In his column about the Facebook IPO, Holman Jenkins says "the stock market is perfectly capable of pricing a company's shares
properly in light of any relative limitations on shareholder rights." He makes this statement in light of the fact that Mark Zuckerberg, post-IPO, will still control the company. The public shareholders essentially have no rights.
Although I'm an efficient markets guy, I have a tough time with this one. Post-IPO Zuckerberg will "only" have 25% of the company or so, but he will have unchecked voting control. So, do you give anyone, including a brilliant 27 year old, the right to manage your money with no actual checks on his behavior, actions and compensation?
What kind of intelligent investor signs up for that kind of deal? Look no further than virtually every hedge fund in existence!
Hedge funds lack any semblance of corporate governance. And, if hedge fund investors learned anything in the financial crisis, they learned that they mis-priced their lack of liquidity and lack of control.
Jenkins assumes investors can efficiently price extremely rare events that are not on their radar screens because their screens are clouded with euphoria over the greatest IPO of the 21st century.
I'm willing to bet this governance story does not end well...too bad I don't know when!
