In this book Michael Jacobs takes a hard look at why so few American businesses are managed for the long term and why so many shareholders and lenders have abandoned the virtue of patient capital. He describes practices and regulations that pit owners and managers of America's corporations against each other, often at the expense of their mutual long-term prosperity. Jacobs offers provocative proposals to reform investment practices, corporate governance mechanisms, executive compensation plans, and banking regulations that have brought about the short-termism eroding US competitiveness and creating distant, if not adversarial relationships between capital providers and corporations.
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A savvy, wide-ranging audit of the reasons American business is losing ground to Asian and European rivals, plus thoughtful prescriptions for retrieving the situation. Having recently spent two years as the US Treasury's director of corporate finance, Jacobs (now a Washington-based consultant) has an insider's sophisticated appreciation of the structural issues he addresses. Arguing that the commercial equivalent of instant gratification is a root cause of the nation's eroding competitiveness in global markets, the author identifies a number of problem areas--among others, disengaged investors, an adversarial system of corporate governance, high-cost capital, and shortsighted executive-compensation practices. Citing the enviable records compiled by major enterprises in Germany and Japan (where cross-ownership among affiliated companies, including depository institutions, creates a stable source of expansion/diversification funds as well as inducements to take a longer view), Jacobs offers a detailed package of reform proposals. He recommends, for instance, employing carrots and sticks to develop a new class of patient investors willing and able to work constructively with the concerns whose securities they hold. The author also counsels making corporate directors genuinely independent and hence more accountable to stockholders. Though he doubts Congress is up to the job, Jacobs would like to see a thoroughgoing overhaul of the US banking/financial system. Lastly, he urges managerial pay policies that reward long-term results, not tenure or expedients. Perceptive analyses of socioeconomic problems that require the immediate attention of the electorate--and of special interests that have failed to heed Benjamin Franklin's still timely warning: ``We must all hang together, or assuredly we shall all hang separately.'' -- Copyright ©1991, Kirkus Associates, LP. All rights reserved.From Publishers Weekly:
In this uncommonly enlightening survey, Jacobs, a former U.S. Treasury Department corporate finance director, condemns as counterproductive the quick-profit approach of many of America's corporate directors and investor-owners. Such short-sightedness, he believes, undermines long-range product research, financing and marketing, and thus reduces America's industrial competitiveness with Japan and Germany. Sharply challenging the prevailing corporate structure, in which he discerns a lack of executive "accountability," Jacobs also points out stubborn anomalies in the board-of-directors system and the roles of lender banks, bondholders and institutional share-owning investors. This comprehensive corrective plan includes banking reform that would expand and centralize "cost-of-capital" financial services; motivationally deferred stock-bonus management compensation; and investor/owner representation on a firm's board of directors. Fortune Book Club alternate.
Copyright 1991 Reed Business Information, Inc.
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Book Description Harvard Business School Pr, 1993. Paperback. Book Condition: New. Bookseller Inventory # P11087584409X