Regulation on Notice

From The Wall Street Journal ($)

Also The New York Times

The Committee on Capital Markets Regulation issues its report today, and says that excessive regulation — much of it a response to recent corporate scandals — is adding to corporate costs, stifling the public securities markets and causing the U.S. markets to lose business to foreign competitors.

Among the report’s 32 recommendations are ones making it harder for companies to be indicted by the government or sued by private lawyers. Six are aimed at easing Section 404 regulations of  the Sarbanes-Oxley Act.

Entrepreneur’s Choice: Rich or Controlling

From HBS Working Knowledge 

For the entrepreneur, getting rich often means selling control to investors; keeping control reduces the payday. Not many can juggle both ends, as Harvard Business School assistant professor Noam Wasserman sees it in a new study.

This question was bolstered by two recent papers that appeared in top economics journals, each showing that entrepreneurs as a whole do not make more than they could make if they were employed by others, and make significantly less than expected from a risk-return perspective.

That’s depressing. We thought the whole reason to go on your own was, well, monetary.

…entrepreneurship is “the pursuit of opportunity beyond the resources controlled.” …. However, getting those resources is far from a free lunch. To get co-founders, investors, hires, and others to come on board and provide you with the resources you need, you have to give up things that are worth a lot to you and to them.

It turns out that VCs prefer the entrepreneur who wants to get rich, like they do, over the one who wants total control.

Keep in the conversation with the blog of the paper’s author, Noam Wasserman.

Supreme Court Slams Patent System

From Legal Times on Law.com

On Tuesday, Supreme Court justices made it crystal clear that they are upset with the nation’s patent system, the lawyers who litigate under it and the appeals court that referees it.

It was a lively — bordering on raucous, according to the Legal Times article – hour of arguments on what makes an invention so obvious that it does not deserve a patent. Criticism was heaped on the U.S. Court of Appeals for the Federal Circuit’s

three-part “teaching-suggestion-motivation” test for determining obviousness, an issue that arises in virtually every patent application and appeal. The test has been criticized as too patent-friendly, resulting in a proliferation of junk patents that stifle competition.

Is There An Accountant in the House?

From CFO.com

Results of a new survey show that the majority of companies polled did not have an accountant on their audit committee as recently as 2005. The study, which surveyed 700 audit committee members at 178 public companies from the NASDAQ 100 and Fortune 100 listings, was conducted by Huron Consulting Group (pdf of the survey results).

The good news is that the number of accountants on audit committees doubled from 2002 to 2005, but that still leaves a lot of committees that have memebers who might be financial professionals, but who lack accounting backgrounds.

The New Corporate Responsibility

From Forbes.com

Looking for a hero to save the world? It might just be the corporation. This special report rounds up stories on Richard Branson and Lance Armstrong, as well as a look at corporate responsibility being taught now in B-schools. There’s hope.

Portrait of a Respectful CEO: Campbell’s Conant

From BusinessWeek 

Campbell Soup Co. is a business reborn. In just under six years, CEO Douglas R. Conant, 55, has transformed Campbell from a beleaguered old brand rumored to be on the auction block to one of the food industry’s best performers. The stock is up 100% since March 2003, more than double other comparable food companies.

And this from a man whose co-workers told him he wasn’t tough enough to hack it in business.

Conant knows that Campbell must keep restocking its cupboard with new products and ideas to maintain its momentum. So he has focused on innovation, the lifeblood of any consumer packaged-goods company. He has homed in on three key areas: healthy, convenient, and premium goods.

Parsons Concedes to Icahn. Somewhat

From CNNMoney.com 

Late last year, billionaire investor Carl Icahn and three other funds bought about 2.8 percent of Time Warner stock and demanded the company undertake a $20 billion share buyback and total spin-off of its Time Warner Cable division, among other proposals.

Now, Time Warner CEO Dick Parsons admits that Icahn’s pushing helped push Time Warner. Shared which were trading at around $17 are now up to $20. According to the story, the company did agree to broadly increase its buyback plan, but it also reached out to major shareholders to get their views in response to Icahn’s high-profile campaign.

Companies Put “E” in Employee Health Records

According to the Wall Street Journal ($), Intel Corp., Wal-Mart Stores Inc., British Petroleum and others are pooling resources to provide digital health records to their employees and to store them in a multimillion-dollar-data warehouse that will link hospitals, doctors and pharmacies. The goal is to cut costs by having consumers coordinate their own health care among doctors and hospitals.

Patient medical records — often hand-written — are currently strewn among doctors’ offices and hospitals. Computerizing them has long been supported by hospital and doctors’ groups, but has foundered on technical and cost grounds. Now, only about 10% of U.S. doctors have a completely electronic record-keeping system.

Values vs. Cynicism

HBS Working Knowledge has a neat interview with authors of a study on the gap between what a company says it represents and what its workers knows it is.

Many employees told us that the best thing about the company was its values. But employees also said that the worst thing about the company was that the CEO had been, from their point of view, breaching the values that he himself had developed for the company. Unwittingly, even a committed leader may appear to followers to be violating principles he or she has espoused.

Think HP Way for another corporate example. The study authors outline four steps to help leaders avoid fostering cynicism among their ranks.

A Class-Action Megabattle

Halliburton. William Lerach. These are familiar names in class-action cases. They come together in a convoluted story involving the Archdiocese of Milwaukee Supporting Fund’s case against Halliburton for alledgedly hiding cost overruns and costing shareholders billions.

The story from Forbes.com deftly defines the battlelines, but also relates the importance of this case: A year ago, the AMS Fund’s lawyers produced a settlement that enriched them and left pennies for investors.