July 20, 2010
Dodd-Frank Forum: Are Shareholders the Problem or the Solution?
Posted by Usha Rodrigues

President Obama is set to sign Dodd-Frank into law tomorrow, and the consensus amongst Masters and Glommers seems to be, there's little cause for celebration, but much cause for discussion.  I've learned a lot already from the Forum, and urge readers to check out some lively discussion in the comments. 

I've been focusing on the corporate governance provisions in the bill, and have enjoyed both Christine and Lisa's posts. Christine seems to think of the executive compensation reform as much ado about nothing,  a politically cheap and easy way to claim "reform," and I'm inclined to agree.  What interests me is how the main regulatory tools here involve giving more information, votes, or proxy access to shareholders as a way to discipline managers.  I remember when the story was that the financial crisis was caused by managers acting to enrich shareholders at the expense of the larger economy.  So how does empowering shareholders help with that?

And just out of curiosity: Christine notes that "Section 955 requires companies to disclose employees and directors who engage in hedging investments regarding company stock." Were there reports of this kind of hedging actually happening, or is this a hammer in search of a nail?

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