Thanks, Savio. Yes, I'm an enormous fan of capital market discipline in its many forms. One of the most important is distributing cash to investors--either as dividends or in the form of share repurchases--so as to get it away from people who might otherwise waste it. Another form of capital market discipline is attentive, independent, conscientious directors. Another is a robust community of equity analysts. Another is activist shareholders. Another is the threat of a takeover by private equity buyout funds. Another (perhaps surprisingly, to some) is corporate debt, because any corporate borrowing--whether through a public bond offering or through a private placement--subjects the company to the scrutiny of another set of lenders, and perhaps debt analysts as well. What I hate to see is a lack of capital market discipline: investors should expect to be taken advantage of if they simply "trust" managers to be looking out for them.
Thanks, Savio. Yes, I'm an enormous fan of capital market discipline in its many forms. One of the most important is distributing cash to investors--either as dividends or in the form of share repurchases--so as to get it away from people who might otherwise waste it. Another form of capital market discipline is attentive, independent, conscientious directors. Another is a robust community of equity analysts. Another is activist shareholders. Another is the threat of a takeover by private equity buyout funds. Another (perhaps surprisingly, to some) is corporate debt, because any corporate borrowing--whether through a public bond offering or through a private placement--subjects the company to the scrutiny of another set of lenders, and perhaps debt analysts as well. What I hate to see is a lack of capital market discipline: investors should expect to be taken advantage of if they simply "trust" managers to be looking out for them.