Subject:
Corporate Governance Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, management, and the board of directors. Other stakeholders include employees, customers, creditors, suppliers, regulators, and the community at large.
Corporate governance is a multi-faceted subject. An important theme of corporate governance is to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the principal-agent problem. A related but separate thread of discussions focuses on the impact of a corporate governance system in economic efficiency, with a strong emphasis on shareholders’ welfare. There are yet other aspects to the corporate governance subject, such as the stakeholder view and the corporate governance models around the world (see section 9 below).
There has been renewed interest in the corporate governance practices of modern corporations since 2001, particularly due to the high-profile collapses of a number of large U.S. firms such as Enron Corporation and MCI Inc. (formerly WorldCom). In 2002, the U.S. federal government passed the Sarbanes-Oxley Act, intending to restore public confidence in corporate governance. (Wikipedia Jan 2010)
Jimmy Carter Redux
By John Schroy, on May 4th, 2009 | 
As of this writing, the term “stagpression” gathers only 145 hits on Google. This is probably because the term — meant to suggest high unemployment plus high inflation — does not convey this meaning effectively.
So we’re stuck with the term “stagflation”. Or maybe something like, “stagflation on steroids”, although this seems a bit hackneyed.
Under President Obama, the Carter combination of inflation and unemployment are likely to return — with a vengeance. Fed Chairman, Ben Bernanke, seems to have read the wrong books about the Great Depression.
Better than bailouts?
By John Schroy, on April 9th, 2009 | 
In March 2009, HSBC PLC strengthened its finances by making a preemptive rights offering of new equity. The bank quickly raised $18.5 billion dollars.
Unlike Citibank, Bank of America, and other giant US banks, HSBC did not have to sell its soul to the government to stay in business.
HSBC had the good fortune to be headquartered in the UK and to have much of its investor base in Europe and other countries where preemptive rights are the law and the customary way to raise capital.
The end of an era?
By John Schroy, on March 27th, 2009 | 
Since 1982, US equities markets have been driven upwards by corporate stock buybacks. Federal Reserve flow of funds accounts showed corresponding sales of stocks by executives exercising options to take advantage of manipulated prices.
The Crash of 2008 changed this pattern, driving equity prices down so that executive options were “below water”. Companies reduced buybacks due to tight credit and the inability of executives to benefit in the depressed market.
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