ARTHUR R. PINTO, Brooklyn Law School
Email: arthur.pinto@brooklaw.edu

The paper was prepared as a national report for the 18th International Congress of Comparative Law to be held in Washington in July 2010. It is an overview of the legal rules and mechanisms designed to protect shareholders and allow manages to effectively run publicly traded corporations in the United States. The particular influences of the focus of corporate governance, federalism (particularly the role of financial scandals) and types of shareholder ownership are discussed. Another reporter deals with fiduciary duty and its enforcement under state law. An edited version of this report will appear in a future edition of the American Journal of Comparative Law.

MICHELE GIANNINO, affiliation not provided to SSRN
Email: mich68gian@yahoo.it

This article deals with the decisional practice on banking mergers the Italian Competition Authority (AGCM) has developed since 2006 when it was given full jurisdiction over banking. More precisely, the article focuses on the noteworthy aspects of the AGCM practice that are believed to be the narrow definition of retail banking markets, a 30% market share threshold to identify the mergers presumed to lead to dominance and a pro-active regulation of anticompetitive interlocking directorates. From these aspects it can inferred that the AGCM has taken a strict approach in vetting banking mergers. The article also dwells on the appraisal of rescue banking mergers. Arguably, these merger fall within Article 20(5 bis) of the Italian Competition Act that codifies a failing firm defence, by giving the Bank of Italy the power to clear an anticompetitive mergers on stability grounds. The banking regulator should invoke Article 20(5 bis) only in exceptional cases meeting a systemic standard, which occurs when a merger is necessary to preserve financial stability. This position is consistent with the thinking of the European Commission, which opposes to relax competition law enforcement at harsh economic times.

DUŠAN ISAKOV, University of Fribourg (Switzerland) - Faculty of Economics and Social Science
Email: Dusan.Isakov@unifr.ch
JEAN-PHILIPPE WEISSKOPF, University of Fribourg (Switzerland) - Faculty of Economics and Social Science
Email: jean-philippe.weisskopf@unifr.ch

Recent research has documented that family-controlled firms are very common around the world. This paper provides new evidence on the accounting and market performance of this type of companies. The empirical investigation is conducted on a market in which family firms are well-established and represent the most widespread form of ownership, namely Switzerland. Using panel data for the period 2003 to 2007 on companies listed on the Swiss exchange, we find evidence that family firms have a 1.19 higher Tobin’s Q and a 3% higher return on assets than non-family firms. A finer analysis reveals that the outperformance depends on the characteristics of the family business. First, we find evidence that family firms in which a second blockholder is present are even more profitable with a 5% higher return on assets and a 1.27 higher Tobin’s Q than non-family firms. In this case not only agency costs between management and shareholders are reduced but also between majority and minority shareholders by limiting private benefit extraction. Second, family firms in which a family is only an investor do not perform better than non-family firms. Only if family members are actively involved in management, as either CEO, Chairman or both do they add value and thus perform significantly better than outsiders. This indicates that family members have superior knowledge on their companies that is lost when they solely hold a financial participation in the firm. Finally, our results also show that these skills are not confined to the founder but are also present in heir-managed family firms. In particular we find that firms with descendant-CEO or founders acting as Chairman have better accounting and market performances.

ELIZABETH STONE, Stanford University
Email: ecstone@stanford.edu

The Securities Exchange Commission (SEC) implemented the first phase of a 'penny pricing' pilot in the exchange-traded equity options market in February 2007. The initial phase of this trial required the six United States options exchanges to reduce the minimum bid-offer spread from five or ten cents to a penny for the options corresponding to thirteen underlying equity securities. The catalyst for this pricing change was the improved electronic capabilities of the exchanges. Over the course of the preceding decade, the exchanges invested in the development of electronic trading systems that allowed for more efficient quoting and trading of options securities. The SEC's mandated pricing change effectively redistributes the gains of innovation from the exchanges' market makers to individual investors. his paper analyses the market impact of the Penny Pilot and highlights the SEC's central role in shaping the options market's innovations and competitive environment. Beyond a reduction in bid-offer spreads, the pricing pilot has stimulated a variety of changes in trading dynamics and market structure. These repercussions include thinner markets, changes in market maker fee structures, the introduction of alternative trading venues, and incentives for the exchanges to prioritize further technological innovation.

MICHELLE M. HARNER, University of Maryland School of Law
Email: mharner@law.umaryland.edu

When a company experiences financial distress, a control contest often follows. Management fights to remain in control of the company, and shareholders, creditors and others try to influence management’s exercise of that control - or wrest it away. This is not a new phenomenon. The degree of influence now exerted by corporate stakeholders in the distressed context, however, is strikingly different than in the past.

This article analyzes the intensified contest for control in corporate reorganizations and whether, as a result, existing bankruptcy laws adequately protect the interests of all of a debtor’s stakeholders. Efforts by a stakeholder to influence control often lead to conflicts of interests and multiple, competing demands on bankruptcy fiduciaries, i.e. debtors in possession and statutory committees. In theory, these fiduciaries should shun their personal interests and any undue influence by particular stakeholders. In practice, however, debtors and committees frequently are unable or unwilling to do so. Accordingly, the article suggests the use of a third-party neutral to promote objectivity and fairness in the bankruptcy process and better protect corporate value.