Two Cultures Shaping The Corporate Governance Debate: Donald G. Margotta Northeastern University
Two Cultures Shaping The Corporate Governance Debate: Donald G. Margotta Northeastern University
Two Cultures Shaping The Corporate Governance Debate: Donald G. Margotta Northeastern University
Governance Debate
Donald G. Margotta
Northeastern University
Takeover defenses
Capital structure
Corporate strategies
Usual
Managers
Institutional
Shareholders
Cultures View
Definition
Issues
Sarbanes-Oxley
Issues (2002)
---------------------------
None
Why
Corporate acquirers
Risk arbitrageurs
Short sellers
Diversification is Key
Diversification
through
Figure 1
Pre-Berle and Means Model
Undiversified
Owner-Manager
Corporation
Business Risk
Market Risk
Figure 2
Berle and Means Model
Undiversified
Owners
Undiversified
Manager
Corporation
Business Risk
Market Risk
Figure 3
Modern Portfolio Theory
Model
Diversified
Owners
Market
Risk
Undiversifie
d Owners
Undiversifie
d Manager
Corporation
Business Risk
Market Risk
ethical perspective.
Applies Kants categorical imperative
Concludes that investors may act unethically
in adopting a MPT perspective
Horrigan, James O. (1987), The Ethics of the New Finance,
Journal of Business Ethics 6, 97-110
Voting Rights in Major Corporations (Sen. Doc. 95-99, June 1978) and Interlocking
Directorates Among the Major U.S. Corporations (Sen. Doc. 95-107, June 1978)
"Commercial Banks and Their Trust Activities: Emerging Influence on the American
Economy." Subcomm. Print, House Committee on Banking and Currency, 90th
Cong., 2d Sess., July 8, 1968. (Patman Subcommittee Study).
/ Shareholder
Diversified
Shareholder / Corporation
Takeover Defenses
Bankruptcy
Product Strategies
8%
8%
8%
8%
60%
60%
A
A
A
those 18 shared holders hold 4.4 MSFT shares for every one of Yahoo
If MSFT were to raise the offer by $3, and this negatively impacted its
own shares by at least $0.68 (which we think possible), then these
shareholders would be net losers
He concludes those 18 may not want a bigger offer for that reason
WSJ, 2/28/08, Courtship of Yahoos Jerry Yang, Heidi Moore
Conclusion
Diversification:
Resolution (1)?
Change
Resolution (2)?
Resolution (3)?
Limiting
Dm notes
Intro: