The bylaw response to decoupling

I’ve always been skeptical that hedge funds’ manipulation of voting rights is the problem it’s made out to be by Hu & Black and others – see, e.g., here and here. That’s not to say there aren’t abuses, but that new federal regulation, even if it's limited to forcing disclosure, could cause more harm than good. Indeed, I wonder if this isn't more about the anti-hedge fund angst than about a real problem.

There’s another reason to support that conclusion – firms can address the problems on their own by determining who can vote and what they have to disclose. And they have ample incentives to do so because, after all, these devices are threats against the tenure of incumbent managers.

Today’s WSJ notes:

Pfizer Inc., Monsanto Co. and Sara Lee Corp., among others, have this year amended their bylaws to require that investors nominating directors or proposing resolutions at annual meetings disclose complex transactions involving the company's stock. * * * The companies claim the information could give boards a better understanding of activists' motives, which may not be the same as other shareholders.* * * More than 40 New York Stock Exchange-listed companies have added such provisions to their bylaws this year . . .