- 49 -
Petitioners did not offer any expert testimony relating to the
merits of the private benefits analysis and did not cross-examine
respondent’s experts on this point.20
Burndy-US could not extract private benefits from Burndy-
Japan because Furukawa and Sumitomo could veto several important
types of corporate actions. These veto powers gave Furukawa and
Sumitomo leverage over actions not subject to veto through the
indirect or “log-rolling” effect; i.e., the ability of Furukawa
or Sumitomo to pressure Burndy-US to act as requested on a matter
not subject to veto to keep Furukawa or Sumitomo from vetoing an
action subject to their veto powers.
Petitioners contend we should disregard Bajaj’s testimony
because he was biased. We disagree and find Bajaj’s analysis to
be helpful in deciding this issue.
Petitioners contend that they found no case or published
analysis which supports Bajaj’s theory. However, the private
benefits analysis is discussed by Shleifer and Vishny in “A
Survey of Corporate Governance”, 52 J. Fin. 737, 747 (1997), and
by Barclay and Holderness in “Private Benefits From Control of
19(...continued)
stockholders, control amenities for individual stockholders, and
synergies in production for corporate stockholders.
20 Petitioners’ counsel asked Bajaj whether he had used the
words “private benefits” prior to his testimony in these cases
and whether a certain hypothetical situation resulted in private
benefits but did not ask Bajaj any other questions about the
merits of the private benefits analysis.
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