A Reply to Professor Bebchuk

Posted by Martin Lipton, Wachtell, Lipton, Rosen & Katz, on Tuesday April 9, 2013 at 8:50 am
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Editor’s Note: Martin Lipton is a founding partner of Wachtell, Lipton, Rosen & Katz, specializing in mergers and acquisitions and matters affecting corporate policy and strategy. This post is a reply to a simultaneously published post by Professor Lucian Bebchuk, which in turn responds to several Wachtell Lipton memoranda. Professor Bebchuk’s post is available here, and the four memoranda to which he responds are available here, here, here, and here.

I respectfully take issue with Professor Bebchuk’s analysis and conclusions. Professor Bebchuk’s empirical evidence consists basically of cherry-picked stock market prices and a unanimous vote in favor of shareholder-centric governance by institutional shareholders. Professor Bebchuk’s hyperbole cannot disguise the fact that his shareholder-centric model promotes short-termism and that it is this short-term focus on capital allocation and other business decisions that has led to the decline of the American economy and greater unemployment. When one attempts to parse his syllogism, it doesn’t hold-together. Apparently, Professor Bebchuk believes that classified boards can’t be bad unless directors are bad, or else they would have all committed ritual suicide rather than ever agree to declassification.

  1. [...] This guest post by Lucian Bebchuk originally appeared on the Harvard Law School Forum on Corporate Governance and Financial Regulation on April 9, 2013 as Wachtell Lipton Was Wrong About the Shareholder Rights Project and is reproduced here with Professor Bebchuk’s permission.  Martin Lipton quickly rebutted in a post entitled A Reply to Professor Bebchuk. [...]

    Pingback by Harvard’s Shareholder Rights Project | Corporate Governance — April 10, 2013 @ 9:47 am

  2. I wish Lipton would expound on his accusation that Bebchuk cherry-picked evidence in favor of SRP (e.g., stock market prices and institutional investor support). Such an assertion suggests that alternative, contrary evidence exists, but Lipton does not offer such evidence himself beyond a few (I daresay cherry-picked) anecdotes.

    Comment by Confused — April 10, 2013 @ 10:46 am


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