Snap Pitches Hopes and Dreams, Shuns Accountability

Snap Inc., the parent company of the popular Snapchat app, has officially filed the paperwork required to go public in an offering expected to raise up to $3 billion.  Characterizing itself as a “camera company” that has reinvented the way in which

Munger’s Prescription for Corporate Governance

David Larcker and Brian Tayan of the Stanford Graduate School of Business recently published a paper entitled Corporate Governance According to Charles T. Munger which concisely outlines the governance philosophy that Mr. Munger has presented on a number of occasions. Read this article for more details.

HP Board Dilutes Principled Stand with Generous Severance Agreement

Considering the scale of recent examples of corporate malfeasance, at first glance Mark Hurd’s indiscretions pale in comparison. Mr. Hurd was forced to resign from Hewlett Packard last Friday after a sexual harassment allegation failed to reveal a violation of the company’s sexual harassment policy but brought to light other questionable patterns of behavior. Specifically, Mr. Hurd’s relationship with a marketing contractor involved $20,000 of expenses associated with travel, restaurant meals, and questions regarding whether services were actually rendered by the contractor. Read this article for an opinion regarding HP’s severance agreement for Mr. Hurd.

Share Buybacks Gain Popularity as Stock Prices Rebound

It has become relatively common to read annual reports of companies that previously engaged in regular share buybacks yet mysteriously decided to halt the practice during 2009 even as share prices hit multi-year lows. As The Economist has noted, share buybacks are making a comeback in 2010 just as markets are approaching levels last seen prior to September/October 2008. Why is this happening now and how should shareholders evaluate management decisions on buybacks? Read this article for more details.

A Modest Proposal for Audit Reform

A Modest Proposal for Audit Reform

Attempting to understand the sequence of events that led to the downfall of Lehman Brothers is normally a mind numbing process, but occasionally an obvious outrage is discovered such as Lehman’s use of “Repo 105” transactions. While we have not perused the 2,200 page bankruptcy examiner’s report, enough information has been reported to draw some conclusions. While Lehman’s top management deserves much criticism and blame, the firm’s auditors were derelict in their responsibilities as well. Whether Ernst & Young is legally culpable is an open question. However, it is obvious that the firm acted as an “enabler” to Lehman’s management when it came to the use of Repo 105. Read this article for more details.

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