Allen Ferrell

Harvey Greenfield Professor of Securities Law

Griswold 303

617-495-8961

Assistant: Jill Smith / 617-496-2865

Biography

Allen Ferrell is the Greenfield Professor of Securities Law at Harvard Law School. He is also a faculty associate at the Kennedy School of Government, chairman of the Harvard Advisory Committee on Shareholder Responsibility, and a research associate at the European Corporate Governance Institute. He was previously on the Board of Economic Advisors to the Financial Industry Regulatory Authority (FINRA), a research fellow at FINRA, and a member of the ABA Task Force on Corporate Governance. He has written widely on capital market regulation, securities litigation and corporate governance.  His representative publications include "Thirty years of shareholder rights and firm valuation" forthcoming in the Journal of Finance (with Martijn Cremers), "Forward-casting 10b-5 Damages: A Comparison to other Methods," 37 Journal of Corporation Law 365 (with Atanu Saha) and "Mandated Disclosure and Stock Returns: Evidence from the Over-the-Counter Market," 36 Journal of Legal Studies 1. He received his Ph.D in economics from MIT, his J.D. from Harvard Law School and his BA and MA from Brown University. He clerked for Judge Silberman on the United States Court of Appeals for the District of Columbia and Justice Kennedy of the Supreme Court of the United States. 

Areas of Interest

Allen Ferrell, Hao Liang & Luc Renneboog, Socially Responsible Firms, 122 J. Fin. Econ. 585 (2016).
Categories:
Corporate Law & Securities
Sub-Categories:
Shareholders
,
Corporate Governance
Type: Article
Abstract
In the corporate finance tradition, starting with Berle and Means (1932), corporations should generally be run to maximize shareholder value. The agency view of corporate social responsibility (CSR) considers CSR an agency problem and a waste of corporate resources. Given our identification strategy by means of an instrumental variable approach, we find that well-governed firms that suffer less from agency concerns (less cash abundance, positive pay-for-performance, small control wedge, strong minority protection) engage more in CSR. We also find that a positive relation exists between CSR and value and that CSR attenuates the negative relation between managerial entrenchment and value. (C) 2016 Published by Elsevier B.V.
Allen Ferrell & Andrew Roper, Price Impact, Materiality, and Halliburton II, 93 Wash. U. L. Rev. 93 (2015).
Categories:
Corporate Law & Securities
Sub-Categories:
Corporate Law
,
Securities Law & Regulation
Type: Article
Abstract
The Supreme Court decision in Halliburton Co. v. Erica P. John Fund, Inc., 134 S. Ct. 2398 (2014), reaffirmed the availability of the fraud-on-the-market presumption of “reliance” for purposes of a Rule 10b-5 class certification. At the same time, the Court held that defendants could rebut the presumption if they could provide “direct evidence” that the alleged misrepresentations did not in fact impact the price of the security (i.e., a lack of price impact). In this Article we discuss various issues that have arisen in lower court rulings that have addressed Halliburton price impact arguments. These issues include the relationship between materiality and price impact, the distinction between hypothetical versus actual changes in the total mix of information made available to the market, the use of event studies, and some lower courts’ refusal to consider certain types of economic evidence in the context of price impact arguments.
Martijn Cremers & Allen Ferrell, Thirty Years of Shareholder Rights and Firm Value, 69 J. Fin. 1167 (2014).
Categories:
Corporate Law & Securities
Sub-Categories:
Shareholders
Type: Article
Abstract
This paper introduces a new hand-collected data set that tracks restrictions on shareholder rights at approximately 1,000 firms from 1978 to 1989. In conjunction with the 1990 to 2006 IRRC data, we track shareholder rights over 30 years. Most governance changes occurred during the 1980s. We find a robustly negative association between restrictions on shareholder rights (using G-Index as a proxy) and Tobin's Q. The negative association only appears after judicial approval of antitakeover defenses in the 1985 landmark Delaware Supreme Court decision of Moran v. Household. This decision was an unanticipated exogenous shock that increased the importance of shareholder rights.
Martijn Cremers & Allen Ferrell, Thirty Years of Shareholder Rights and Stock Returns (AFA 2013 San Diego Meetings Paper, 2012).
Categories:
Corporate Law & Securities
Sub-Categories:
Shareholders
,
Corporate Governance
Type: Article
Abstract
This paper explores the robustness of the positive association between shareholder rights and abnormal stock returns (using the Fama-French-Cahart four factor model) and potential explanations thereof. Utilizing hand-collected shareholder rights data for the 1978-1989 period in conjunction with the existing post-1990 RiskMetrics data, we document that: (1) over the 1978-2007, the association is generally robust to a variety of controls and estimating abnormal returns at the portfolio or firm-level; (2) this association co-varies with merger and acquisition (M&A) waves; (3) while being acquired and making acquisitions are both strongly associated with abnormal stock returns, these effects do not explain the positive association; and (4) once the four factor model is supplemented with the Cremers, Nair & John (2009) takeover factor – which captures risk associated with time-varying investment opportunities and thus relates to the state of the M&A market – the association disappears.
Atanu Saha & Allen Ferrell, Event Study Analysis: Correctly Measuring the Dollar Impact of an Event (Harv. L. & Econ. Discussion Paper, 2011).
Categories:
Corporate Law & Securities
,
Civil Practice & Procedure
Sub-Categories:
Shareholders
,
Corporate Law
,
Litigation & Settlement
Type: Article
Abstract
Using the traditional event study approach in the context of securities litigation, the determination of the "materiality" of a firm disclosure hinges on the statistical significance of the abnormal share price change (i.e., return) on the disclosure day. To estimate per share damages, the abnormal return is then transformed to an abnormal dollar impact. It is often assumed that if the abnormal return on a disclosure day is statistically significant, so is the abnormal dollar effect. We demonstrate - first analytically and then through an empirical example - that need not be the case. We derive the proper t-statistic if one wishes to determine the statistical significance of an abnormal dollar effect. This has obvious implications for liability and damages in securities litigation matters.
Allen Ferrell & Atanu Saha, Forward-Casting 10b-5 Damages: A Comparison to Other Methods, 37 J. Corp. L. 365 (2012).
Categories:
Corporate Law & Securities
Sub-Categories:
Corporate Governance
,
Corporate Law
Type: Article
Abstract
We propose in this paper the forward-casting method for estimating 10b-5 damages. We argue that this method compares favorably to two commonly used 10b-5 damage methods: constant dollar back-casting and the allocation method. Most importantly, both constant dollar back-casting and the allocation method, in contrast to forward-casting, fail to incorporate market expectations in estimating the stock price that would have obtained absent the alleged fraud. In the course of our discussion, we demonstrate how each one of these three methods work in practice using facts and data from an actual case. The choice of a damage method, as we document, can make a dramatic difference in estimated damages.
Allen Ferrell & Atanu Saha, Calculating Damages in ERISA Litigation, 1 J. Fin. Persp. 93 (2013).
Categories:
Labor & Employment
,
Civil Practice & Procedure
,
Corporate Law & Securities
Sub-Categories:
Securities Law & Regulation
,
Litigation & Settlement
,
Retirement Benefits & Social Security
Type: Article
Abstract
In this paper we will present and discuss four different methodologies for calculating ERISA damages — what we will label the “best-performing fund,” “portfolio redistribution,” “most similar fund,” and “10b-5 style” ERISA damage methods. For purposes of demonstrating how these ERISA damage methods work in practice we will use facts and data from an actual ERISA litigation matter. These different ERISA methods can result in strikingly different damage estimates. In the ERISA matter we analyze, for instance, aggregate damages can range from less than U.S.$3 million, using the “most similar fund” approach, to well over U.S.$2 billion using the “best-performing fund” ERISA damage method.
Allen Ferrell, Floor Versus Screen Trading in the Stock Market: Comment, 158 J. Inst'l. & Theoretical Econ. 63 (2002).
Categories:
Banking & Finance
Sub-Categories:
Investment Products
,
Financial Markets & Institutions
Type: Article

Current Courses

Course Catalog View

Griswold 303

617-495-8961

Assistant: Jill Smith / 617-496-2865