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CMS Structure

CMS Structure. KoGuan Law School Zhou Renjie. I. Definition of CMS. I. Definition of CMS. Combine the incentive problems associated with both the CS and DO in a single ownership structure?. I. Definition of CMS. II. Three CMS Forms. II. Three CMS Forms A. Dual Class Equity Structure.

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CMS Structure

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  1. CMS Structure KoGuan Law School Zhou Renjie

  2. I. Definition of CMS

  3. I. Definition of CMS Combine the incentive problems associated with both the CS and DO in a single ownership structure?

  4. I. Definition of CMS

  5. II. Three CMS Forms

  6. II. Three CMS Forms A. Dual Class Equity Structure 1. Structure

  7. II. Three CMS Forms A. Dual Class Equity Structure 2. Incidence Not the most common CMS structure Common in Sweden and South Africa Partly

  8. II. Three CMS Forms B. Stock Pyramids 1. Structure Controlling Shareholder Control Company A Company A Control Company B …… Company N Company in CMS Form

  9. II. Three CMS Forms B. Stock Pyramids 1. Structure Cash Flow R ights In Company N

  10. II. Three CMS Forms B. Stock Pyramids 2. Incidence the most common CMS structure Quite common in Asian companies

  11. II. Three CMS Forms C. Cross-ownership Structures 1. Structure

  12. II. Three CMS Forms C. Cross-ownership Structures 1. Structure Controller 1 n 2 ……

  13. II. Three CMS Forms C. Cross-ownership Structures 1. Structure Sij: the fraction of company i’s shares held by company j Si: the fraction of company i’s shares held by the controller If for each i, the controller maintains The controller controls all n companies

  14. II. Three CMS Forms C. Cross-ownership Structures 2. Incidence Popular in Asia

  15. The Geography of Shareholder Engagements KoGuan Law School Zhou Renjie

  16. I. Definition of Shareholder Engagement Shareholder Engagement is a strategy used to open channels of communication between a shareholder and a company to improve performance of the company.

  17. II. Engagement Tools

  18. II. Engagement Tools

  19. Wall Street Walk II. Engagement Tools Author’s View My View • 1. It is a form of shareholder activism. • 2. It does not fall within the definition of “shareholder engagement”. Lack of Communication

  20. II. Engagement Tools

  21. II. Engagement Tools

  22. II. Engagement Tools • Why to take private engagements? Inefficiency in Collective Action

  23. III. Issues of Shareholder Engagements

  24. IV. Institutional Investors

  25. V. Does Shareholder Engagements Matters? √

  26. Questions a British asset manager the investee firms changed their policies

  27. Sample Sample All of the asset manager’s engagement activities at 397 unique “priority” firms located in 37 different countries from 2006-2011 Priority Firms For these firms, both the engagement agent and the institutional clients view immediate engagement action regarding ESGpolicies as necessary. environmental, social and governance

  28. VI. Question 1: Which firms does the institutional investor engage with and how does geography drive the intensity of such engagements? Home Bias Phenomenon 1 Firms from the UK get significantly more objectives (设定了更多政策目标)

  29. VI. Question 1: Which firms does the institutional investor engage with and how does geography drive the intensity of such engagements? Determinants other than Geography Phenomenon 2 Larger firms get relatively more objectives than their smaller counterparts. Explanation These firms make up for a large part of the relevant investment portfolio. More benefits!

  30. VI. Question 1: Which firms does the institutional investor engage with and how does geography drive the intensity of such engagements? Determinants other than Geography Phenomenon 3 There is a positive relationship between the number of past engagements and the number of current engagements. “Path Dependency”! What drove more past engagements? Closer Collaboration Poorer Performance Explanation 1. A closer collaboration on particular issues raises the number of objectives that a particular firm receives in the future. 2. Poorly performing firms are more frequently targeted with private engagements.

  31. VII. Question 2: Does geography drive the success of engagement activities? √ Phenomenon Firms originating from the United States and Continental Europe do have higher success ratios than their UK counterparts. Explanation The institutional investor is particularly targeting those foreign firms for which the necessity of engagement is also highest and which therefore have the highest potential to change. Firms from the UK have a tight nationwide regulation with respect to corporate governance and environmental standards that the potential of a change is also limited for domestic firms.

  32. VobisGratias Ago

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