The Firm Divided: Manager-Shareholder Conflict And The Fight For Control Of The Modern Corporation by Graeme Guthrie

The Blurb On The Back:

A battle is being fought within modern corporations.

Shareholders want managers to make their shares as valuable as possible, managers want shareholders to leave them alone, and the board of directors is caught in the middle.  The Firm Divided shows how strong boards persuade managers to do what’s best for shareholders – and how weak board don’t.

Graeme Guthrie blends the stories of particular firms and individuals with the insights of scholarly  research, inhaling understanding of how seemingly separate events are examples of a fundamental divide in the nature of the firm: the separation of ownership and control that results in manager-shareholder conflict.  Boards of directors are caught in the middle trying to weigh their fiduciary duty to shareholders against the close ties that inevitably bind them to senior executives.  A firm’s directors can influence the outcome of this conflict by monitoring managers, providing incentives for managers to work in shareholders’ best interests, delegating monitoring to outside parties, and determining the effectiveness of the market for corporate control.

The Firm Divided provides conceptual insight, underpinned by research into corporate governance, into board-manager interactions.  It shows how tools that can benefit shareholders when used by strong boards can actually harm shareholders when used by weak boards.  Guthrie provides a 360 degree view of firms exploring the ways in which each player pursues their own goals with examples from a range of firms in diverse industries.

The Review (Cut For Spoilers):

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