The Hayek / Mises argument that any small step to the left leads inevitably to full on totalitarian socialism, might have had something going for it when the world was beset by Hitler, Stalin, and the fascist governments of Spain, Portugal and Southern America. And later, when national-socialism and fascism had become history, but communism [...]
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 [...]
Posted on July 28, 2010, 10:49 am, by Gordon Pearson, under
Agency theory,
BBC,
BP,
Corporate Governance,
Economic Theory,
Free Market Capitalism,
Shareholder Value.
Nowhere in British or United States law are directors (and/or managers) of the incorporated limited liability company, claimed to be the agents of shareholders. The principal, for which directors act as agent, is the company itself. And as agents of the company, directors have a legal duty to act in its best interests at all [...]
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 [...]