Now that shareholders have secured their right to exercise control, Gramm’s compelling account raises questions about where...
The rise and triumph of shareholder activism through the previously unpublished letters of some of the U.S.'s most successful investors.
A hedge fund manager who also teaches investing at Columbia Business School, Gramm looks at a variety of case studies, including Benjamin Graham and Northern Pipeline, Warren Buffett and his involvement in American Express, Electronic Data Systems founder Ross Perot and his battle with Roger Smith of General Motors, and Carl Icahn, who is still successfully chasing money-making deals after 50 years. Their battles to maximize shareholder rights—through takeovers, leveraged buyouts, cash distributions, or sales of public companies with underperforming or even incompetent managers—are told through their own correspondence. In the letters, which sometimes take the official form of Securities and Exchange Commission filings, investors outline their objectives and the motives that drive them to act. In a straightforward narrative, Gramm threads a path through abstractions about the rights of corporate ownership and the obligations of governance, highlighting the many ways conflicts of interest can develop “as long as investors are motivated by financial gain, and as long as they determine the makeup of boards of directors.” The process he traces has led to circumstances under which we must ask the question, “why did shareholders triumph in the struggle for corporate control? Who were the key players that ushered in this period of so-called shareholder primacy?” Each of the battles he recounts involved different ways of valuing and realizing the asset value of companies. Political campaigns played their parts, as well, whether conducted behind the scenes or in the full glare of publicity. Now, writes the author, “judging activism purely based on stock performance can be tricky and superficial.”
Now that shareholders have secured their right to exercise control, Gramm’s compelling account raises questions about where and how the new situation will affect the continuing maximization of profits.Pub Date: Feb. 23, 2016
ISBN: 978-0-06-236983-3
Page Count: 320
Publisher: Harper Business
Review Posted Online: Dec. 5, 2015
Kirkus Reviews Issue: Dec. 15, 2015
Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our...
A psychologist and Nobel Prize winner summarizes and synthesizes the recent decades of research on intuition and systematic thinking.
The author of several scholarly texts, Kahneman (Emeritus Psychology and Public Affairs/Princeton Univ.) now offers general readers not just the findings of psychological research but also a better understanding of how research questions arise and how scholars systematically frame and answer them. He begins with the distinction between System 1 and System 2 mental operations, the former referring to quick, automatic thought, the latter to more effortful, overt thinking. We rely heavily, writes, on System 1, resorting to the higher-energy System 2 only when we need or want to. Kahneman continually refers to System 2 as “lazy”: We don’t want to think rigorously about something. The author then explores the nuances of our two-system minds, showing how they perform in various situations. Psychological experiments have repeatedly revealed that our intuitions are generally wrong, that our assessments are based on biases and that our System 1 hates doubt and despises ambiguity. Kahneman largely avoids jargon; when he does use some (“heuristics,” for example), he argues that such terms really ought to join our everyday vocabulary. He reviews many fundamental concepts in psychology and statistics (regression to the mean, the narrative fallacy, the optimistic bias), showing how they relate to his overall concerns about how we think and why we make the decisions that we do. Some of the later chapters (dealing with risk-taking and statistics and probabilities) are denser than others (some readers may resent such demands on System 2!), but the passages that deal with the economic and political implications of the research are gripping.
Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our minds.Pub Date: Nov. 1, 2011
ISBN: 978-0-374-27563-1
Page Count: 512
Publisher: Farrar, Straus and Giroux
Review Posted Online: Sept. 3, 2011
Kirkus Reviews Issue: Sept. 15, 2011
BOOK REVIEW
IN THE NEWS
A readable, persuasive argument that our ways of doing business will have to change if we are to prosper—or even survive.
A well-constructed critique of an economic system that, by the author’s account, is a driver of the world’s destruction.
Harvard Business School professor Henderson vigorously questions the bromide that “management’s only duty is to maximize shareholder value,” a notion advanced by Milton Friedman and accepted uncritically in business schools ever since. By that logic, writes the author, there is no reason why corporations should not fish out the oceans, raise drug prices, militate against public education (since it costs tax money), and otherwise behave ruinously and anti-socially. Many do, even though an alternative theory of business organization argues that corporations and society should enjoy a symbiotic relationship of mutual benefit, which includes corporate investment in what economists call public goods. Given that the history of humankind is “the story of our increasing ability to cooperate at larger and larger scales,” one would hope that in the face of environmental degradation and other threats, we might adopt the symbiotic model rather than the winner-take-all one. Problems abound, of course, including that of the “free rider,” the corporation that takes the benefits from collaborative agreements but does none of the work. Henderson examines case studies such as a large food company that emphasized environmentally responsible production and in turn built “purpose-led, sustainable living brands” and otherwise led the way in increasing shareholder value by reducing risk while building demand. The author argues that the “short-termism” that dominates corporate thinking needs to be adjusted to a longer view even though the larger problem might be better characterized as “failure of information.” Henderson closes with a set of prescriptions for bringing a more equitable economics to the personal level, one that, among other things, asks us to step outside routine—eat less meat, drive less—and become active in forcing corporations (and politicians) to be better citizens.
A readable, persuasive argument that our ways of doing business will have to change if we are to prosper—or even survive.Pub Date: May 1, 2020
ISBN: 978-1-5417-3015-1
Page Count: 336
Publisher: PublicAffairs
Review Posted Online: Feb. 16, 2020
Kirkus Reviews Issue: March 15, 2020
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