Tag Archives | value creation

Moneyball Corporate Governance

Moneyball Corporate Governance: making the best use of what limited capital is available – just like what the Oakland A’s had to do with their limited payroll.

David R. Koenig, Founding Principal, The Governance Fund & Author of Moneyball Corporate Governance

David R. Koenig, Founding Principal, The Governance Fund, Author of Governance Reimagined: Organizational Design, Risk, and Value Creation

In the mid-1980s, New York Mets manager Davey Johnson was among the first in professional baseball to realize the advantage that could be gained by using computers and statistics to help select the team members for any given game, the order in which he played them, and even which specific pinch-hitter to use in a given situation. Under his leadership, the New York Mets won the 1986 World Series, Major League Baseball’s championship series.

The more widely known Moneyball story, made famous by Michael Lewis’ book and a movie starring Brad Pitt, takes place nearly 15 years later. It tells a similar story – of using analytics and probability-based decision-making to successfully discover hidden value in both players and collections of players. In that story, the focus of the analytics is on maximizing player and team performance relative to the constraints of the Oakland Athletics’ very limited payroll. Continue Reading →

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Value Creation Thinking: Review

Value Creation ThinkingWhile primarily concerned with explaining value creation thinking and the life-cycle valuation framework, the book also delves into context, specifically how Bartley Madden views evolved.

I find his work compelling, at least in part because he shares my interest in understanding the world from the bottom up, instead of top down. Additionally, he focuses attention on “how we know what we think we know,” which takes me back to my studies in the sociology of knowledge. I am less sure about his embrace of systems theory but he deploys that tool well in the context of analyzing firm performance.

Value Creation Thinking: On Capitalism

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Yvan Allaire: Shareholder Activism & Long-Term Value

Dr. Yvan Allaire

Dr. Yvan Allaire

In case you missed it last weekend, Donna Dabney, Executive Director of the Governance Center at The Conference Board posted this November 14th presentation by  Dr. Yvan Allaire presented at the Annual Meeting of The Conference Board Governance Center. His talk was titled Do activist interventions create long term shareholder value?

Allaire reviews a lot of studies and basically disputes the contention that activist interventions lead to long-term shareholder value. While I find his arguments compelling, what we really need in research going forward is much more nuanced than what his overview provides. Yes, I yield to the point that most shareholder activism doesn’t move in the direction I would like. For example, transferring wealth from employees and debt holders to shareholders only aggravates wealth disparity. Agreed – reducing cash, investment and R&D seem more likely to the hurt long-run prospects of a company. Continue Reading →

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