PROF. MARC GOERGEN ON CORPORATE GOVERNANCE

The private equity deals that fail to justify 'fast buck' strategies By Marc Goergen , Cardiff University ; Geoffrey Wood , University of Warwick , and Noel O'Sullivan , Loughborough University There is an ongoing and very heated debate between the unconditional supporters of private equity and their opponents. It’s not hard to see why. On the surface, these investors can often buy fragile companies, load on debt to fund strategic change and sack workers in a bid for efficiency. It can look ruthless, but the industry claims it simply works. The British Private Equity & Venture Capital Association (BVCA), preach what they deem to be the undeniable benefits of private equity. For example, the trade lobby group wrote in 2010 that: Private equity investment has been demonstrated to contribute significantly to companies’ growth. Private equity backed companies outperform leading UK businesses. In contrast, Ed Miliband in his speech at the 2011 annual Labour Par...

My previous blog was on the US corporation Google Inc . This time I'll be covering the French public limited company ( Société Anonyme or S.A. in French) Danone S.A., a global food company. This is a pretty complex case study and I do not intend to do it full justice here. What follows is a summary of what I believe are key characteristics of Danone S.A.'s control and ownership structure. As it was the case for my previous blog, this case is built on  the concepts discussed in Chapters 1-3 of  "International Corporate Governance" . Danone S.A.'s most recent company report (or 'registration document') is available from here . You might need to click on '2013' to obtain the most recent available company report at the time of writing this blog.  This might be obvious, but it is always a good idea to start by having a look at the table of contents. This should give you a fairly good idea where to find important information on control and own...

The aim of this brief exercise is to enable you to identify potential differences between control rights and ownership rights in listed corporations from all over the world. This exercise is based on the concepts discussed in Chapters 1-3 of "International Corporate Governance" . Further, briefer examples are contained in Chapter 3 of the book. Before we can proceed just a reminder what we mean by control and ownership. Ownership  is defined as ownership of cash flow rights . Cash flow rights give their holder a pro rata claim to the firm's earnings and a pro rata claim to the firm's assets if the firm is to be liquidated. Control  is defined as ownership of voting rights . Voting rights give their holder the right to vote for or against a number of agenda points at the annual general shareholders' meeting (AGM), including the appointment and the dismissal of the members of the board of directors. Unfortunately, a lot of the corporate governance literat...

Wall Street tries to weed out the wolves while London stays sheepish By Marc Goergen , Cardiff University When Mathew Martoma, the former portfolio manager of SAC Capital, was sentenced to nine years in prison for insider trading last week, much of the comment was about how harsh the punishment looked. It must have seemed particularly so to traders in the dealing rooms of light-touch London. In truth, Martoma should take some of the blame. Federal court judge Paul Gardephe justified the length of the sentence by the exceptionally high gains that he had made from this deal, his lack of repentance and his refusal to co-operate with the authorities. Martoma had been dealing on non-public information he had received from a doctor about clinical trials of a new Alzheimer’s drug. He received the private information on a Sunday in July 2008. The next day, SAC Capital sold its $700m stake in US-based Wyeth Pharmaceuticals and Irish Élan Corporation , the two joint developers of the...

The questions below are taken from the supplementary material accompanying my book International Corporate Governance . The supplementary material is available from here for university teachers. How much do you know about corporate governance? » Create A Quiz

The highly acclaimed textbook  International Corporate Governance  has now been published in a Chinese translation by  China Machine Press . The book is available from Amazon China . The original English version was published by Pearson Education  and is available in print as well as via Kindle  and CourseSmart . Endorsements on the back cover: 'An excellent textbook which truly stands out. It is better than any book on corporate governance that I have seen',  Luc Renneboog, Tilburg University 'Marc Goergen's book on corporate governance is by far the best textbook that has been published on the topic. He has done a wonderful job of covering the topics from a global perspective and I strongly recommend it to all scholars and students with an interest in corporate governance',  Franklin Allen, Wharton School, University of Pennsylvania 'An excellent and very comprehensive book. It should become a standard reference on corporate gove...

Please click on the following diagrams to see them in their full size. The full study was published in the Journal of Corporate Finance  and can be found here . A pre-publication version of the same study is available from the SSRN website . See also my blog on the Cadbury Code which refers to above study. Chapter 14 of International Corporate Governance  reviews corporate governance issues pertaining to initial public offerings. Legal disclaimer: This blog reflects my personal opinion and not necessarily that of my employer. Any links to external websites are provided for information only and I am neither responsible nor do I endorse any of the information provided by these websites.