What to Do About Poor Corporate Governance at Unicorns

Why are large private companies often characterized by poor corporate governance?  WeWork provides a recent high-profile example.  For reasons that now seem implausible, WeWork attracted billions of investment dollars.  Perhaps it was the company’s “vision” or the sheer personality of its co-founder, Adam Neumann, or maybe there was just too much venture capital money looking for the next big thing.  For whatever reasons, WeWork was valued at $47 billion in January 2019, despite having never turned a profit in a rather traditional business.  By the fall of 2019, the WeWork IPO was cancelled, and the company’s value plummeted to about … Read more

Unicorns, Guardians, and the Concentration of U.S. Equity Markets

Developments in private and public markets are changing the role equity plays in the United States, i.e., what “stock” means as a matter not only of investment and corporate governance, but also of political economy.  For several generations, a broad middle class invested directly in bureaucratically run corporations, disciplined by securities and other laws.  The governance of firms and therefore much of the economy was answerable to this broad middle class.  Perhaps most important, citizens understood such arrangements as “the free enterprise system” or even “the American way.”  We call this a “republican” imagination of equity markets.

There has recently … Read more