The Shareholder Value Myth

book cover At at fast 115 pages, you can read this book in a sitting. Looking back, it would make more sense for a beginner to read this and then Firm Commitment (the last entry). Professor Lynn Stout’s view here seems to be that what’s actually in shareholders’ interest is different than what we typically think of and we actually harm them through the current conceptualization of what is in their interest (i.e. “maximization of stock value”). In short, they’re people with lots of different interests that include more than just stock-price maximization. So, we should expand our understanding of what “shareholder value” means, if we are going to actually benefit them.

Some of the examples she uses to make her points I don’t get. For instance, to illustrate her argument that something that might help a shareholder qua shareholder could end up hurting him along another dimension. Here she asks the reader to imagine a shareholder in Microsoft. Their stock price might shoot up if Microsoft knocks out all competitors and become a monopoly (which is good for the shareholder qua shareholder), but if the shareholder also buys software as a consumer, he’s also forced to pay monopoly pricing, which hurts. I get the idea but… I’m guessing the average person who is both a shareholder and consumer of Microsoft nets a lot more financial benefit from the upward stock price, even after paying a bit more on the consumer side. By a lot.

Another oddity — “Goldman Sachs investment bankers and Morgan Stanley traders can easily take their skills and their client relationships to other banks, and often do, and at least in the United States, any attempt to stop them would run afoul of the U.S. Constitution’s Thirteenth Amendment.” (pp. 84-85).  I don’t know if she’s trying to suggest non-competes are unconstitutional?

Anyway, a nice intro read (also a plus are the helpful footnotes) but at least for purposes of this project she takes as a premise that shareholder value can be the lodestar, it’s just we need a robuster version of it.

Firm Commitment

book coverWhile working on my Article I came across Oxford University’s Saïd Business School Professor Colin Mayer’s book Firm Commitment. I read a few reviews (here’s the Economist) that led me to believe I needed to read it before finishing up one of my larger sections. And so my weekend was born.

I absolutely recommend this book to those looking for a broad overview of the control-ownership issues in corporate governance. Mayer has his own recommendation, but even if you aren’t on board with it, you’ll walk away with a much stronger understanding of this important area. Especially helpful for me was both the discussion of corporate laws in other countries and the (too) brief introduction to the history of corporations in England. I’ll be looking into the relationship between the creation of corporations and the development of guilds, and later unions, soon.

My main complaint is perhaps the result of my own confusion: Mayer seems to occasionally argue that dispersed ownership is causally connected to the governance structure of a company, but I cannot see any necessary connection whatsoever with ownership and governance. In theory, you could have a public firm that is comprised of only non-voting stock… no? (think about dual class shares as a milder example)

Regardless, very happy I stumbled upon this book.

Collegiate Republic: Cultivating an Ideal Society in Early America

Book coverJust finished the first of my Christmas present books – Collegiate Republic: Cultivating an Ideal Society in Early America by Professor Margaret Sumner. A combination of my interest in tracing the history of certain ideas through American history (e.g., virtue, self-interest, the good, utopia, etc.), book hunting, and the history of higher education led me (and my Christmas list) to it. My main complaint is that at 202 pages, it wasn’t nearly as dense as I was hoping.

In short, the book is sold as a historical overview of the earliest stages of higher education in post-Revolution antebellum America (the post-Revolution qualifier is significant: I hoped the book would talk about the history of Harvard too, but being established in 1693 meant it did not make the cut). In reality, the book is divided into five stand-alone chapters and only scratches the surface of each area it covers.

The biggest point of frustration came from what the book did not explain. In particular, early on Sumner tells us that these early colleges and college families were interested in promoting “virtue,” “the common good,” and “self-sacrifice” amongst students (and society at large). But Sumner never quite explains what these concepts mean to these people, at that time. And, in fact, her highest level conception of the relationship between these undefined concepts seems to change. Early on she casts self-interest and self-sacrifice as opposing forces, with self-sacrifice associated with the common good (p.34) while later (p. 104) she conceptualizes self-interest as potentially compatible with the common good. “College families were not only determined to renovate public spaces, they also used those structures considered most ‘private’ to the sider world – their homes and their very selves – to model how self-interest, the element that always threatened their design, could be made to work for the common good.” As I’ve written about elsewhere, I’m particularly interested in (and sensitive to) the changing relationship of these concepts, which means I notice inconsistent treatment of them in a single text.

Interesting tidbits about the role of women in college communities and the changing understanding of labor (from exalting the yeoman to revering the life of the mind).

Short nice read with a robust bibliography for those interested in further reading.

Read Armed (with a pen)

How to do it. David Foster Wallace’s copy of C. S. Lewis’s The Lion, the Witch, and the Wardrobe (from Parks' article)

How to do it. David Foster Wallace’s copy of C. S. Lewis’s The Lion, the Witch, and the Wardrobe (from Parks’ article)

Tim Parks has a lovely piece up on the NY Book Review blog about why writing in what we read makes us better thinkers. I’d add it also makes us much better readers.

I enjoy re-reading my old margin notes and seeing how much my views have changed over the years. And it’s hard to think of something more special than a friend giving you a copy of their favored book filled to the brim with their own comments. His article is definitely worth a read.

When Books Went to War (we won)

Books Went to WarI was recently the happy victim of good marketing.

While clicking through WSJ articles the other day, I came across one that was clearly calling, personally, to me: “How Paperbacks Helped Us Win WWII.” I read the article, realized it was something of a promotional piece for author Molly Guptill Manning’s just-released book on the same topic, and then naturally immediately ordered the book. I read it over last night and today (it’s a quick read at 194 pages).

The WSJ article provides a fuller summary, but the general idea is this: During WWII, while the Germans were burning books, Americans were figuring out how to get as many books as possible to US troops stationed around the world. The first attempt came through the Victory Book Campaign, where Americans donated millions of books through nationally publicized book drives. Because there were never enough books and hardcover books (which comprised the vast majority of books at that time) were not easily transportable by soldiers on the move, the U.S. War Department and a group of publishers got together and did something quite extraordinary: they created Armed Service Edition books – cheap, small, paperback books printed especially for the size of military pockets, and delivered them to our military all over the world.

The book explains how this happened (including a most interesting history on the deployment of books and ideas at home [ever heard of the Council on Books in Wartime and their Imperative book program?]), what the books meant to the soldiers (hint: a lot), and even how American book culture shifted from one limited to the wealthy to one enjoyed by the larger population.

Long story short: if you like books, history, and most of all the history of books, add this one to your list.

The Hours (true, sad, beautiful, perfect.)

book cover for the HoursI never re-read books. Not on principle or anything, it’s just I always have a collection of I’ve-bought-but-not-yet-read books sitting patiently next to me, so it seems… how do you say… irresponsible (insensitive?) (brutish?) to read the same book twice, right in front of them like that.

Recently I’ve been reading A Stranger in Olondria, which has won all sorts of awards and is beautifully written but sort of a challenge to get through (will explain later). Last night I needed a break and was feeling in the mood for something commenting on the human condition (you know the mood). I remembered how much I loved The Hours when I read it back in 2008. Fast forward about 24 hours and I’ll recommit: The Hours may just be my very favorite book ever. The way it describes life (to constantly be seeking the Perfect as if it could finally be, after valiant searching, found in a fixed form. And once found, merged with; in some sense, annihilated by), relationships (of all sorts), the effects of mental illness in and on a family, love (of all sorts). It’s just that I’ve still never read anything I’ve found to speak more truthfully to the occasional intensity of life’s smallest, most fleeting, moments.

A few favorite passages

“Richard cannot imagine a life more interesting or worthwhile than those being lived by his acquaintances and himself, and for that reason one often feels exalted, expanded, in his presence. He is not one of those egotists who miniaturizes others. He is the opposite kind of egotist, driven by grandiosity rather than greed, and if he insists on a version of you that is funnier, stranger, more eccentric and profound than you suspect yourself to be – capable of doing more good and more harm in the world than you’ve ever imagined – it is all but impossible not to believe, at least in his presence and for a while after you’ve left him, that he alone sees through to your essence, weighs your true qualities (not all of which are necessarily flattering – a certain clumsy, childish rudeness is part of his style), and appreciates you more fully than anyone else ever has. It is only after knowing him for some time that you begin to realize you are, to him, an essentially fictional character, one he has invested with nearly limitless capacities for tragedy and comedy not because that is your true nature but because he, Richard, needs to live in a world peopled by extreme and commanding figures.” (NB: once you read about his mom this will break your heart)

“It had seemed like the beginning of happiness, and Clarissa is still sometimes shocked, more than thirty years later, to realize that it was happiness; that the entire experience lay in a kiss and a walk, the anticipation of dinner and a book. The dinner is by now forgotten; Lessing has been long over-shadowed by other writers; and even the sex, once she and Richard reached that point, was ardent but awkward, unsatisfying, more kindly than passionate. What lives undimmed in Clarissa’s mind more than three decades later is a kiss at dusk on a patch of dead grass, and a walk around a pond as mosquitoes droned in the darkening air. There is still that singular perfection, and it’s perfect in part because it seemed, at the time, so clearly to promise more. Now she knows: That was the moment, right then. There has been no other.”

“What if that moment at dinner – that equipoise, that small perfection – were enough? What if you decided to want no more?”

“There’s just this for consolation: an hour here or there when our lives seem, against all odds and expectations, to burst open and give us everything we’ve imagined, though everyone but children (and perhaps even they) knows these hours will inevitably be followed by others, far darker and more difficult. Still, we cherish the city, the morning; we hope, more than anything, for more.  Heaven only knows why we love it so.”