The Law of Corporate Finance: General Principles and EU Law

Transcription

1 Petri Mantysaari The Law of Corporate Finance: General Principles and EU Law Volume I: Cash Flow, Risk, Agency, Information 4y Springer

2 Table of Contents Introduction What Does Corporate Finance Law Mean? Why Was This Book Written? What Are the Themes of This Book? General Principles and the Firm 8 The Nature of Corporate Finance Law Introduction Key Objectives of Corporate Finance Law Corporate Finance Law and Efficiency Comparison with Other Fields of Law Key Tools and Practices in Corporate Finance Law 21 Management of Cash Flow: General Remarks The Scope of Legal Considerations Generic Ways to Manage Cash Flow 24 Management of Risk: General Remarks Introduction Legal Risk Introduction Different Categories of Legal Risk The Effect of the EU on Legal Risk Excursion: Directly Applicable Community Law Management of Legal Risk Introduction Strategic Level Operational Level Transactional Level Management of Risk by Legal Means Introduction Living with Risk Transfer of Risk Through Incorporation Community Law, Incorporation, Governing Law Transfer of Risk Through Contracts Mitigation of Risk Through Diversification 94

3 VI Table of Contents Agency, Risk, Transparency, Governance Corporate Risk Management v Corporate Governance Partly the Same Legal Tools 97 Management of Agency in General Introduction Behaviour Modification Choice of the Scope of Agency Alignment of Interests Monitoring (Transparency) Choice of Agents Rules and Standards Initiation and Ratification Trusteeship and Reward The Role of Legal Background Rules 113 Corporate Risk Management Introduction General Remarks Financial Theory, Strategy, and the Firm Corporate Risk Management as a Business Discipline Costs, Risk Level, Compliance, Agency, Information Strategic Risk Management Operational Risk Management Fundamental Organisational Measures Excursion: Dealings with Third Parties The Regulation of Corporate Risk Management Introduction Basel II and Ratings Fair Value Accounting of Financial Assets Basel II and the Governance of Banks The MiFID and Risk Management Disclosure of Risk The Contents of Risk Management Policies 153 Agency and Corporate Governance Introduction Three-level Choices, Theory of Corporate Governance General Remarks First Level, Artificial Person First Level, Organisation First Level, Legal Organisation v Real Organisation Second Level, the Firm as the Principal Third Level, the Interests of the Firm The Function of the Board Particular Remarks: Extreme Cases The Function of Stakeholders Allocation of Value and Risk 184

4 Table of Contents VII 8.7 The Role of Shareholders The Interests of Shareholders The Function of Shareholders The Relative Importance of Shareholders Should the Share Price Be Maximised? What Does Making a Profit for Shareholders Mean? What Are Shareholders Paid For? How Can the Board Increase the Value of Shares? Why Should the Firm Use Takeover Defences? Why Are Shareholders Protected by Laws? Should Shareholders Have Formal Powers? 204 Management of Agency in Corporate Governance Introduction Dealing with Different Agents: General Remarks Agent Mix Industries as Agents The Firm as an Agent Society at Large as an Agent Shareholders as a Class as Agents Individual Shareholders as Agents Banks and Other Lenders as Agents Customers and the Public as Agents Managers as a Class as Agents Individual Managers as Agents The Board as an Agent Community Law Introduction Separation of Decision Management and Control Monitoring by the Board Financial Reporting and Transparency The Alignment of Interests, Financial Rewards Controlling Shareholders' Corporate Governance Tools Introduction Block-holding as a Corporate Governance Tool The Board as a Corporate Governance Tool Minority Shareholders' Corporate Governance Tools Introduction Avoidance of Risk Mitigation of Risk in Advance Equivalent Treatment Block-holding as a Corporate Governance Tool Different Classes of Shares Voting Caps Exit Rights "Good Corporate Governance" as a Tool Outsourcing as a Corporate Governance Tool 329

5 VIII Table of Contents 10 Management of Information Introduction General Remarks Information and Information Economics Dealing with Information Problems The Role of Legal Rules on Information Corporate Finance Law, Information, the Firm Information Management in Corporate Finance Law Introduction Information Delivery Chain Legal Tools and Practices: General Remarks Legal Tools and Practices: Investment in Information General Remarks Automation, Standardisation Separate Decisions, Contracts Legal Tools and Practices: Incoming Information Introduction Transfer of Risk Intermediaries, Improving Information Quality Creating Incentives Screening of Potential Intermediaries Identifying Good Intermediaries Identifying Bad Incentives Being Optimally Informed Mitigating the Risk of Attribution of Information Legal Tools and Practices: Outgoing Information Introduction Keeping Information Secret Benefiting from Superior Information Increasing the Perceived Usefulness of Information Management of Reputation Establishing or Restricting Communication Analysis of Rights and Duties Relating to Disclosure Community Law Introduction Main Policy Choices Regulation of the Quality of Financial Information Regulation of Intermediaries: General Remarks Information Analysts Outside the Target Information Analysts Inside the Target Information Analysts Inside the Firm Regulation of Outgoing Information Otherwise 466 References 471