Did Bear Stearns Really Have a Board? | Part I

Bear StearnsHow this 85-year-old icon of Wall Street was governed was also a clue as to how it might fail.

When rumors were circling the company and threatening its survival, it responded by issuing a strong statement denying liquidity problems. The board agreed. But astonishingly, the company disintegrated less than 48 hours later and was quickly valued at only $2 per share in a fire sale to JPMorgan. The board agreed with that number. Then, in yet another stunning twist, just a few days later the company was suddenly valued five times higher by the same suitor and a new price of $10 per share was set. The board agreed with that number, too. In the dust and rubble that cover the collapse of Bear Stearns, much is still unknown and unexplained. But one thing is clear: the fifth largest investment bank in America has been governed by one of the most incurious and acquiescent boards in history. On the other hand, perhaps it has had no real board at all.Read more

from Finlay ON Governance, 2008

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