Comments on: Are Buyout Funds Appropriating Profits? http://www.truthonthemarket.com/2006/01/29/are-buyout-funds-appropriating-profits/ Academic commentary on law, business, economics and more Fri, 19 Mar 2010 20:08:11 -0700 http://wordpress.org/?v=2.8.5 hourly 1 By: Abnormal Returns » Blog Archive » Monday links: silver ETF timing http://www.truthonthemarket.com/2006/01/29/are-buyout-funds-appropriating-profits/comment-page-1/#comment-181 Abnormal Returns » Blog Archive » Monday links: silver ETF timing Mon, 30 Jan 2006 18:32:46 +0000 http://www.truthonthemarket.com/2006/01/29/are-buyout-funds-appropriating-profits/#comment-181 [...] Truth on the Market comments on the question: Are private equity firms appropriating excess profits that should accrue to public shareholders? [...] [...] Truth on the Market comments on the question: Are private equity firms appropriating excess profits that should accrue to public shareholders? [...]

]]> By: Ideoblog http://www.truthonthemarket.com/2006/01/29/are-buyout-funds-appropriating-profits/comment-page-1/#comment-178 Ideoblog Mon, 30 Jan 2006 15:52:20 +0000 http://www.truthonthemarket.com/2006/01/29/are-buyout-funds-appropriating-profits/#comment-178 <strong>Another effect of SOX: America going private...</strong> Bill Sjostrom refers to a NYT article that quotes hedge fund manager is quoted as suggesting that buyout funds are appropriating profits that should go to public shareholders. Sjostrom says that can’t be in the longrun because of competition... Another effect of SOX: America going private…

Bill Sjostrom refers to a NYT article that quotes hedge fund manager is quoted as suggesting that buyout funds are appropriating profits that should go to public shareholders. Sjostrom says that can’t be in the longrun because of competition…

]]> By: Geoffrey Manne http://www.truthonthemarket.com/2006/01/29/are-buyout-funds-appropriating-profits/comment-page-1/#comment-172 Geoffrey Manne Mon, 30 Jan 2006 02:30:02 +0000 http://www.truthonthemarket.com/2006/01/29/are-buyout-funds-appropriating-profits/#comment-172 And another thing: By what absurb metric does "the public" not share in the profits of the private companies they spawn? Isn't it "the public" who receives the takeover premium paid by the buyers in the first place? And another thing: By what absurb metric does “the public” not share in the profits of the private companies they spawn? Isn’t it “the public” who receives the takeover premium paid by the buyers in the first place?

]]> By: Geoffrey Manne http://www.truthonthemarket.com/2006/01/29/are-buyout-funds-appropriating-profits/comment-page-1/#comment-171 Geoffrey Manne Mon, 30 Jan 2006 02:23:25 +0000 http://www.truthonthemarket.com/2006/01/29/are-buyout-funds-appropriating-profits/#comment-171 Although the (very brief) article tries to suggest otherwise, every "cost of being public" cited by the executives in the article is a function of regulatory or legislative excess. Compliance costs and independent boards, obviously. But the real peril cited by these guys is mandatory-disclosure-enabled meddling by shareholders and other stakeholders who shouldn't. Downward pressure on executive pay is (surprisingly) an issue, so are other constraints on managerial decisionmaking. In a forthcoming post on disclosure, I'll say a bit more about this, but the basic point is: If you make it less expensive for shareholders to exert influence, you make it more likely, as well. Despite what the corporate democracy folks say, this can be costly. And, of course, fundamentally, if the problem is that the takeover game isn't being played by public companies, one need surely look in the direction of the Williams Act. Oh--and for my money you left out the best quote: <blockquote>said one top executive of a major Fortune 100 company. 'I'd much rather have a strong businessperson on my board than a Harvard professor who is an expert in corporate governance who only wants to talk about process.'</blockquote> I wonder if he's referring to anyone in particular. Although the (very brief) article tries to suggest otherwise, every “cost of being public” cited by the executives in the article is a function of regulatory or legislative excess. Compliance costs and independent boards, obviously. But the real peril cited by these guys is mandatory-disclosure-enabled meddling by shareholders and other stakeholders who shouldn’t. Downward pressure on executive pay is (surprisingly) an issue, so are other constraints on managerial decisionmaking. In a forthcoming post on disclosure, I’ll say a bit more about this, but the basic point is: If you make it less expensive for shareholders to exert influence, you make it more likely, as well. Despite what the corporate democracy folks say, this can be costly. And, of course, fundamentally, if the problem is that the takeover game isn’t being played by public companies, one need surely look in the direction of the Williams Act.

Oh–and for my money you left out the best quote:

said one top executive of a major Fortune 100 company. ‘I’d much rather have a strong businessperson on my board than a Harvard professor who is an expert in corporate governance who only wants to talk about process.’

I wonder if he’s referring to anyone in particular.

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