Snapchat\u27s Gift: Equity Culture in High-Tech Firms

Snap, Inc., the company that owns the platform Snapchat, controbersially offered nonvoting common shares to the public in 2017. This Article asks what it means to invest in Snap or other (mostly technology-based) companies in which common shareholders collectibely have little or no power to influence corporate policy. In particular, why do such investors expect to be compensated? This Article explores the familiar rationales for equity investing, including stock appreciation and dividends, and the logical shortcomings of those rationales in these circumstances. Adopting Henry Manne\u27s two systems approach to corporate affairs through both law and economics, we show that corporation law fails to ensure that corporations return business profits to shareholders. A similar analysis of the market for corporate control concludes that, without shareholder boting, the market for corporate control also fails to ensure a return to shareholders. Shareholders who invest in firms in the absence of legal or market mechanisms to secure a return on their inbestment, howeber, are not irrational. Instead, inbestors rely on cultural understandings of appropriate reciprocity. This Article employs Marcel Mauss\u27s cultural anthropology classic, The Gift, to explain the equity culture in which shareholders invest in Snap and other high-technology firms, and in which such firms operate. This Article concludes by suggesting some ramifications of understanding shareholding, and consequently management, in terms of equity culture. This Article also complements the substantial work of behabioral economics in explaining inbestor choice and organizational behabiors. The field of corporate finance traditionally has been organized around the figure of the rationally self-interested indibidual. Behabioral economics argues that people are not as rational as orthodox corporate finance assumes. This Article argues that people in markets are not as individual as corporate finance assumes

Snapchat\u27s Gift: Equity Culture in High-Tech Firms

Snap, Inc., the company that owns the platform Snapchat, controversially offered nonvoting common shares to the public in 2017. This Article asks what it means to invest in Snap or other (mostly technology-based) companies in which common shareholders collectibely have little or no power to influence corporate policy. In particular, why do such investors expect to be compensated? This Article explores the familiar rationales for equity investing, including stock appreciation and dividends, and the logical shortcomings of those rationales in these circumstances. Adopting Henry Manne\u27s two systems approach to corporate affairs through both law and economics, we show that corporation law fails to ensure that corporations return business profits to shareholders. A similar analysis of the market for corporate control concludes that, without shareholder boting, the market for corporate control also fails to ensure a return to shareholders. Shareholders who invest in firms in the absence of legal or market mechanisms to secure a return on their investment, however, are not irrational. Instead, investors rely on cultural understandings of appropriate reciprocity. This Article employs Marcel Mauss\u27s cultural anthropology classic, The Gift, to explain the equity culture in which shareholders invest in Snap and other high-technology firms, and in which such firms operate. This Article concludes by suggesting some ramifications of understanding shareholding, and consequently management, in terms of equity culture. This Article also complements the substantial work of behavioral economics in explaining investor choice and organizational behaviors. The field of corporate finance traditionally has been organized around the figure of the rationally self-interested individual. Behavioral economics argues that people are not as rational as orthodox corporate finance assumes. This Article argues that people in markets are not as individual as corporate finance assumes

Unicorns, Guardians, and the Concentration of the U.S. Equity Markets

I. Introduction II. The Republican Equity Market of the Twentieth Century ... A. Law as Response to Marketplace Power in the Late Nineteenth and Early Twentieth Centuries ... B. Corporation Law and the Threat to the Republic ... C. Securities Law, Disclosure, and Bureaucratization … D. Participation III. Private Equity Markets ... A. Introduction ... B. The Rise of the Private Equity Market and the Relative Decline of the Initial Public Offering Market ... C. Reasons for the Rise of the Private Equity Market and the Decline of the Initial Public Offering Market ... 1. Cost ... 2. Deep, Nonpublic Pools of Capital ... 3. Interest Rate Environment … 4. Modest Capital Requirements of New Businesses ... D. Requiem for the Public Equity Market? IV. The Contemporary Public Equity Markets ... A. Introduction ... B. Rise of the Institutional Investor ... C. The Shift from Actively Managed to Passively Managed Funds ... D. Possible Consequences of Institutional-Investor Dominance ... E. Guardians V. Conclusio

Securing the Nation or Entrenching the Board? The Evolution of CFIUS Review of Corporate Acquisitions

The Committee on Foreign Investment in the United States (CFIUS), which reviews transactions based on national security concerns, has recently become critical to the operation of the U.S. economy. In March of 2018, CFIUS review led to the prohibition of Broadcom Limited’s acquisition of Qualcomm Corp., which would have been the largest technology merger in history. In August of 2018, CFIUS was dramatically expanded with the enactment of the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). Major transactions must now reckon with the uncertainties of CFIUS review. Created over thirty years ago as a reporting and monitoring committee, CFIUS has evolved into a formidable force with the power to review and investigate foreign investments in U.S. businesses, and to recommend that the President prohibit or order divestment of those investments. This Article traces the origins of CFIUS from its establishment in 1975 through the changes made by the 1988 Exon–Florio Amendment, the Foreign Investment and National Security Act of 2007, and now FIRRMA. The Article examines the key transactions CFIUS has considered, and CFIUS’s expansive understandings of what constitute U.S. businesses and its authority over foreign investors. In the Broadcom–Qualcomm transaction, CFIUS review was requested by target company (Qualcomm) board, and the review and resulting Presidential order operated as a powerful antitakeover defense. Turning from history to process, this Article looks closely at the ramifications of corporate boards seeking CFIUS review as a defensive measure to ward off hostile takeovers, a kind of “super poison pill.” To that end, the Article looks at mergers and acquisitions, and the longstanding conceptions of both the market for corporate control and the agency problem in corporate governance. The Article then reviews board powers and the traditional antitakeover measures, as well as the jurisprudence developed by state courts to review those defenses. CFIUS review may be deployed by corporate boards as an antitakeover device. Given the strong global M&A market, and the significant increase in CFIUS’s jurisdiction as a result of the enactment of FIRRMA, CFIUS is expected to review more transactions, including more hostile takeovers. In assessing notifications in this context, CFIUS may benefit from the jurisprudence developed by state courts. Given the amount of global capital being invested across borders, and the intensity of global security concerns, foreign investment transactions are likely to continue, and to continue to need review, for the foreseeable future. A CFIUS review process that can assess target board motivations and measures, with an experienced perspective on blocking or allowing the transaction, will help ensure that CFIUS review achieves its national security goals without doing unnecessary societal harm

Teacher Selection Practices in Effective Elementary Schools Which Differ by Community Type and Socioeconomic Status Context.

The current study investigated teacher selection in elementary schools which differ by school type, community type, and socioeconomic status (SES). The qualities sought, procedures utilized, and problems encountered by principals during teacher selection were examined. Statistical analyses were used to determine whether school types differ significantly on variables regarding teacher selection. The present study involved collecting both qualitative and quantitative data, and was conducted in four phases. In Phase I, all elementary schools in the state were classified by community type, student body SES, and effective and typical status. Phase II consisted of 12 site visits to effective schools which differed by community and SES contexts. Principals and teacher interviews were conducted, and the effectiveness of the schools was verified via classroom observations. Phase III utilized interview data to develop and pilot a questionnaire that was distributed across the various effective school contexts. Finally, in Phase IV, the questionnaire was distributed to principals of effective and typical schools, and the data were analyzed to address research questions regarding teacher selection. The quantitative data analyses revealed that there are differences between the qualities that principals of effective and typical schools seek. Also, there are differences regarding problems encountered between principals of low- and middle-SES schools. The qualitative data revealed findings regarding qualities with respect to classroom management, creativity, flexibility, concern for children, and enthusiasm. A teachers\u27 teaching background, ability to get along with others, and believing that children can learn as well as whether a teacher is a parent and a teacher\u27s morals and values are discussed. With regard to procedures utilized, the qualitative data revealed findings with respect to checking references, observing a teacher, recruiting student teachers, and using a relaxed talk and hypothetical questions. Also, contacting references, especially past principals, investigating personnel files, and using a selection committee are highlighted. Regarding problems encountered, one mainly associated with middle-SES schools and five associated with low-SES schools were highlighted. Also, several problems associated with central office involvement are discussed