Hi, good afternoon. My name is Amy Che. I'm Associate General Counsel and Director of Advocacy Initiatives for the Association of Corporate Counsel. So I am not an academic. I'm a lawyer. You all have given me a wonderful education so far today, really enjoying it. And I am here on behalf of ACC to announce our first winners ever of our ACC Weinberg Center Carl Lego Memorial Call for Papers. So ACC, if you're not familiar with us, we're a global organization. Of in house counsel, corporate counsel. We've got about 46,000 members in over 100 countries. We really believe that the chief legal officer, the general counsel plays a critical role in corporate governance. We think that in the best practices of corporate governance and that an organization's compliance with legal legal and ethical obligations really benefit from having a robust chief legal officer and having a good understanding of the role that the CLO plays in terms of corporate governance and management structure. So we really see that there are benefits to the society at large, to shareholders, employees when we have this kind of compliance. So our goal with this call for papers is to encourage and spur development of academic scholarship that further explores this idea of the role of the CLO in corporate governance. And we have named this award for one of our co founders. We launched this competition for the first time last fall. There was a monetary prize of $20,000 and an opportunity to speak here at the Weinberg Center. And I want to thank the Weinberg Center for all of their support throughout this process. This was a very new endeavor for ACC, and we were thrilled to have Justin and Louisa supporting us every step along the way. Now it is my privilege to introduce our winning paper. We have three authors for our paper, and we've got Serena Shirley here to present the paper. She's an assistant professor in the accounting division at Columbia Business School. She's originally from Jamaica. She moved to the US to attend Ithaca College. And then following an accounting career in the private sector, she went to Penn State University for her PhD. And before Columbia, she was at George Mason, and we're just so thrilled that she's here and then can present to all of you. So, will you please join me in welcoming and congratulating Serena Shirley. Thank you. Thank you. I'm going to hold the clicker for a second. Make sure it works. Okay. Great. Thank you so much, Amy and Susannah and ACC and the conference organizers for this opportunity to present this work. This birthed out of my PhD program at Penn State, where I learned about the role of the corporate secretary and with that kind of understanding their role with the chief legal officer. So I'm very excited to have practitioners appreciate the work. That I have here with my co authors. So A Amy mentioned, it's a co authored project with Justin Hopkins, who's at UVA and JK Are who was my former department chair at George Mason University. And they've really helped me to kind of elevate the project to where it is today, so I'm excited to take about 15 minutes or so and give you an overview of what it's about. So as you can see on the screen, it's entitled Independent or informed how combining the roles of corporate secretary and chief legal officer impacts legal risk. Our project is motivated by discussion in practice about the combination of these two very roles. And as I'll show you with the descriptive statistics, it's very common to have the corporate secretary role combined with the chief legal officer role. And I'll tell you a little bit more about the corporate secretary because I feel like that's usually the newest part when we think about these roles for our academic community. So basically, we're looking at something that we think would be within their wheelhouse. The outcomes that we're looking at is legal risk. So how does the combination of these two roles influence legal risk within corporations. So the corporate secretary. If we think about the board of directors, overall, we often think about the board as carrying out their duties, but we neglect to really think about how they get information, who informs them, and the fact that the board they only meet a few times per year, right? And so there's things going on throughout the year. The corporate secretary is the person who's really helping the board in carrying out their duties, their fiduciary duties, helping them in determining governance, learning best practices, and sharing them with the board, If we even think about something like on board in board members, we talk about board appointment earlier, the corporate secretary plays a role in helping the board members to figure out how to be a board member, right? And so they have a very strong influence on the board that we see and study today. However, when we think about the chief legal officer, their duties are not necessarily always aligned with the role of the corporate secretary as we would think about it. So the chief legal officer, borrowing from practitioner information, they serve a role as a senior vice president often. So they're part of the leadership team, part of the Swiss Chief suite. And we've seen the elevation of the chief legal officer over recent years, and they're helping the companies to carry out their strategic function. The chief legal officer also serves as a general counsel, and often in academic research that you've seen so far, the two are treated interchangeably. The term is treated interchangeably. But here as a general counsel, they're the chief legal advisor for the company. They're involved in anything that's legal, they're overseeing it. They have their hands in it. But then, lastly, most general counsel, sorry, most chief legal officer also are the corporate secretary. And as I mentioned here, in this role, they're serving as an advisor to the board. And so the reason that this question came to be was because there are practitioner kind of literature talking about the tensions of these two roles, and that's what we're investigating in this study. So the chief legal officer is not new to the accounting and finance literature. Prior studies have shown somewhat mixed evidence as to whether or not they provide, benefits for companies or cost companies in certain ways. And you can see on the screen, just prior studies have looked at the highest paid, sorry, high paid GC. So it's the pay status of the chief legal person because that's the data that we have, and we're able to exploit. And so we see benefits in terms of the companies that have this high paid GC. They're less likely to experience stock price crash. They have lower compliance and monitoring breaches. More likely to issue forecasts and lower insider trade in profits. But on the other side, we also see that these companies also engage in more aggressive accounting practices. So again, our study is not about the level of compensation. What we're doing here is we're actually getting into the role and duties of the chief legal officer. So that's one distinction from prior studies. So views on the CLO and why do we care about this in terms of whether or not they're the ones helping to advise the board in developing governance initiatives and compliance initiatives. So just taking some quotes here from prior literature as it relates to the role of the CLO? So the best legal executives push the organization to take informed risks, devise creative solutions to facilitate taking risks. So this idea of they're helping the companies to take risks, and we hope, of course, legal risks. But what we're getting at here is sometimes they might help the company to push the limits. And this is where people are like, Well, if that's their role, but then they're also helping the board to develop governance practices, how can they be the one carrying out both of these. And where we saw examples of the failure of these two roles being combined were actually situations with stock options back date in. So Apple McGraw hill where some of the stark examples of where the combination of these two roles actually failed. So, Apple, for instance, their chief legal officer who was also the company secretary clearly abused her duties in that she actually had her staff change the minutes of board meetings to substantiate stock option back date in, and this is what they provided to the auditors, right? And she could only do this because she had these two hats on. If they were separate, we would hope that it would reduce the likelihood of this complicit behavior. And so others have talked about prior frauds and corporate scandals and the roles that attorneys or not attorneys lawyers play in this. And this is again, just motivation for why people have been, you know, there is some opposition to the combination of these two roles. However, I must admit that despite the arguments against it, it is a common practice. And so that helps us even as we were thinking about this project as to why are we seeing this? Why are companies still combining these two roles? There must be some benefit for this, right? And that's what our study that's the sneak peak, but that's what we find actually that companies do benefit from having these two roles combined. So with this in mind, then, what are the two motivations or hypotheses that we can kind of examine here? The first is an information hypothesis. We have a board that is now more informed about legal risks. They can be more proactive. They can learn from, you know, this person who's in their ear, guiding them in how to manage everything from a legal perspective. Right? So they're more informed. And the chief legal Officer slash Corporate Secretary can help also just in the concentration of risk management. So there are certainly possible benefits of combining the two roles. On the flip side, as I mentioned with the example using stock options back dating, we can see where there's opportunity to kind of misuse the combination of these two powers. In addition, we can have the board being misled, intentionally misled in the information that they're receiving and making certain decisions ultimately. And so it's not clear from an empirical perspective, which of these two hypotheses will kind of that we would really find. And so in terms of that, then when we were thinking about this project, we were agnostic in terms of the direction that we're likely to find. And so with that, our hypothesis then is that comparing CLO duality firms, these are firms where the two roles are combined, and non CLO duality firms, firms where the roles are separated, there is no difference in the likelihood and severity of legal issues. And so just to talk about our sample and how we did this. So we used Bordex and we're looking at the post Sarbanes Oxley period because we wanted to ensure that we were looking at similar regulatory environments. So we're looking at 2003 to 2019. We also wanted to ensure because of the outcomes that we're looking at, they're legal and it takes time for these things to be resolved. So we ended our sample at 2019 as of right now. So with this, we identified the corporate secretary and the chief legal officer within each company in Bordex and then from that, we're basically looking to see if the same person is fulfilling both duties, and that's how we classify CLO duality. It's 81% of the sample years. So again, it's not trivial, right? So many companies. If you see a chief legal officer, their title probably has. Company secretary or corporate secretary. It's very common to see this practice. And so that still leaves us with if there are these potential risks of combining these two roles, why are companies still doing this? So if we just look at the data over time, we don't see a lot of change. So the percentages that I mentioned kind of remain fairly static over time. When we look at firms, as they age, we see some sense that as they age maybe slightly, this doesn't work. As they age, you see some slight decline in the CLO duality percentage. And some of that is natural because as a firm gets bigger and grows, then it's possible that the work of these two roles becomes cumbersome for one person, and the split is kind of natural for firms to separate. So we're seeing that confirmed by the data. Then we also look across industry. Again, it's very common to see CLO duality across the variation of industries. So here, what we're looking at is the data that we have available to us. We have three measures that we're looking at to capture legal risks of the firms. We're looking at shareholder class action lawsuits. And then we're also looking at regulatory violations, which includes state and local government, federal regulations that are being violated. And then we also have the penalty. So we have $1 value associated with these violations that we can also measure. The empirical model that we're looking at here. We are borrowing from prior research that looks at X anti litigation risk, and then we include our CLO duality measure. And here we are controlling for the high paid GC status because again, what we're looking at, or what we're interested in is separate from their pay status. We want to understand the roles and duties and the impact on firms legal risk. So we took a step back to try to understand again, why we see the structure within the United States. And this is also a global phenomenon. But it's been very hard to get specific information from companies about why this structure is the way it is. A lot of times, that's just the way they do it. And there's no strategic from an academic perspective. We really want to hear some strategic motivation as to why it is the way it is. And we haven't been able to gather that. However, from prior literature related to just governance, and as well as some of the practitioner literature that talks about these two roles, we are able to identify certain variables that would seem like they are related to the combination or separation of these two roles. And so with this in mind, we were able to construct a determinants model. And so with this, we found that the CLO duality firms were more likely to have a high paid CLO. So that's where the roles are combined. You're paying them for doing more in some ways. And firms with high board independence are also the firms that are more likely to have this combined structure. In terms of firms that are more likely to actually have the role separated, which we saw graphically, older firms and larger firms are more likely to have the role separated. And then we looked at profitability, more profitable firms also separate the roles and CO firms with the combined CO chairman role also are more likely to separate these two functions. So that's just to inform, provide information descriptively in some ways on determinants of this structure. So with that in mind, then, just to talk about the empirical results that we have so far. So as I mentioned, we're looking at three different measures of legal risk. And as you can see here, we have some evidence that the CLO duality structure is associated with a lower likelihood here of lawsuits. Those are the shareholder class action lawsuits. And then we saw that the penalties that are associated with regulatory violations are more likely to be lower for these companies as well. We also tried to do some matching, so we use course and exact matching to develop a determine a matched sample. And so with this, we saw the results for our lawsuits variable, actually got stronger, though other results went away admittedly, but we didn't lose everything. And so, with this much smaller sample, we were still able to find stronger results for the shareholder class action lawsuits. In terms of additional tests, so you did see from the graph that the percentage doesn't really change over time, but we do have a sample of firms that did switch the status during our sample period. And so we wanted to exploit that to analyze changes to or from the CLO duality structure. And so with this, we found that our results were driven by firms that changed two. This is the firms that combine firms that combine the two roles that were more or sorry, less likely or have lower likelihood of legal issues following the combination. And we didn't find any results related to the separation. So we can see that it's being driven by the combination of the two roles. In addition, we also split our sample based on the board independence measure. In earlier versions of the paper, we did this as an interaction variable. The results were the same in terms of the findings, but we find that our results are driven by high board independence firms. This actually relates to earlier studies related to even having a finance expert on the board. We're basically high independence boards, stronger boards seem to be able to leverage the guidance and advice of this legal mindset that they have. And with earlier studies looking at the finance experts, boards that have the higher independence boards, the stronger boards were able to also leverage the skill set of the finance expert on the board. And then lastly, because I am an accountant researcher and having presented this in certain accountant settings, people have asked also asked, you know, though, our focus is on the chief legal officer, and the debate is about the chief legal officer. Other people have asked, what about the CFO, you know? So we did do some initial test to kind of get at understanding where maybe the role is not combined with the CLO role, but maybe the CFO role. So again, doing the same exercise going through the data, identifying where the role is the corporate secretary function is linked or not associated with. It's fulfilled by the chief financial officer looking to see if we see evidence of that it impacts financial outcomes. And we found some evidence of lower restatements or less likelihood of having your financial statements restated. But this is not the crux of our paper. It's just one of those additional things in the back. But I guess just in the spirit of full disclosure, if you're actually able to go through the data, you'll see that the corporate secretary duty can be fulfilled by there's no guidance that says it has to be a legal person, so there is variation within companies. But as I showed you, 81% of companies, it's with the chief legal officer. That's where the combination is, and that's where the issues that I discuss really matter. And so with this in mind, that's the conclusion of our paper. What we find is that CLO duality firms are more likely or less likely to experience legal risk, lower likelihood of legal risk measured by shareholder class action lawsuit, regulatory violations, and penalties associated with those violations. And we find that this result is driven by firms with high independence and firms that actually combine the roles, not separation as some might presume. We results are also not driven by the compensation which prior research has kind of focused on when they look at the general counsel. So with this in mind, we believe that our study examining this organizational structure and this channel for board information should be informative to practitioners to regulators and such. And so, again, we really appreciate the ACC confirming what we're saying. So with that in mind, I just want to say thank you and I'm happy to talk about this paper with anyone who's interested like I've been working on this for a long time. I'm happy to talk to anyone about this. So thank you guys.