Comments on: The Fiduciary Duties of Directors of Troubled Companies: Emerging Clarity http://blogs.law.harvard.edu/corpgov/2008/06/20/the-fiduciary-duties-of-directors-of-troubled-companies-emerging-clarity/ Sponsored by the HLS Corporate Governance Program Mon, 23 Nov 2009 18:31:21 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Michael F. Martin http://blogs.law.harvard.edu/corpgov/2008/06/20/the-fiduciary-duties-of-directors-of-troubled-companies-emerging-clarity/comment-page-1/#comment-19533 Michael F. Martin Sat, 21 Jun 2008 01:02:09 +0000 http://blogs.law.harvard.edu/corpgov/2008/06/20/the-fiduciary-duties-of-directors-of-troubled-companies-emerging-clarity/#comment-19533 Some of the observations and ideas here were articulated earlier this year in a paper by Baird and Henderson called "Other People's Money." http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1017615 Since Miller-Modigliani, we've had good reason to doubt whether there are any lasting differences between the interests of creditors and the interests of shareholders. Nonetheless, on my view managers and directors should do more. Every decision about value maximization has both a dollar value and a time frame associated with it. Asian manufacturing firms have left their American counterparts in the dust by adopting accounting and management methods that attend both to the marginal costs and benefits AND the turnover rates or liquidity constraints. No picture of a firm is complete without that understanding of dynamics. Some of the observations and ideas here were articulated earlier this year in a paper by Baird and Henderson called “Other People’s Money.”

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1017615

Since Miller-Modigliani, we’ve had good reason to doubt whether there are any lasting differences between the interests of creditors and the interests of shareholders.

Nonetheless, on my view managers and directors should do more. Every decision about value maximization has both a dollar value and a time frame associated with it. Asian manufacturing firms have left their American counterparts in the dust by adopting accounting and management methods that attend both to the marginal costs and benefits AND the turnover rates or liquidity constraints. No picture of a firm is complete without that understanding of dynamics.

]]>