The Principal-Agent Problem
Whenever one party acts on another's behalf, their interests diverge and the agent's information advantage lets the divergence pay. It is the root of most corporate-governance questions: empire building, earnings management, and compensation that rewards size rather than return. The investor's counter is to read the incentive documents before the strategy deck.
7 books · 14 people behind it · 4 resources
Start here
- The OutsidersWilliam N. Thorndike, 2012
- Pay Without PerformanceLucian Bebchuk, Jesse Fried, 2004
- Economics, Organization and ManagementPaul Milgrom, John Roberts, 1992
The people behind it 14
Each person holds a book in this entry or names it in their own tags.
Investors 7
Warren Buffett1 book here
David F. Swensennamed in their tags
John C. Boglenamed in their tags
Carl Icahnnamed in their tagsMJ
Martin J. Whitmannamed in their tagsDL
Daniel Loebnamed in their tags
William Ackmannamed in their tagsFounders 1
Executives 1
Academics 1
Strategists 1
Journalists 3
RL
Roger Lowensteinnamed in their tags
Bethany McLeannamed in their tagsLA
Lawrence A. Cunninghamnamed in their tagsResources 4
- A Look Under the HoodHoward Marks · memo · How an institution's incentives shape its portfolio.
- Bias from Incentives and ReinforcementShane Parrish · essay · Munger's claim that incentives reshape sincere belief.
- Capital AllocationMichael J. Mauboussin · paper · Ranking uses of capital against the best alternative.
- An Owner's ManualWarren Buffett · essay · Berkshire's economic principles, including opportunity cost.
Books 7
James Burnham · 1943 · Elite theory: who actually rules, and why stated aims mislead