The trouble with markets

Roger Martin argues (see title link) that linking managers rewards to share prices (eg with options) gives them an incentive to manage the 'expectations' market rather than the real market for production of goods and services. He fingers efficient markets theory, shareholder value and agency theory as the intellectual culprits and advocates reward based on 'real' performance.

He has a convincing case and a corollary of his argument would be a return to historical cost accounting rather than the use of fair values, which are based on the expectations market.

The unacceptable face of capitalism reborn?

The title link is to a report that hedge funds are buying poor quality corporate debt in order to take over ("loan to own") or liquidate ("loan to bust") the issuing companies. Edward Heath dubbed some of the activites of Tiny Rowland's Lonrho as "the unacceptable face of capitalism". We seem to be seeing that face in a new guise.