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The key feature of a corporation besides limited liability is the nearly unmanageable principal-agent relationship between shareholders and managers. It's kind
by T_S_ 16y ago
The key feature of a corporation besides limited liability is the nearly unmanageable principal-agent relationship between shareholders and managers. It's kind of amazing to me that a structure where shareholders lose to managers so consistently is the structure of choice.
Most corporations should be distinguished from banks, since the banks actually managed to acquire a put option for the bank itself, doubling the leverage of management. The really striking thing is witnessing the monetization of that put although it really shouldn't be too surprising, since virtually the same thing happened in the 80's with the S&L industry.
All the hive mind/group think stuff can and does happen in any organization where leaders need to persuade followers. Not as "new" as you might think.
- stretchwithme 16y agoIts not amazing that those creating an enterprise would use the structure most advantageous to them. Or that investors would pick investments run by people capable of seeking advantage.
- ent_ 16y agoHeh, 'bout time someone pointed out the other key feature of a (public) corporation. Plus I like the idea of banks having a 'put option' on themselves. Glad to see at least some people manage a level-headed assessment of the economic situation now -- e.g. as opposed to others who in light of corporations' success in the arena immediately start a religion around worshipping the idea of a corporation, Y combinator included.