WALL STREET JOURNAL: For much of recorded history, businesses were financed by a single person or small group. Investors served as operators, and a firm’s owner and manager were one and the same. Managers had little incentive to misappropriate assets since that would simply mean moving money from one pocket to another…
For all the business advantages offered by the rise in dispersed ownership, this financial innovation marked the demise of the personal relationship between executives and investors. Not only did managers and investors not physically interact, but executives were often shielded from even knowing who their investors were…
It’s often a convoluted path from an executive’s decision to the impact on investors. Even in the most blatant misconduct, an executive’s actions can seem far removed from the eventual negative repercussions on others or the erosion of trust among the public at large… (more)
