A world class law professor recently visited New Zealand for a major conference about the changing landscape of corporate law: He tells us why he’s impressed with Auckland
Given his reputation as an international expert in corporate law, corporate finance, international securities and banking regulation, and European business law, it’s something of a surprise to find that Professor Joe McCahery comes across as a fairly regular sort of guy.
He’s approachable, funny, interested and interesting, down-to-earth and all those other things not readily associated with the upper echelons of the academic landscape. And he’s mercurial in thought, darting from one subject to another, going wherever his many thoughts take him.
Among other things, McCahery is a Professor of International Law at Tilburg University, Fellow of the Tilburg University Law and Economics Centre and the European Banking Centre, and Programme Director of the MSc and LLM in Finance and Law at Duisenberg School of Finance in Amsterdam.
He has many publications in top law and finance journals and has recently published two books on corporate law and governance and edited 10 collections of papers.
His recent visit to New Zealand – his second trip down-under – was to be the keynote speaker at the Auckland Law School’s recent conference, The Changing Landscape of Corporate Law, at the invitation of a respected Auckland Law School colleague, deputy dean, Professor Susan Watson.
In a lecture to students, McCahery talked about ‘conservatism and innovation in venture capital contracting’, conjecturing that venture capitalists and their investors often fall prey to what is known as ‘collective conservatism’.
Boilerplate provisions in limited partnerships are sometimes accepted by investors, not because they believe the standardised terms and conditions sufficiently align the interests of investors and fund managers, but merely because they think their peers, including their competitors, prefer to include them in the limited partnership agreement, he contends.
“The financial crisis has facilitated some notable deviations in the provisions that are aimed at returning confidence in the venture capital industry,” McCahery says. “A gradual shift toward more investor-favourable limited partnership agreements or separate accounts and pledge funds arrangements may be taking place.
“These shifts, which do not lead to significant changes in the limited partnership agreements, appear to be particularly effective for bigger funds that focus on later stage investments.
“Early stage funds are more inclined to enter into innovative collaborative agreements that differ from the traditional limited partnership agreements in that they focus less on curtailing principal agent problems and more on joint development and value creation.”
Today, however, the professor is more worried about his cats back home in Leiden, The Netherlands. There are three English shorthair cats in the family and one of them is just back from surgery – a colon operation which hopefully will go some way towards righting an odour problem.
But he digresses, as he does in his mercurial fashion. He was a high school journalist in Ohio, and hence knows about “hooks” like the cat-phrase above – that’s why he threw it in there, he admits with a grin.
McCahery, 58, says the Netherlands retirement age is 67 but it’s kind of irrelevant to his life because he doesn’t really want to stop and he hopes other people don’t want him to either.
He shares his home life with his wife of 22 years, Coby - an oil and gas economist and a linguist – their daughter Meagan who is in her second year at medical school, and the cats.
He’s “thoroughly impressed” with the Auckland Law School, and for that matter, Auckland. Having also taught in the UK, he says it’s wonderful to see a person of Dean Andrew Stockley’s calibre here.
“The Law School has a great reputation,” he adds. “People I know are attracted to it and come here regularly. It is an engaged school with top researchers and high-achieving students.”
He likes Auckland as a city also, finding it dynamic and cosmopolitan with lots of different dialects. He enjoys the Polynesian influence and that he can buy good Dutch cheese here.
“The city is great,” he enthuses. “It’s got great bookstores, good walks and public spaces, museums, and it’s all reasonable and not crowded – it’s attractive in itself.”
McCahery thrives on his research, the opportunity to work in a challenging environment – to solve problems that don’t have obvious answers, to achieve results that are not easy to get to, to work across disciplines.
Some of his current research is linked with a “carbon bubble” report for the Netherlands Government. It answers questions like: is there a bubble? what’s the market reaction to the scientific journals that say there may be a bubble?, and how’s the market responding to corporations that have a high percentage of assets based on carbon?
“We’ve analysed our own data to see what the reaction is – oil and gas companies and now coal companies. What we suspect is that the exposure to the carbon bubble will include coal.”
He says there has not been a generalised response from investors, but rather a fund by fund response. “There hasn’t been as much of an over-reaction as the media is indicating.
“The introduction of carbon tax worries investors more than the announcement of the carbon bubble.”
McCahery says research is the driver of location. “It’s not something I just picked up, I’ve stayed with it.
“The challenge for lawyers when they want to become researchers is to choose a field with many interesting components, get incentivised, be open and engaged and have a focussed research agenda.”
He’s approachable, funny, interested and interesting, down-to-earth and all those other things not readily associated with the upper echelons of the academic landscape. And he’s mercurial in thought, darting from one subject to another, going wherever his many thoughts take him.
Among other things, McCahery is a Professor of International Law at Tilburg University, Fellow of the Tilburg University Law and Economics Centre and the European Banking Centre, and Programme Director of the MSc and LLM in Finance and Law at Duisenberg School of Finance in Amsterdam.
He has many publications in top law and finance journals and has recently published two books on corporate law and governance and edited 10 collections of papers.
His recent visit to New Zealand – his second trip down-under – was to be the keynote speaker at the Auckland Law School’s recent conference, The Changing Landscape of Corporate Law, at the invitation of a respected Auckland Law School colleague, deputy dean, Professor Susan Watson.
In a lecture to students, McCahery talked about ‘conservatism and innovation in venture capital contracting’, conjecturing that venture capitalists and their investors often fall prey to what is known as ‘collective conservatism’.
Boilerplate provisions in limited partnerships are sometimes accepted by investors, not because they believe the standardised terms and conditions sufficiently align the interests of investors and fund managers, but merely because they think their peers, including their competitors, prefer to include them in the limited partnership agreement, he contends.
“The financial crisis has facilitated some notable deviations in the provisions that are aimed at returning confidence in the venture capital industry,” McCahery says. “A gradual shift toward more investor-favourable limited partnership agreements or separate accounts and pledge funds arrangements may be taking place.
“These shifts, which do not lead to significant changes in the limited partnership agreements, appear to be particularly effective for bigger funds that focus on later stage investments.
“Early stage funds are more inclined to enter into innovative collaborative agreements that differ from the traditional limited partnership agreements in that they focus less on curtailing principal agent problems and more on joint development and value creation.”
Today, however, the professor is more worried about his cats back home in Leiden, The Netherlands. There are three English shorthair cats in the family and one of them is just back from surgery – a colon operation which hopefully will go some way towards righting an odour problem.
But he digresses, as he does in his mercurial fashion. He was a high school journalist in Ohio, and hence knows about “hooks” like the cat-phrase above – that’s why he threw it in there, he admits with a grin.
McCahery, 58, says the Netherlands retirement age is 67 but it’s kind of irrelevant to his life because he doesn’t really want to stop and he hopes other people don’t want him to either.
He shares his home life with his wife of 22 years, Coby - an oil and gas economist and a linguist – their daughter Meagan who is in her second year at medical school, and the cats.
He’s “thoroughly impressed” with the Auckland Law School, and for that matter, Auckland. Having also taught in the UK, he says it’s wonderful to see a person of Dean Andrew Stockley’s calibre here.
“The Law School has a great reputation,” he adds. “People I know are attracted to it and come here regularly. It is an engaged school with top researchers and high-achieving students.”
He likes Auckland as a city also, finding it dynamic and cosmopolitan with lots of different dialects. He enjoys the Polynesian influence and that he can buy good Dutch cheese here.
“The city is great,” he enthuses. “It’s got great bookstores, good walks and public spaces, museums, and it’s all reasonable and not crowded – it’s attractive in itself.”
McCahery thrives on his research, the opportunity to work in a challenging environment – to solve problems that don’t have obvious answers, to achieve results that are not easy to get to, to work across disciplines.
Some of his current research is linked with a “carbon bubble” report for the Netherlands Government. It answers questions like: is there a bubble? what’s the market reaction to the scientific journals that say there may be a bubble?, and how’s the market responding to corporations that have a high percentage of assets based on carbon?
“We’ve analysed our own data to see what the reaction is – oil and gas companies and now coal companies. What we suspect is that the exposure to the carbon bubble will include coal.”
He says there has not been a generalised response from investors, but rather a fund by fund response. “There hasn’t been as much of an over-reaction as the media is indicating.
“The introduction of carbon tax worries investors more than the announcement of the carbon bubble.”
McCahery says research is the driver of location. “It’s not something I just picked up, I’ve stayed with it.
“The challenge for lawyers when they want to become researchers is to choose a field with many interesting components, get incentivised, be open and engaged and have a focussed research agenda.”
