Consciously Decoupling : A Response to Professors Barry, Hatfield and Kominers

In their Article, On Derivatives Markets and Social Welfare: A Theory of Empty Voting and Hidden Ownership, Professors Jordan M. Barry, John William Hatfield, and Scott Duke Kominers offer a compelling addition to the still-burgeoning discussion of the bifurcation of voting rights and ownership interests. The practice of decoupling the long-fused voting rights of shareholders from their underlying economic interests has become all too common with the explosive growth of the financial derivatives markets. Such decoupling efforts challenge assumptions embedded in our capital markets, test our system of corporate governance, and strain a regulatory regime based on disclosure. Decoupling practices, which seemed both clever and innovative in their earliest days, now represent a growing threat to corporate law.This short Response attempts to further advance the discussion and proceeds in four parts. Part I offers a brief summary of the types of decoupling the Article addresses and highlights the complex and dynamic nature of the subject. Part II addresses the Article's most lasting contribution — the introduction of an alternative “core outcome” model by which particular decoupling tactics can be better analyzed. Part III attempts to persuade the reader that decoupling is, by its very nature, upsetting to the natural order, and its persistence threatens the predictability and stability of the overall market. Finally, Part IV concludes the Response with a brief summary of the Article's contribution and a hope that focus on a desirable explanatory model does not siphon attention from efforts underway to improve the quality and depth of the information available to market participants