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• Case | HBS Case Collection | October 2020 (Revised November 2020)

  Digging for Gold: Paulson & Co.’s Activism in the Gold Sector

  Suraj Srinivasan and Jonah S. Goldberg

  The case describes the efforts of hedge fund Paulson & Co to influence corporate governance and improve performance in the gold industry. In an innovative move, the hedge fund led the creation of the Shareholder Gold Council, a consortium of large investors in gold companies to push gold mining companies to adopt higher levels of corporate governance. The case describes the motivation and process that led to the creation of the SGC and the initial work of the SGC. The case also discusses the variety of techniques that Paulson & Co uses to press for better performance at gold mining companies such as buying majority ownership and pursuing activist proxy contests in addition to its work at the SGC. The case serves as a vehicle for students to discuss how investors can engage with companies to drive their desired corporate governance goals. In particular, the case develops the idea of collective action by investors and the opportunities and challenges in doing so.

  Keywords: corporate governance; board of directors; hedge funds; shareholder activism; Governing and Advisory Boards; corporate accountability; gold; Corporate Governance; Governing and Advisory Boards; Corporate Accountability; Mining Industry; Canada; United States;

  Citation:

  Srinivasan, Suraj, and Jonah S. Goldberg. "Digging for Gold: Paulson & Co.’s Activism in the Gold Sector." Harvard Business School Case 121-021, October 2020. (Revised November 2020.)  View Details

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• Case | HBS Case Collection | March 2020 (Revised October 2020)

  Board Director Dilemmas—Digging into Detail

  David G. Fubini, Suraj Srinivasan and Amram Migdal

  This case explores a new board director who asks a detailed question about a footnote in the lengthy board packet distributed to directors by management. The case allows for discussion about the amount of information and level of detail provided by management, the level of preparation directors engage in prior to board meetings, and the appropriate strategic focus of the board. This case is part of a series of vignettes that capture different dilemmas faced by directors as they join boards of companies and understand the dynamics of the new boards that they join.

  Keywords: board of directors; Corporate Governance; Governing and Advisory Boards;

  Citation:

  Fubini, David G., Suraj Srinivasan, and Amram Migdal. "Board Director Dilemmas—Digging into Detail." Harvard Business School Case 120-100, March 2020. (Revised October 2020.)  View Details

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• Article | Journal of Corporate Finance | October 2020

  Corporate Legal Structure and Bank Loan Spread

  Anywhere (Siko) Sikochi

  This study examines how a corporate legal structure may affect borrowing costs. Corporate legal structure refers to the legal fragmentation of a firm into multiple, separately incorporated entities. This fragmentation is bound to be a factor when lenders determine the pricing of debt and design of contract terms because they can enter into legally enforceable agreements only with specific legal entities. Using a sample of bank loans issued to U.S. parent companies, I find that a more complex corporate legal structure is associated with higher loan spreads. The findings are robust to several firm and loan characteristics, and are incremental to the effects of other forms of organizational structure, namely business and geographic diversification. I also subject the results to tests to correct for potential endogeneity concerns. I also find that the level of debt at subsidiaries affects the parent company's borrowing costs. However, the subsidiary debt does not moderate the relationship between legal structure and borrowing costs. Evidence suggests that this is, at least partly, explained by recovery costs. There is also some evidence that a corporate legal structure affects the design of the debt contracts.

  Keywords: corporate legal structure; subsidiaries; Bank loans; minority interest; credit risk; Organizational Structure; Business Subsidiaries; Financing and Loans;

  Citation:

  Sikochi, Anywhere (Siko). "Corporate Legal Structure and Bank Loan Spread." Journal of Corporate Finance 64 (October 2020).  View Details

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