Facebook (Meta) Lesson 1: Corporate Governance - The What, Why and What now?

This has not been a good year for Facebook, as its stock price has plummeted, and its earnings report from last week precipitated a new round of selling and finger-pointing. In this session, I start by putting the news in the most recent earnings report in perspective, but use the reaction to the report to look at bigger issues that affect tech companies. Specifically, I focus on corporate governance, and argue that much of the legislation, research and regulation in the last two decades has focused on the details of board composition and proxy voting minutiae, while giving shareholders the power to change management at the companies that they invest in. I argue that change is needed because managers  can be mismatched to the companies they run, use the corporate life cycle to illustrate why these mismatches occur and explain why are more likely to happen at tech companies, with their compressed life cycles. Ironically, these are also the companies where we have acquiesced to being second-class citizens, in terms of voting rights, making change less likely in companies where it is needed the most.
Slides (if download does not work, try a different browser): https://www.stern.nyu.edu/~adamodar/p...
Blog Post: https://aswathdamodaran.blogspot.com/...

• #education
• #corporate
• #finance