Lucian Bebchuk

An enigma baffling American economists for years has been solved, with a little help from outside. In a study published in January, professors Efraim Benmelech, Nittai Bergman and Hyunseob Kim explain why over the 68 years from 1948 to 2016 the productivity of the average American employee increased 242% while wages rose only 115%...One of the most important researchers in this respect is Lucian Arye Bebchuk, a professor at Harvard Law School. Fifteen years ago he published a book with Harvard Law colleague Jesse Fried, “Pay without Performance: The Unfulfilled Promise of Executive Compensation,” explaining why the correlation between executive pay on Wall Street and performance is so weak. It’s mainly because directors are captives of management, and the market for managers isn’t really a market, it’s more like a rigged game.

Steve Wynn resigned yesterday as the C.E.O. of Wynn Resorts after allegations of sexual misconduct. Those accusations have created an important test for corporate America. In recent months, many powerful men have had to step down from senior positions as they have faced accusations of sexual harassment, but none were the head of a public company like Mr. Wynn. How would the board, shareholders, regulators, customers and unions react?...In an email exchange with me, Lucian Bebchuk, a Harvard law professor and an expert in corporate governance, asked why the board did not suspend Mr. Wynn from his position pending the investigation, or demand that he not interact with Wynn Resorts employees, a step that would have limited his ability to influence the board investigation. In fact, the board, in its statement, sounded somewhat saddened by Mr. Wynn’s departure, saying it had “reluctantly” accepted his resignation.

Twelve of the top 100 most-cited law professors of all time teach at Harvard Law School, according to the Social Science Research Network—and professors Lucian A. Bebchuk and Steven Shavell took the first two spots. An electronic service that aims to make research papers and scholarly articles easily accessible, the SSRN contains over 650,000 documents by more than 360,000 authors...“The rankings reflect the significant impact that the Harvard Law School faculty has on policy research and the legal academy,” Bebchuk wrote in an email. Law Professor Cass R. Sunstein ’75, who ranks in fourth place with 1,484 citations, said he thinks there is a significant benefit to publishing work on SSRN. “I think it’s a good thing if you have a paper that’s published and that could benefit from the comments and criticisms of others,” Sunstein said...The list also includes Law professors Louis Kaplow, Reinier H. Kraakman ’71, Mark J. Roe, Jesse M. Fried ’86, Alma Cohen, Allen Ferrell, John Coates IV, Oren Bar-Gill, and J. Mark Ramseyer.

On January 6, 2017, JANA Partners, a New York–based activist hedge fund, and the California State Teachers’ Retirement System (CalSTRS) sent a letter to Apple’s board of directors that may change the future of activist investing. Citing a substantial body of expert research, the letter stated, “We believe there is a clear need for Apple to offer parents more choices and tools to help them ensure that young consumers are using your products in an optimal manner.”...But it’s also true that many activists are not as short-term as many assume them to be. Despite their reputation as slash-and-burn financial engineers, activists are actually no strangers to seeking returns from genuine, long-term value creation. Empirical research, such as the article “The Long-Term Effects of Hedge Fund Activism,” by Lucian A. Bebchuk, Alon Brav, and Wei Jiang, shows that in contrast to prevailing beliefs, the long-term effects of activist hedge funds are positive rather than negative.

The largest proxy battle in U.S. history ended last week in a near tie, leaving Procter & Gamble without the clear support of its shareholders and activist shareholder Nelson Peltz without a board seat...The canard that activist shareholders promote short-term gains at the expense of long-term value has been utterly demolished by academic research. Harvard’s Lucian Bebchuk examined more than 2,000 activist events spanning 13 years and found that these interventions resulted in a 6% rise in stock prices on average and that targeted companies managed to hold on to these gains, above their benchmarks, over a five-year period.

Lucian Bebchuk, a professor at Harvard Law, has been at the heart of scholarly arguments over corporate governance for a long time, perhaps since 1990, the year he edited a textbook on Corporate Law and Economic Analysis. That was also the year Bebchuk, along with Marcel Kahan, authored a seminal article on “legal policy toward proxy contests.”...His more recent work includes a paper with Alon Brav, of Duke University, and Wei Jiang, of Columbia Business School, on the long-term effects of hedge fund activism. The argument of this paper is in line with Bebchuk’s long held convictions on the subject. He and his colleagues take issue with the common contention that hedge fund activism in particular represents a short time horizon, that hedge funds push for immediate pay-outs at the expense of long term strategic thinking.

President Trump has nominated Robert Jackson to be a member of the Securities and Exchange Commission for the remainder of a five-year term expiring June 5, 2019. Jackson is a professor at Columbia Law School and director of its program on corporate law and policy...In a recent research paper, “Shining Light on Corporate Political Spending,” Harvard Professor Lucian Bebchuk and Jackson outlined some of what they expect the SEC will have to address as it proceeds with rulemaking. First, it will need to determine the types of political spending covered by a rule and which public companies will be subject to it. Should smaller companies be exempted from the rules, for example, or is a scaled disclosure requirement warranted?

Activist investors who aggressively force change at companies are good for shareholders, according to fund experts, after claims from Hermes' chief executive Saker Nusseibeh that they can ruin longer term shareholder value in pursuit of short term gain...Adrian Lowcock, investment director at Architas, also welcomed investor activism. He pointed to data from the US showing that activist investors can improve longterm value. "Harvard’s Lucian Bebchuk and two colleagues did analyse 2,000 incidents of activist investing. "In the five years that followed there was marked improvement of share price performance, compared to the three years beforehand, even taking into account any rally after news broke of the activists involvement," he said.

...Among the proponents of a sunset provision for dual-class share structures are Lucian Bebchuk, a professor at Harvard Law School and director of the program on corporate governance who, with Kobi Kastiel, a research director of the program, published a detailed paper in April providing a framework for designing such structures. “The debate should focus on the permissibility of finite term dual-class structures—that is, structures that sunset after a fixed period of time (such as 10 or 15 years) unless their extension is approved by shareholders unaffiliated with the controller,” they wrote in the research paper.

This month the Dutch government debated a proposal to suspend all shareholder rights for a year in the event of an unsolicited takeover bid. This move, which we view as a “backwards step”, is the latest in a salvo of proposals to curb engaged investors. But it is also part of a broader debate about the perceived short-termism in markets, the weaknesses in corporate governance and the role of activists which policymakers, boardrooms and investors wrestle with...So who is going to solve this? Rather than passing new laws, we should welcome activist and engaged investors which can be an important catalyst for change. The best academic study on activism suggests activists are not myopic. Harvard’s Lucian Bebchuk and colleagues looked at 2000 interventions by activists which showed that five years after activist intervention, their operating performance was materially improved.

Lousy incentives for corporate stewardship is a flaw at the heart of our system of delegated asset management. What’s more, index funds, which are rapidly becoming the dominant force in investment management, have the lowest incentive to spend money to chivy the companies whose shares they hold to perform better...“Investment managers of mutual funds - both index funds and actively managed funds - have incentives to under-spend on stewardship and to side excessively with managers of corporations,” Lucian Bebchuk and Scott Hirst, both of Harvard Law School, and Alma Cohen of Tel Aviv University write in a newly revised study.

In a new study, Dr. Anderson examines why so many companies land in what he dubs “the Delaware Trap.”...Dr. Anderson’s research doesn’t take into account various factors that prior research has shown to influence incorporation decisions, such as the antitakeover statutes of a business’s state of headquarters, says Lucian Bebchuk, the James Barr professor of law, economics and finance at Harvard Law School and the director of its program on corporate governance. A study by Dr. Bebchuk and Alma Cohen, a professor of empirical practice at Harvard Law School, found that companies are more likely to incorporate in Delaware rather than their state of headquarters when they have more employees or sales, when they’re based in the Northeast or South or when their state of headquarters has fewer antitakeover statutes.

Corporate America prides itself on rewarding success and punishing failure. Yahoo CEO Marissa Mayer does not fit comfortably into that narrative...But when Yahoo’s sale to Verizon becomes official in June, with the restructured company renamed Oath, Mayer will walk away with $186 million, according to a regulatory filing released this week. That includes shares of Yahoo stock Mayer owned, stock options, and a $23 million “golden parachute” of cash, restricted stock units, and medical benefits. Mayer did relinquish $14 million while taking responsibility for the Yahoo Mail data breach, but she’ll get 13 times that amount just to no longer remain part of the company...The new compensation standards naturally served to weaken resistance to hostile takeovers, as bundles of cash took the sting out of the loss of employment and prestige. Indeed, a 2012 study from Alma Cohen, Charles Wang, and Lucian Bebchuk confirms that companies offering golden parachutes are more likely to be acquired in a merger.

The repeated censures BHP Billiton copped from aggressive New York hedge fund Elliott Management last week signalled the wave of shareholder activism that has engulfed the United States has descended to Australia with brute force....Yet the most comprehensive academic research led by Harvard University law professor and corporate governance expert Lucian Bebchuk debunks claims that activist hedge funds cause long-term underperformance and losses to other shareholders. Bebchuk and two academic colleagues reviewed all of about 2000 interventions by activist hedge funds from 1994 through 2007, finding no evidence that target companies' performance or share prices suffered in the five years after an activist fund announced a campaign. "During the third, fourth, and fifth year following the start of an activist intervention, operating performance tends to be better, not worse, than during the pre-intervention period," the academics conclude. The study found no evidence of "pump-and-dump" patterns where stock prices collapsed after activists sold out.

...DuPont is one of dozens of American companies that have abandoned a long-term approach to doing business after being the target of so-called activist investors...Activist investors have some supporters. Lucian Bebchuck, a Harvard professor who is known as one of the most devout defenders of activist shareholder campaigns, says that activist interventions target underperforming companies, and that they improve the company’s performance in the long-run. “Policymakers and institutional investors should not accept the validity of the frequent assertions that activist interventions are costly to firms and their shareholders in the long term,” he writes, in a 2015 paper, “The Long-Term Effects of Hedge Fund Activism.”

Big shareholders do not always play nice. They strip away founders’ responsibilities. They side with activist hedge funds. They vote for takeovers even when a board is resisting. Those are the types of shareholders that Peter McCausland encountered toward the end of his three-decade reign at the industrial gas distributor Airgas. By 2015, he could not take it anymore. He searched globally for a buyer...The ruling was — and remains — controversial. “The court’s case allowing the indefinite use of the poison pill for this purpose established an unfortunate precedent,” said Lucian A. Bebchuk, director for the Program on Corporate Governance at Harvard Law School. “There is significant empirical evidence indicating that, on the whole, the current expansive use of takeover defenses is detrimental to the interests of shareholders and the economy.”

Your company could be doing better. The stock is in the doldrums, and the price-to-book ratio is low. On a variety of financial measures — shareholder returns, revenue growth, operational costs, and so on — the company is underperforming its peers. Cash flow is reasonably healthy, but one of the divisions is starting to falter. Adding insult to injury, management won the last say-on-pay vote by less than a large margin. ...Once activists cash out, how will their targets perform? “The jury is still out,” says Grossman. Despite claims that activist investors are “pumping and dumping,” a recent study of activist interventions between 1994 and 2007 by Harvard Law School professor Lucian Bebchuk and others found that Tobin’s Q and return on assets were consistently higher three, four, and five years following the interventions. Similarly, a McKinsey study of 400 activist campaigns against large U.S. companies found that the median campaign reversed a downward trajectory in target performance, and created a sustained increase in shareholder returns.

Aging media mogul Sumner Redstone stepped down as executive chairman of Viacom on Thursday and was replaced by CEO Philippe Dauman, a move that immediately disappointed investors. Although the decision mimicked a similar move at sister company CBS, Thursday's action has the potential to set off a future board fight...Lucian Bebchuk, a Harvard law professor and director of its program on corporate governance, said the board conflict highlights the problems of companies with two classes of stock — one set that holds voting power, and another that does not. He said in an email that Viacom's corporate structure is now "highly problematic and fraught with risks for public investors." "The company's CEO is unaccountable to public investors and accountable only to a person whose health prevents him from actively monitoring the affairs of the company," Bebchuk said.

...After decades of being treated as boorish gate-crashers, activist investors are infiltrating the boardrooms of large companies like never before. This year activists launched more campaigns in the U.S.—360 through Dec. 17—than any other year on record, according to FactSet...At the same time, changes in corporate governance were making it easier for activists to win board seats. Between 2011 to 2014, a group at Harvard University led by professor Lucian Bebchuk campaigned to get more than 100 major companies to put their entire boards up for annual election, instead of staggering directors in multiyear terms.

An op-ed by Lucian A. Bebchuk and Robert J. Jackson Jr. The omnibus budget agreement adopted by Congress includes a provision that prevents the Securities and Exchange Commission from issuing a rule next year that would require public companies to disclose their political spending. This unusual Congressional intervention in S.E.C. rule-making is a troubling development both for investors and for the agency.

Payments made to officers, directors and other “insiders” in control of a distressed corporate debtor are closely scrutinized by other stakeholders as well as the media in larger chapter 11 cases. Bankruptcy rules require companies to disclose insider payments during the 12-month period leading up to a bankruptcy filing. ...Whatever the merits of the disclosure debate may be, the debate is swept up in the larger controversy surrounding executive pay faced by healthy and distressed businesses alike. For example, in their controversial treatise on the unfulfilled promise of executive compensation, Lucian Bebchuk and Jesse Fried weave a detailed account of how structural flaws in corporate governance have enabled managers to influence their own pay and have produced widespread distortions in pay arrangements. They believe that directors must focus on shareholder interests and operate independently from the executives whose compensation they set by making directors more directly accountable to shareholders. In rebuttal, critics point to executive compensation practices of distressed businesses to demonstrate that reducing “agency costs”—the problem created by the separation of ownership and control in larger public companies which is mitigated in distressed situations through the consolidation of ownership interests and assertion of control by sophisticated investors—doesn’t lead to material changes in executive compensation arrangements.

Scathing commentary about the U.S. Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission has tended to focus on the court’s refusal to restrict corporate political spending. As you know, the justices struck down campaign finance reforms as an unconstitutional violation of corporations’ free speech rights, triggering an avalanche of predictions that corporate donors would wield outsized political influence. The other free speech beneficiaries of Citizens United – labor unions also subject to the invalidated campaign finance restrictions – haven’t been the subject of nearly as much fear and loathing. That’s going to change, at least a little, later this term when the Supreme Court hears Friedrichs v. California Teachers Association...The point of the amicus brief, according to law professor John Coates of Harvard, was to highlight the relative rights of union beneficiaries and shareholders, particularly because in this case, the justices are being asked to give non-union members even more control over political expenditures they don’t support. “It seemed like a good opportunity to intervene – even better than a corporate case,” said Coates, who said he wrote the initial draft of the brief and circulated it to likely co-signers. He said he was pleasantly surprised that so many corporate law professors – 19 in all – ended up joining a brief in a case that nominally has nothing to do with corporate law. (Among the amici are Lucian Bebchuk of Harvard...)

Activist hedge funds can count on a number of supporters in academia and in the media rising up in defense of their actions. No doubt activist hedge funds have found their most persistent academic supporters in Professor Lucian Bebchuk of the Harvard Law School and his co-authors. In several papers, but most particularly in the Bebchuk, Brav and Jiang (2013) paper, the authors make several claims, which are summarized in Bebchuk’s op-ed piece in the Wall Street Journal: “Our comprehensive analysis examines a universe of about 2,000 hedge fund interventions during the period of 1994-2007 and tracks companies for five years following an activist’s arrival...Basically, Bebchuk et al’s argue that their vast base of empirical data does not support the claims made by opponents of activist hedge funds.

Shareholders are hitting a wall with some major companies in their effort to persuade them to disclose how they spend corporate money to support political candidates. According to the Center for Political Accountability, at least one in 10 big publicly traded companies doesn’t reveal details of its donations to electoral candidates, parties or causes on its website, where investors could easily find it...Many investors want to know how and where companies put corporate funds to work, said Lucian Bebchuk, a professor at Harvard Law School. “Without disclosure and accountability, companies may well spend funds on political causes that insiders favor but shareholders do not.”

Corporations are turning to the nation’s biggest business lobby to help fend off activist investors such as Dan Loeb and Bill Ackman. The U.S. Chamber of Commerce is forming a coalition to make sure “long-term value creation” drives public companies’ decisions, according to a letter it sent last week to Securities and Exchange Commission Chair Mary Jo White. The group plans to weigh in on regulations that affect corporate governance, the letter said...If the chamber’s coalition wants to “facilitate long-term value creation, they should support reforms that strengthen shareholder rights and oppose arrangements that insulate managements from shareholders,” said Lucian Bebchuk, a professor at Harvard Law School.

It was called the “blood oath”. The management team of Sandy Weill, an architect of the modern Citigroup and mentor to Jamie Dimon, had to commit not to sell any shares until they left. In their decades as partnerships, Goldman Sachs and Morgan Stanley bankers had no need to open their veins. Holding equity until retirement was a binding legal restraint. But that practice is not universal on Wall Street. A Financial Times analysis of insider selling at the six biggest US banks since the 2008 crisis shows that many of the current crop of executives have offloaded millions of dollars worth of stock each year...However, Lucian Bebchuk, director of the corporate governance programme at Harvard Law School and a former adviser to the US government’s “pay tsar”, argued there should be tighter restrictions on the amount of annual selling by executives. “When bank executives have substantial freedom to unload equity incentives given to them as part of their compensation, and when executives can be expected to make significant use of their freedom to unload such equity incentives, the executives’ pay arrangements produce distorted incentives to engage in excessive risk-taking,” he said.

When Sardar Biglari, CEO of Biglari Holdings, won a hotly contested shareholder proxy in April, investors feared his next move would be to cement control over the company. They were right, and a review of Biglari’s actions in recent months shows he did so with the help of leading Wall Street investment banks....“The tender offer is an aggressive entrenchment move aimed at enabling the CEO to use the shareholders’ money to gain control over the company,” says Lucian Bebchuck, director of the program on corporate governance at Harvard Law School. “Given that the CEO’s management and performance has been controversial, it is especially important for this company’s shareholders to retain the power to vote for a change of control. Unfortunately, if the tender offer is successful, the CEO would become fully entrenched,” he adds.

It has been submitted as a rulemaking petition twice since 2011, garnered 1.2 million comment letters, sparked a superhero-themed ad campaign, and is the subject of a current lawsuit. The latest push to get the Securities and Exchange Commission to act on a largely ignored demand that companies disclose political contributions and spending on lobbyists: pressure from former commissioners...The push for political spending disclosures initiated with a Petition for Rulemaking filed by a team of 10 prominent law professors. Robert Jackson, an associate professor at Columbia Law School, and Harvard Law School Professor Lucian Bebchuk spearheaded the effort in 2011.

Americans have missed out on investment gains, discouraged by an uneven playing field created by Wall Street. U.S. stocks have more than tripled since bottoming out in March 2009 during the Great Recession, rising in value by a staggering $12.8 trillion. But the average American household has been left behind. Most of the gains went to the wealthy and institutional investors including investment banks and hedge funds. Fewer than half of U.S. households own stocks either directly or indirectly, down from a peak of more than 53% in 2007...A paper by Harvard Law School professor Lucian Bebchuk found that CEOs who earn more than the average “pay slice” of 35% of a firm’s total compensation for its top five executives significantly underperform their peers. That is because such companies make poor acquisition decisions, reward their CEOs for “luck” when industry conditions improve, fail to hold CEOs accountable for poor performance, and grant options that are timed “opportunistically,” Bebchuk found.

Mylan’s recent reincorporation in the Netherlands was part of the generic drugmaker’s strategy to reduce its global tax bill. But the shift, accomplished while keeping its operational headquarters in Cecil, came with another benefit: a European-style poison pill that could help Mylan thwart a hostile, $43 billion takeover bid from Israeli drugmaker Teva Pharmaceutical Industries....Harvard law professor Lucian Bebchuk opposes the use of the Dutch poison pill. “The shareholders of a company should be able to decide whether to sell the company, and giving the board of a Dutch foundation effective veto power over an acquisition is detrimental to the interests of shareholders,” he said in an email.

In November 2012, the corporate law guru who is most revered by managers faced off against the corporate law guru who is most feared by managers, at the Conference Board think tank in New York, in a friendly debate that was about to turn hostile. Martin Lipton has defended CEOs against all comers since forming Wachtell, Lipton, Rosen & Katz 50 years ago. Lucian Bebchuk, a Harvard Law School professor, champions the "activist" hedge funds that assail CEOs in an intensifying struggle for control of America's boardrooms...Lucian Bebchuk, age 59, likes to attack blue chip stocks. His astonishing success has made him the only law professor listed among the 100 Most Influential People in Finance by Treasury and Risk magazine. A lowly student clinic led by Bebchuk—the Shareholder's Rights Project—has destaggered about 100 corporate boards on the Fortune 500 and the S&P 500 stock index since 2011. As a critic of CEO compensation, Bebchuk paved the way for the Dodd-Frank Act rules that give shareholders more "say on pay." Shareholder activism has drawn him into debates with Lipton in 2002, 2003, 2007, and more or less continually since 2012.

...[former Lehman Brothers C.E.O. Dick] Fuld remains fabulously wealthy, although just how wealthy remains a subject of some dispute. During the same October 2008 congressional hearing in which he sparred with Mica and Henry Waxman, the committee chairman, about how much money he had made at Lehman, Waxman released a chart showing that Fuld had been paid $484 million between 2000 and 2007. Under oath, Fuld argued he had received closer to $310 million. Later in the hearing he conceded that it may have been $350 million. A subsequent analysis by Harvard law professor Lucian Bebchuk and colleagues concluded that the figure was $522.7 million.

The latest rap against big corporations is that they’re returning too much money to shareholders through dividends and stock repurchases. What they should be doing, the complaint goes, is using that money to build new factories, create new products and increase research. Their stinginess, the argument continues, is one reason for the lackluster recovery...Similarly, most executives don’t automatically favor share purchases over hard investment projects, argues Harvard law professor Lucian Bebchuk, an expert on corporations. If they had hard projects that were more profitable than purchasing shares, they would actually do better personally, he says. Firms would become more profitable, so their stock prices and executive compensation would rise even further. What’s happening, Bebchuk says, is that investment funds are being channeled from slow-growing to fast-growing sectors.

Statistics released by the Social Science Research Network (SSRN) indicate that, as of the end of 2014, Harvard Law School faculty members featured prominently on SSRN’s list of the 100 most-cited law professors.

A U.S. Securities and Exchange Commission member’s dispute with a prominent Harvard Law School professor has turned into something of a gang fight, academy style. More than 30 law professors from universities such as Harvard, Columbia and Stanford are calling on SEC Commissioner Daniel Gallagher to withdraw his paper accusing Harvard’s Shareholder Rights Project of filing misleading proposals in corporate elections. The project, led by Lucian Bebchuk, has sought annual elections for boards of directors. “We are especially concerned that a sitting SEC commissioner has chosen to issue such allegations without support from a prior investigation by the SEC staff and without due process of law,” the professors wrote in a paper posted today on Harvard Law School’s blog on corporate governance and financial regulation.

An Op-Ed by Noah Feldman. A sitting member of the Securities and Exchange Commission co-writes an article accusing Harvard University of violating securities laws -- because, the article claims, a professor’s biased research has been used to argue for eliminating staggered corporate board terms....And for the moment, let’s leave aside the content of their argument, namely that the Shareholder Rights Project, led by my Harvard Law School colleague Lucian A. Bebchuk....

A normally academic question about corporate governance has erupted into a nasty, often personal battle among elite professors, regulators and white-shoe lawyers that has raised the suggestion of securities fraud on one side and abuse of authority on the other. At the heart of the dispute is an academic paper written last month by Daniel M. Gallagher, a member of the Securities and Exchange Commission, and Joseph A. Grundfest, a professor at Stanford Law School and himself a former S.E.C. commissioner, that was titled “Did Harvard Violate Federal Securities Law? The Campaign Against Classified Boards of Directors.” The paper took aim at Lucian A. Bebchuk, a Harvard Law School professor who has long researched corporate governance issues and has been an outspoken advocate for increased democracy in corporate America’s boardrooms...“The paper’s spurious allegations are unworthy of a sitting S.E.C. commissioner and a former commissioner,” Mr. Bebchuk, who learned about the paper the night before it was published, said in an email. “I was also surprised that the authors chose not give me an opportunity to correct the paper’s reckless factual and legal errors.”

... Here is an utterly loony paper by Securities Exchange Commissioner Daniel Gallagher and former SEC commissioner Joseph Grundfest arguing that Harvard is violating the securities laws in its Shareholder Rights Project. That project, run by Harvard professor Lucian Bebchuk, submits shareholder proposals to public companies asking them to de-stagger their boards, so that all directors are elected every year instead of electing one-third of directors a year to three-year terms. Staggered boards make activism hard and hostile takeovers nearly impossible, and so are often viewed as shareholder-unfriendly. There is some empirical evidence that they are in fact bad for shareholders. There is other empirical evidence that they are good for shareholders. There is yet other empirical evidence that they are sometimes good and sometimes bad. (This is how empirical corporate governance research always works out, by the way.)