Do skills of GCs clearly affect share price?

A piece in Law.com In-House Counsel, May 26, 2006 (Daniel Panitz of Major, Lindsey & Africa), discusses succession planning for the general counsel position. One of its contentions raised my eyebrows.

“The leadership and core business knowledge skill set of today’s GC clearly affects shareholder value.” For general counsel, legal judgment surely makes more difference than does leadership or business knowledge. Even less credible to me is the assertion that event studies bear out the claim that share price rises or falls on GC decisions or appointments (See my post of May 4, 2005 on event studies and litigation.).

Perhaps Panitz’s would defend himself by the looseness of “affects,” but then someone could point out that every action in a company affects shareholder value. That moderate stance, which vitiates the intended meaning, goes by the boards with the exaggerated “clearly.” There are no doubt instances where legal judgment clobbered or pumped up a company’s share price (recall Texaco for the first and the plaintiff against RIM for the second), yet I suspect those are exceptions that prove the rule: GC actions barely nudge stock prices.