Session 3: The Real World Strikes Back - Corporate Governance

In this session, we spent almost a large chunk of out time on the assessment of where the power lies in a company. In the utopian world, the power lies entirely with shareholders, but in the real world, that is not often the case. It can lie with managers, if shareholdings are diffuse and shareholders are passive. It can lie with a subset of inside shareholders, who have large holdings and/or are part of incumbent management. In some cases, that power can come from having voting and non-voting shares. It can lie with governments, lenders or employees. The first step in understanding why a company does what it does is to assess the power structure, and I suggested that you look at the largest shareholders in the company. (Yahoo! Finance has this information under holders). We then turned our attention to the differences in interests between lenders and shareholders, when it comes to running a firm, and argued that lenders to businesses who don’t protect themselves risk being Nabiscoed. Moving on to the r