Gustavo Ballvé on July 10th, 2012
Corporate Governance, Corporate Strategy, Food for thought, Home, Portfolio Management, Risk management

The Deal Professor writes about the corporate governance standards in the recent hyped-tech-company IPOs – Facebook, Zynga, LinkedIn, Groupon and so on. He’s right to point out the potential for a worrisome trend, although I’ve yet to see evidence of one in a more wide-ranging study. And he does make the vital point that people who buy such companies have no excuse, because such less-friendly structures are very well laid out in the companies’ filings. Where I disagree with him is in the next sentence: “But shareholders may accept these arrangements because they assume that a board will act independently. Directors are meant to act as a check on executives or at least add their expertise and advice to big decisions.” — I don’t think one can call oneself an investor and assume that boards will act independently. I will never rely/ depend on such an assumption. While I do accept that some boards will be better than others, the incentives game is far more complicated than that.

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