Luke Johnson on ownership and control
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Luke Johnson’s entrepreneurship column in the Financial Times rarely if ever fails to hit the spot in his colourful and direct style. His most recent piece is simply superb on the fundamental dysfunctionality in the traditional model of corporate ownership and control in some of the bigger listed businesses. A wonderful read for those who want to appreciate the principal agent problem. He makes the case for a switch back to private ownership - taking companies off the market.
“Large public companies are mostly owned by a hugely fragmented shareholder base. Most of us have pension and insurance policies, through which we all invest in equities; everyone owns them and yet no one does. No owner has control, so the hired hands rule the roost. Fund managers meet executive directors twice a year for an hour and expect to understand what is going on. Too often they judge management based on their ability to carry off a presentation rather than their true skills as leaders.”
The remainder of his (highly recommended) article can be found here
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