the transaction. For example, theory and empirical analysis challenge the board\u27s suggestion that liquidity benefits would help justify the arrangement. The board and the court also failed to describe clearly the beneficiaries of the transaction. A special committee of the board concluded that Magna would benefit from the arrangement but offered no conclusion on whether shareholders would benefit. This is internally inconsistent: Since Magna issued shares as consideration in the arrangement, the only way to determine whether Magna would benefit on net was to determine the arrangement\u27s impact on share value. I analyze these and other errors, identify the possible benefits and beneficiaries of the arrangement, and conclude that while the court could have been more critical of Magna\u27s approach, it was correct to look to shareholder support-both from market signals and from voting-as a justification for approving the arrangement

Some of the Causes and Consequences of Corporate Ownership Concentration in Canada

The June 1997 edition of Canadian Business ranks the top ten Canadian corporations in terms of growth. It states of its number-one performer, the Goldfarb Corporation, Goldfarb\u27s expansion strategy is founded on a few basic principles: First, look to invest in global companies.... Second, own more than 50% of the company in order to consolidate and control the business. Last, use Goldfarb\u27s own marketing expertise. It states of its number-three performer, on the other hand, Question: What turns a $395-million pipeline company into a$2.5 billion powerhouse in just three years? Answer: losing the majority shareholder. Ever since Olympia and York Developments Ltd. sold its 65% stake in IPL Energy Inc. of Calgary in 1992, IPL has grown with a vengeance. Instead of maximizing dividend payouts to satisfy cash-hungry O&Y, it has focused on expansion ( Performance 500, Top 10 1997, 137, 141; emphasis added). Mere pages apart, the magazine partially credits majority ownership with driving a successful company and blames majority ownership for restraining the performance of a potentially successful company. As this paper will discuss, there may be some truth to both opinions. At least since the time of Adam Smith, commentators have expressed concern about the effect of separating those who own a corporation from those who manage it, an effect resulting from the adoption of a widely held ownership structure (Smith 1937, 700; Berle and Means 1933). The suggested problem is that, if those who manage do not have a personal interest in the returns generated by the firm\u27s assets, those assets will be utilized in a way that may be beneficial to the manager but not to the owners. Berle and Means (1933), however, were more pessimistic, predicting not only that corporations not owned by their managers would underperform corporations owned by managers but also that these widely held corporations would eventually become the norm in developing industrial economies. The argument was simple. As an economy grows and firms strive for scale economies, entrepreneur-managers are not capable of raising money to finance the firm\u27s growth on their own and thus are compelled to go to equity markets to finance expansion. In repeatedly going to equity markets, of course, the entrepreneur eventually loses control of the firm. Because of the unceasing demand for capital in a rapidly industrializing society, the economy will in time largely comprise widely held corporations, which, given their inadequate governance by disinterested managers, does not bode well for the efficiency of the economy. It is apparent, however, that Berle and Means overstated the likelihood of an economy replete with widely held firms. While the widely held corporation is indeed the norm in the United States, firms controlled by very few shareholders remain predominant in other industrialized countries, such as Germany, Japan, and Canada. In Canada, for example, Morck and Stangeland (1994) report that just under 16 percent of the 550 largest corporations in Canada in 1989 were widely held in the sense that no single shareholder owned more than 20 percent of outstanding voting stock. Using the same definition, Demsetz and Lehn (1985) had found earlier that almost 50 percent of the largest 511 corporations in the United States were widely held. We first provide. a brief outline of the literature on corporate governance and ownership concentration. l Next, we examine legal issues that, as a positive matter, may have contributed to the concentrated ownership structure in Canada. We then examine the normative implications of these causal relations

The Role of Crown Corporations in the Canadian Economy: An Analytical Framework

Government interference in markets arouses heated emotions on both sides of the political spectrum. But the fact remains that governments of all stripes routinely play a direct role in the economy. Motivations run the gamut from the economic (correcting perceived market failures) to the ethical (addressing social injustice) to the nakedly political (ideology or the status quo demands it). This paper offers a highly readable theoretical and practical framework for understanding federal and provincial governments’ market interventions in sectors including power generation, alcohol and mail delivery. Public ownership can advance a range of normative objectives, so the choices, reasons and outcomes for the government, the Canadian economy, Crown corporation employees and the general public can vary as widely as the enterprises involved. But in asking why and how and assessing ways and means, the authors bring together a substantial body of knowledge and expertise, providing an essential guide to a phenomenon that, like it or not, will remain a major part of Canada’s economic landscape for a long time to come

Troponin-only Manchester Acute Coronary Syndromes (T-MACS) decision aid: single biomarker re-derivation and external validation in three cohorts.

BACKGROUND: The original Manchester Acute Coronary Syndromes model (MACS) 'rules in' and 'rules out' acute coronary syndromes (ACS) using high sensitivity cardiac troponin T (hs-cTnT) and heart-type fatty acid binding protein (H-FABP) measured at admission. The latter is not always available. We aimed to refine and validate MACS as Troponin-only Manchester Acute Coronary Syndromes (T-MACS), cutting down the biomarkers to just hs-cTnT. METHODS: We present secondary analyses from four prospective diagnostic cohort studies including patients presenting to the ED with suspected ACS. Data were collected and hs-cTnT measured on arrival. The primary outcome was ACS, defined as prevalent acute myocardial infarction (AMI) or incident death, AMI or coronary revascularisation within 30 days. T-MACS was built in one cohort (derivation set) and validated in three external cohorts (validation set). RESULTS: At the 'rule out' threshold, in the derivation set (n=703), T-MACS had 99.3% (95% CI 97.3% to 99.9%) negative predictive value (NPV) and 98.7% (95.3%-99.8%) sensitivity for ACS, 'ruling out' 37.7% patients (specificity 47.6%, positive predictive value (PPV) 34.0%). In the validation set (n=1459), T-MACS had 99.3% (98.3%-99.8%) NPV and 98.1% (95.2%-99.5%) sensitivity, 'ruling out' 40.4% (n=590) patients (specificity 47.0%, PPV 23.9%). T-MACS would 'rule in' 10.1% and 4.7% patients in the respective sets, of which 100.0% and 91.3% had ACS. C-statistics for the original and refined rules were similar (T-MACS 0.91 vs MACS 0.90 on validation). CONCLUSIONS: T-MACS could 'rule out' ACS in 40% of patients, while 'ruling in' 5% at highest risk using a single hs-cTnT measurement on arrival. As a clinical decision aid, T-MACS could therefore help to conserve healthcare resources

Ernst Freund as Precursor of the Rational Study of Corporate Law

Gindis, David, Ernst Freund as Precursor of the Rational Study of Corporate Law (October 27, 2017). Journal of Institutional Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2905547, doi: https://dx.doi.org/10.2139/ssrn.2905547The rise of large business corporations in the late 19th century compelled many American observers to admit that the nature of the corporation had yet to be understood. Published in this context, Ernst Freund's little-known The Legal Nature of Corporations (1897) was an original attempt to come to terms with a new legal and economic reality. But it can also be described, to paraphrase Oliver Wendell Holmes, as the earliest example of the rational study of corporate law. The paper shows that Freund had the intuitions of an institutional economist, and engaged in what today would be called comparative institutional analysis. Remarkably, his argument that the corporate form secures property against insider defection and against outsiders anticipated recent work on entity shielding and capital lock-in, and can be read as an early contribution to what today would be called the theory of the firm.Peer reviewe

No Exit? Withdrawal Rights and the Law of Corporate Reorganizations

Bankruptcy scholarship is largely a debate about the comparative merits of a mandatory regime on one hand and bankruptcy by free design on the other. By the standard account, the current law of corporate reorganization is mandatory. Various rules that cannot be avoided ensure that investors’ actions are limited and they do not exercise their rights against specialized assets in a way that destroys the value of a business as a whole. These rules solve collective action problems and reduce the risk of bargaining failure. But there are costs to a mandatory regime. In particular, investors cannot design their rights to achieve optimal monitoring as they could in a system of bankruptcy by free design. This Article suggests that the academic debate has missed a fundamental feature of the law. Bankruptcy operates on legal entities, not on firms in the economic sense. For this reason, sophisticated investors do not face a mandatory regime at all. The ability of investors to place assets in separate entities gives them the ability to create specific withdrawal rights in the event the firm encounters financial distress. There is nothing mandatory about rules like the automatic stay when assets can be partitioned off into legal entities that are beyond the reach of the bankruptcy judge. Thus, by partitioning assets of one economic enterprise into different legal entities, investors can create a tailored bankruptcy regime. In this way, legal entities serve as building blocks that can be combined to create specific and varied but transparent investor withdrawal rights. This regime of tailored bankruptcy has been unrecognized and underappreciated and may be preferable to both mandatory and free design regimes. By allowing a limited number of investors to opt out of bankruptcy in a particular, discrete, and visible way, investors as a group may be able to both limit the risk of bargaining failure and at the same time enjoy the disciplining effect that a withdrawal right brings with it

Search for dark matter produced in association with bottom or top quarks in √s = 13 TeV pp collisions with the ATLAS detector

A search for weakly interacting massive particle dark matter produced in association with bottom or top quarks is presented. Final states containing third-generation quarks and miss- ing transverse momentum are considered. The analysis uses 36.1 fb−1 of proton–proton collision data recorded by the ATLAS experiment at √s = 13 TeV in 2015 and 2016. No significant excess of events above the estimated backgrounds is observed. The results are in- terpreted in the framework of simplified models of spin-0 dark-matter mediators. For colour- neutral spin-0 mediators produced in association with top quarks and decaying into a pair of dark-matter particles, mediator masses below 50 GeV are excluded assuming a dark-matter candidate mass of 1 GeV and unitary couplings. For scalar and pseudoscalar mediators produced in association with bottom quarks, the search sets limits on the production cross- section of 300 times the predicted rate for mediators with masses between 10 and 50 GeV and assuming a dark-matter mass of 1 GeV and unitary coupling. Constraints on colour- charged scalar simplified models are also presented. Assuming a dark-matter particle mass of 35 GeV, mediator particles with mass below 1.1 TeV are excluded for couplings yielding a dark-matter relic density consistent with measurements

The FASER Detector

FASER, the ForwArd Search ExpeRiment, is an experiment dedicated to searching for light, extremely weakly-interacting particles at CERN's Large Hadron Collider (LHC). Such particles may be produced in the very forward direction of the LHC's high-energy collisions and then decay to visible particles inside the FASER detector, which is placed 480 m downstream of the ATLAS interaction point, aligned with the beam collisions axis. FASER also includes a sub-detector, FASER$\nu$, designed to detect neutrinos produced in the LHC collisions and to study their properties. In this paper, each component of the FASER detector is described in detail, as well as the installation of the experiment system and its commissioning using cosmic-rays collected in September 2021 and during the LHC pilot beam test carried out in October 2021. FASER will start taking LHC collision data in 2022, and will run throughout LHC Run 3