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Towhom howisaccountabilityexercised

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Unformatted text preview: s enable management to pass on all costs (including agency costs) to customers & shareholders ­ And if not ­ Are they passed on to debt holders & public via bankruptcy? – – – – Lockheed Chrysler Savings and loans Public & Private Pension Schemes & Medical Ins. Copyright 2013 Copyright 2013 Questions: Have shareholders traded control for liquidity? Is this a good trade? What about passive investors (index ­ funds)? Is this a zero sum game? Who are the losers? In focusing on liquidity have we ignored ‘credit quality’? Who are the final holders? “Greater fools?” Copyright 2013 Copyright 2013 More Questions: Does or should “ownership” have accountability? Who is accountable? To whom? How is accountability exercised? – – Shareholders (limited liability) Directors & Managers Discretion Indemnification D + O Insurance Corporation as a legal person Copyright 2013 Copyright 2013 More Questions If institutional legal owners exercise control, who are they accountable to? Drucker: “If ‘som’ is defined as “ownership of the means of production by workers” then the U.S....
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