Empty Voting
A paper in the Spring 2013 issue of The Journal of Financial Research by Shane M. Moser, Bonnie F. Van Ness, and Robert A. Van Ness of The University of Mississippi investigates the securities lending market around proxy record dates for evidence of proxy abuse. The paper concludes that the data shows no evidence of abusive short lending around proxy record dates. CSFME provided data for this study as well as comments and feedback on the paper. (full paper)
In 2006, academic researchers claimed to have found evidence of vote buying in the U.S. securities lending markets. Their studies claimed that spikes in equities were prima facie evidence of borrower manipulation of corporate governance. That research was cited in a widely-reported 2006 law review paper (Professors Hu and Black of the University of Texas Law School) equating securities lending with derivative abuses. Extensive CSFME research, later affirmed by two prominent academic teams, found several reasons to question the validity of the earlier academic findings. (full paper)
Lender-Directed Voting
Academic claims that empty voting was rampant in U.S. securities lending markets were rebutted by the Center's 2009 report. However, no similar research has yet been conducted for non-U.S. markets. In recognition of this, the European Securities Markets Association (ESMA) issued a Request for Information in September 2011 about lending practices in EU markets. In response, the Center announced a live pilot of Lender Directed Voting for the 2012 proxy season. (full article)
Liability Dynamics
After the collapse of Bear Stearns and Lehman Brothers, investors were shocked to learn that even senior executives often fail to appreciate how vulnerable their firms are when denied access to short-term funding markets. Similar funding denials preceded the de facto collapses, shotgun mergers, or bailouts of other large investment banks, as well as AIG, Citigroup, Fannie Mae, and Freddie Mac. (full article)
Home