Corporate Governance

Carl Icahn wrote this article on WallStreetJournal last week after his unsuccessful attempt to takeover Dell.

http://online.wsj.com/article/SB10001424127887324665604579081703521362462.html

I believe the role of corporate raiders like Carl is critical in the market. The numbers he gives in his article are solid and noteworthy though its not easy to verify the claim.  But all in all he makes a good case for change in corporate governance.

Dell, HP and a lot of other giant corps have lost so much value due to poor corporate governance. On the other hand I don’t fully understand what happened with Citigroup less than an year ago. Despite leading Citi out of the woods Vikram Pandit was pushed out unceremoniously.

This makes a more compelling case for restructuring corporate governance.  I do believe that some form of stakeholder model would be far better than the current one.

http://en.wikipedia.org/wiki/Stakeholder_theory

I believe that the success of Mittelstand companies in Germany is due to the focus on long term profitability as opposed to the quarterly and annual pressure faced by public listed companies. 

“Enlightened value maximization utilizes much of the structure of stakeholder theory but accepts maximization of the long-run value if the firm as criterion for making requisite trade-offs among its stakeholders... and therefore solves problems that arrives from multiple objectives that accompany traditional stakeholder theory”

-Jensen, 2001

Some countries push to maximise shareholder value others push multiple stakeholder value.

I’ll expand further on this.