Power dynamics in American businesses shift as Trump favors management over shareholders
The Trump administration's proposals to shift power from shareholders to CEOs in American companies could have significant implications for investment, depending on the extent of their implementation and the ensuing debate. John Coffee, a corporate governance professor at Columbia Law School, suggests that the US's reputation as a transparent and shareholder-friendly venue for raising capital will be tested in this context.
Meanwhile, the US and UK are set to announce closer cooperation on digital assets, with a focus on cryptocurrency regulations. This move comes as a response to pressure from crypto groups, with the discussion about digital assets and blockchain being a point of contention ahead of US President Donald Trump's visit to the UK.
Across the Mediterranean, the situation in Gaza remains precarious. Israel has initiated a ground invasion into Gaza City, causing a humanitarian crisis. The latest incursion has forced hundreds of thousands of people to flee Gaza's biggest city, adding to the existing displacement in the area. A UN commission has declared that Israel has been committing genocide in the Gaza Strip, adding to the scrutiny and criticism of Israel's conduct in its war against Hamas.
On the economic front, the US economy expanded eight times faster than the EU's last quarter. However, Mario Draghi, the former European Central Bank president, criticized the European Union for its slow response to his report containing 380 recommendations to improve economic competitiveness, stating that only 11% have been implemented.
In the realm of corporate governance, the Securities and Exchange Commission (SEC) has launched a review of regulatory disclosures and is considering proposals to curb shareholders' ability to sue companies. The SEC has also endorsed a new voting system that Exxon wants to implement, which would automatically vote shares in the way that management wants for retail investors who opt in. This move, along with the administration's intention to reduce class action lawsuits and special interest group proposals, raises concerns about reduced transparency and limited shareholder ability to put forward views or take action against management.
Lastly, the SEC is considering a proposal to allow companies to report earnings every six months instead of every three. The search results do not provide specific information on who initiated this change in corporate reporting in the USA that shifts more power to companies themselves rather than shareholders.
In contrast, the Trump administration has shown an embrace towards digital assets, while British regulators have taken a more cautious approach. UK Chancellor Rachel Reeves and US Treasury Secretary Scott Bessent discussed digital assets during a meeting on Tuesday.
As the world continues to navigate these complex issues, it's clear that the global landscape is undergoing significant changes, and understanding these shifts is crucial for investors, policymakers, and citizens alike.
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