chapter
5
Liaisons and intrigues
Facts over fiction
T
his chapter, on liaisons and intrigues in business society,
is suspiciously long. That’s because there is quite a lot
of it. Of course, rumors and dubiously founded accusa-
tions abound in the business world. In contrast, this chapter
relies heavily on solid evidence: studies that carefully measure
the existence of conicts of interest, the exact causes and con-
sequences of (excessive) remuneration, and the inuence of
who-knows-who in business.
It takes aim at three topics: the global phenomenon of investment
banks and their analysts, boards of directors, and issues of top
management team compensation. I will feed you facts about
these three protagonists in a piecemeal fashion. As with any good
soap opera, these pieces can be enjoyed on a stand-alone basis,
but will add up to a coherent picture.
How inuential are these equity analysts? How do banks handle
potential conicts of interest (if at all)? How are new board
members selected? This chapter provides insights into the origins
of excessive top management compensation, debunks the myth
of stock options, and unveils the secret practices of the old boys’
network (a.k.a boards of directors).
It may feel like a trashy novel, but it ain’t no ction.
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