Posted on August 25, 2010, 11:01 am, by Gordon Pearson, under
Agency theory,
Corporate Ownership,
Economic History,
Economic Theory,
Free Market Capitalism,
Management Practice,
Shareholder Value.
Since Adam Smith’s example of the pin factory, economists have never been able to produce a satisfactory theory of the industrial firm. They’ve thought of it as a black box, expressed it as a production function involving such illuminating variables as price and quantity, and they’ve reduced it to the agency relationship falsely claiming managers [...]
Posted on August 2, 2010, 11:34 pm, by Gordon Pearson, under
Corporate Governance,
Corporate Ownership,
Economic Theory,
Financial Sector,
Free Market Capitalism,
Management Practice,
Moral Hazard.
Almost every empirical study of the value of takeovers indicates that overall there is no gain; the acquirer doesn’t benefit and the overall economy usually loses out. The only ones who gain are the shareholders of the acquired company, and in cases like the Tomkins sell out currently going through, its top management whose pay [...]
The hero of the free market philosophy is surely the entrepreneur, the one who has the entrepreneurial spirit to start from small beginnings and build something not only with their own sweat, blood and creativity, but also by putting their own money at risk. They control and own. Most of them fail but a few [...]
Posted on July 19, 2010, 8:54 am, by Gordon Pearson, under
Bank Bonuses,
Corporate Governance,
Corporate Ownership,
Economic History,
Financial Reporting Council,
Financial Sector,
Free Market Capitalism,
Moral Hazard,
Shareholder Value.
“The directors of … companies, being the managers of other people’s money rather than their own, it cannot well be expected, that they should watch over it with the same anxious vigilance … Negligence and profusion must always prevail … in the management of the affairs of such a company.” So wrote Adam Smith 250 [...]
Posted on July 12, 2010, 10:18 am, by Gordon Pearson, under
Accounting profession,
Audit profession,
Corporate Governance,
Corporate Ownership,
Financial Sector,
Free Market Capitalism,
Regulation,
Shareholder Value.
The Financial Reporting Council (FRC), which oversees issues of corporate governance, has been busy recently. In June it published an updated UK Corporate Governance Code. Now, this month it has published the companion UK Stewardship Code for institutional investors. So we now have both sides of the governance coin, ready for implementation, the considered regulation [...]