Maximizing Shareholder Value is the worlds dumbest idea (2)

Another, older, article about the same matter, from one of my favourite bloggers, "Naked Capitalism".


Lazonick discusses how we evolved from a society in which corporate interests were largely aligned with those of broader public purpose into a state where crony capitalism, accounting fraud, and corporate predation are predominant characteristics.

Lazonick makes a very powerful case that the ideology of “maximizing shareholder value” primarily works to the benefit of the very corporate executives who make corporate resource allocation decisions, and who derive high levels of remuneration from munificent stock option awards. As for the rest of us, we’re left to fight over the crumbs.

Dangers of financial over-engineering

I often lamented about the increase of financial engineering, especially at Wall Street, and more recently (unfortunately) also in Malaysia.

Here is an example what happens if you let those guys (it is mostly guys, not many girls) run wild:

1. Tarrant Capital Advisors
2. is the sole shareholder of Tarrant Advisors, Inc., a Texas corporation, 
3. which is the general partner of TPG Ventures Professionals, L.P., a Delaware limited partnership,
4. which is the general partner of TPG Ventures Partners, L.P., a Delaware limited partnership,
5. which is the managing member of TPG Ventures Holdings, LLC, a Delaware limited liability company,
6. which is the sole member of TPG Ventures Advisors, LLC, a Delaware limited liability company,
7. which is the general partner of TPG Ventures GenPar, L.P., a Delaware limited partnership, 
8. which in turn is the general partner of TPG Ventures, L.P., a Delaware limited partnership (the “TPG Fund”),
9. which directly owns the shares of Common Stock of the Issuer reported herein.

Nine Levels of "matryoshka dolls", can anybody still unravel all the relationships between them?

The above from NakedCapitalism, one of my favourite bloggers.