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If breaking Google up would be good for Google shareholders, surely the shareholders would have made it happen already, right? Unless the argument is that shar
by kaashif 2y ago
If breaking Google up would be good for Google shareholders, surely the shareholders would have made it happen already, right?
Unless the argument is that shareholders don't know what's good for them.
- CPLX 2y agoThe divergence between the interests of shareholders and the actions of a corporation in cases like this is a textbook example of a well established concept: https://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem https://en.wikipedia.org/wiki/Principal%E2%80%93agent_proble...
- kaashif 2y agoNaively I would've thought that by making management huge shareholders, (most of) the agents then become principals. So when we talk about "the shareholders" we also include the CEO. I guess the argument here is that that actually doesn't work and the CEO would prefer being in charge of a larger company even if it personally costs him tens or hundreds of millions of dollars. That's what I'm skeptical of.
- CPLX 2y agoBeing CEO of the larger company would make him more money. His money comes from constant grants of new stock and options and incentives not the simple appreciation of stock granted the day he was hired. And just in general the incentive of management is to preserve monopoly because it’s a lot less work to sit and collect monopoly profits than to actually compete and win. The principal agent issue here is that management can sit on their ass all day and make a lot of money instead of working like hell to compete and possibly getting replaced but ultimately creating more shareholder value.