The battle for the soul of capitalism

The Battle For The Soul Of Capitalism

Volumn , Issue , 2005, Pages 1-260

  Bogle, John C ^a  

^a NONE

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EID: 84902604567     PISSN: None     EISSN: None     Source Type: Book    
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References (163)

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2. Edward Gibbon, The Decline and Fall of the Roman Empire (1776-88; New York: Random House, 2003), 1137.
3. John Maynard Keynes, The General Theory of Employment, Interest and Money (1936; New York: Harcourt, Brace and Company, 1964), 159.
4. Dr. Bernard Lown, letter to the author, undated.
5. Quoted in David B. Hart, The Soul of a Controversy, Wall Street Journal, April 1, 2005.
6. Quoted in Warren G. Bennis, Will the Legacy Live on? Harvard Business Review, February 1, 2002, 95.
7. Jonathan Sacks, Markets and Morals, The 1998 Hayek Lecture. London: Institute of Economic Affairs, 1998.
8. James Surowiecki, A Virtuous Cycle, Forbes, December 23, 2002, 248.
9. Adam Smith, The Wealth of Nations (1776; New York: Random House, 1994), 485.
10. Surowiecki, A Virtuous Cycle, 248.
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12. William Pfaff, A Pathological Mutation in Capitalism, International Herald Tribune, September 9, 2002, 8.
13. Peter Schwartz and Peter Leyden, The Long Boom: A History of the Future, Wired, July 1997, 115.
14. Mark Gimein, The Greedy Bunch, Fortune, August 11, 2002, 64.
15. Flotation Fever, The Economist, March 18, 2004, 7.
16. Conrad S. Ciccotello, C. Terry Grant, and Gerry H. Grant, Impact of Employee Stock Options on Cash Flow, Financial Analysts Journal 60/2, March/April 2004, 39.
17. Quoted in Edward Chancellor, Devil Take the Hindmost: A History of Speculation (New York: Farrar, Straus and Giroux, 1999), 58.
18. Edward Chancellor, The Trouble with Bubbles, New York Times, January 27, 2002, 13.
19. Martin Howell, Predators and Profits (Upper Saddle River, N.J.: Reuters Prentice Hall, 2003), passim.
20. Source for projected earnings growth, Morgan Stanley 1981-2001, author's estimate thereafter.
21. Theo Francis, 'Phantom' Accounts for CEOs Draw Scrutiny, Wall Street Journal, June 13, 2005.
22. Patrick McGeehan, They Don't Need a Ticket to Ride, New York Times, April 11, 2004, section 3, page 1.
23. Lucian Bebchuk and Yaniv Grinstein, The Growth of U.S. Executive Pay, Working Paper, January 2005, abstract. Updated figured obtained in author's conversation with author
24. Alan Abelson, Street Fight, Barron's, April 4, 2005, 5.
25. Quoted in Bob Herbert, The Era of Exploitation, New York Times, March 25, 2005, 17.
26. Steve Galbraith, Compensatory Damage, Morgan Stanley Research, October 20, 2003, 1.
27. Peter Bernstein, Surprising the Smoothies, Journal of Portfolio Management, Fall 1979.
28. Source for 1990-94 data, Min Wu, A Review of Earnings Restatements, August 2002, published by Softrax.
29. Source for 2000-2004 data, Diya Gullapalli, Outside Audit: To Err Is Human, to Restate Financials, Divine, Wall Street Journal, January 20, 2005. (These figures will also appear in chapter five.)
30. Lucian Bebchuk and Jesse Fried, Pay Without Performance (Cambridge, Mass.: Harvard University Press, 2004), 125
31. James Surowiecki, To the Barricades, The New Yorker, June 9, 2003, 44.
32. Adolf A. Berle and Gardiner C. Means, The Modern Corporation and Private Property (1932; New Brunswick, N.J.: Transaction, 2002), 64-65.
33. Adam Smith, The Wealth of Nations (1776; New York: Random House, 1994), 800.
34. Jeff Gerth and Richard W. Stevenson, Enron's Collapse: The System, New York Times, January 20, 2002.
35. As quoted in David Boyle, The Tyranny of Numbers (London: Harper-Collins, 2000), 38.
36. Yahoo!, press release, October 10, 2001.
37. Erin Schulte, Stocks Surge at Midmorning as Investors Pore Over Earnings Reports, Wall Street Journal, October 11, 2001.
38. John C. Bogle, Public Accounting: Profession or Business? The Seymour Jones Distinguished Lecture at the Vincent C. Ross Institute of Accounting Research. New York: New York University's Stern School of Business, October 16, 2000.
39. Jamin B. Raskin, Corporate Citizenship, review of Unequal Protection: The Rise of Corporate Dominance and the Theft of Human Rights, by Thom Hartmann, Los Angeles Times, August 24, 2003.
40. Robert W. Lear and Boris Yavitz, Boards on Trial, Chief Executive (October 2000), 40.
41. Enron, 1999 Annual Report.
42. Warren E. Buffett, Chairman's Letter, Berkshire Hathaway 1993 Annual Report, March 1, 1994.
43. Joseph Fuller and Michael C. Jensen, Dare to Keep Your Stock Price Low, Wall Street Journal, December 31, 2001.
44. Jeffrey A. Sonnenfeld, Expanding Without Managing, New York Times, June 12, 2002.
45. Report available at http://www.conference-board.org/knowledge/governCommission.cfm.
46. John C. Bogle, Mutual Fund Secrecy, New York Times, December 14, 2002.
47. John J. Brennan and Edward C. Johnson 3rd, No Disclosure: The Feeling Is Mutual, Wall Street Journal, January 14, 2003.
48. AFL-CIO Office of Investment, Behind the Curtain, September 2004.
49. Hewitt Heiserman, It's Earnings That Count (New York: McGraw-Hill, 2004), xxvii.
50. The U.S. Department of Commerce's Bureau of Economic Analysis, National Income and Product Accounts, table 7.16.
51. James Surowiecki, Board Stiffs, The New Yorker, March 8, 2004, 30.
52. Mark J. Roe, The Inevitable Instability of American Corporate Governance, Olin Center for Law, Economics, and Business Discussion Paper No. 492, September 2004, abstract.
53. Paul A. Gompers, Joy L. Ishii, and Andrew Metrick, Corporate Governance and Equity Prices, Quarterly Journal of Economics, vol. 118, issue 1, February 2003.
54. Mark Gordon, Martin Lipton, and Laura Munoz, 'Restoring Trust' or Losing Perspective? Memorandum, August 27, 2003, 2.
55. Henry G. Manne, Citizen Donaldson, Wall Street Journal, August 7, 2003.
56. Unocal Corporation vs. Mesa Petroleum Corporation, 493 A. 3d 946 (Delaware 1985).
57. Blasius Industries, Inc., vs. Atlas Corporation, 564 A.2d 651, 659 (Delaware Ch. 1988).
58. Lucian A. Bebchuk, The Case for Shareholder Access to the Ballot, The Business Lawyer 59(2003):43-66.
59. Henry A. McKinnell, Ph.D., in a letter to Jonathan G. Katz of the SEC, File No. S7-10-03, June 13, 2003.
60. Adolf A. Berle and Gardiner C. Means, The Modern Corporation and Private Property (New Brunswick, N.J.: Transaction, 2002).
61. SEC, NYSE, NASD and Elliot [sic] Spitzer Settle with U.S. Investment Banks, SriMedia, April 28, 2003. http://www.srimedia.com/artman/publish/article_547.shtml.
62. This e-mail and the other private e-mails discussed below were all uncovered by the investigations by New York attorney general Eliot Spitzer, the SEC, and other federal investigators.
63. Joan Caplin and Amy Feldman, What Would It Take to be the Worst Analyst Ever? Money, April 25, 2002, 98.
64. Charles Gasparino, Citigroup Investigation Now Leads to Door of Elite Nursery School, Wall Street Journal, November 14, 2002.
65. J. Bogle, The Economic Role of the Investment Company, senior thesis, Princeton University, 1951, 94.
66. Big Money in Boston, Fortune, December 1949, 116.
67. Bogle, The Economic Role of the Investment Company, 101
68. Benjamin Graham, The Intelligent Investor (1949; New York: HarperCollins, 2005), 207-8.
69. Paul Krugman, For Richer, New York Times Magazine, October 10, 2002, 62.
70. Graham, The Intelligent Investor, 228.
71. The first three points were made by John Biggs in his keynote address at the Conference on Institutional Investors as Owners, entitled Strong Managers, Weak Boards, Passive Owners: A Fair Description? and are paraphrased. New York: New York University's Stern School of Business, February 5, 2005.
72. Warren E. Buffett, Chairman's Letter, Berkshire Hathaway 1987 Annual Report, February 29, 1988.
73. Warren E. Buffett, Chairman's Letter, Berkshire Hathaway 1996 Annual Report, February 28, 1997.
74. John Maynard Keynes, The General Theory of Employment, Interest and Money (1936; New York: Harcourt, Brace and Company, 1964), 154-55.
75. John C. Bogle, The Economic Role of the Investment Company, senior thesis, Princeton University, 1951, 109.
76. Quotes in this paragraph from Keynes, General Theory, 159.
77. James Grant, One in 50 Billion, Grant's Interest Rate Observer, July 17, 1998, 2.
78. John C. Bogle, The Silence of the Funds, speech before the New York Society of Securities Analysts, New York, October 20, 1999.
79. Author's notes.
80. Earnscliffe Research and Communications, Report to the United States Independence Standards Board, November 1999.
81. American Institute of Certified Public Accountants, Press Release, November 19, 1999.
82. John Maynard Keynes, review of Common Stocks as Long Term Investments, Edgar Lawrence Smith, 1925.
83. General Motors, 2001 Annual Report.
84. A World Awash with Profits, The Economist, February 12, 2005, 62.
85. Clifford S. Asness, Rubble Logic, speech before the CFA Institute's Reflections and Insights Conference, Pasadena, Calif.: February 11, 2005.
86. Source for 1990-94 data, Min Wu, A Review of Earnings Restatements, August 2002, published by Softrax.
87. Source for 2000-2004 data, Diya Gullapalli, Outside Audit: To Err Is Human, to Restate Financials, Divine, Wall Street Journal, January 20, 2005.
88. David Henry, Mergers: Why Most Big Deals Don't Pay Off, Business Week, October 14, 2002, 60.
89. Bernstein Disciplined-Strategies Monitor, October 2003, 12.
90. Lawrence Minard, The Original Contrarian, Forbes, September 26, 1983, 42.
91. Robert L. Bartley, No Profit, The American Spectator, December 2003/January 2004.
92. Alfred Rappaport, The Economics of Short-Term Performance Obsession, working paper, September 2004.
93. Benjamin Graham, A Conversation with Benjamin Graham, Financial Analysts Journal 32, no. 5 (September/October 1976): 20.
94. Benjamin Graham, The Intelligent Investor (New York: HarperCollins, 2005), 205.
95. John Maynard Keynes, The General Theory of Employment, Interest and Money, 155.
96. John Maynard Keynes, The General Theory of Employment, Interest and Money (1936; New York: Harcourt, Brace and Company, 1964), 154.
97. Burton G. Malkiel and Atanu Saha, Hedge Funds: Risk and Return, working paper, December 1, 2004, 35.
98. Source: Securities and Exchange Commission Annual Reports.
99. Keynes, General Theory, 158-59.
100. Robert D. Arnott and Clifford S. Asness, Surprise! Higher Dividends = Higher Earnings Growth, Financial Analysts Journal 59, no. 1 (January/February 2003): 70.
101. Roger Lowenstein, A Boss for the Boss, New York Times Magazine, December 14, 2003, 42.
102. No Democracy Please, We're Shareholders, The Economist, April 29, 2004.
103. Robert A. G. Monks and Nell Minow, Corporate Governance (Malden, Mass.: Blackwell, 1995).
104. Robert A. G. Monks and Allen Sykes, Capitalism Without Owners Will Fail, http://www.ragm.com/hottopics/2004/ragm_sykesPolicyMakersGuide.pdf, 29-30.
105. Getting Rid of the Boss, The Economist, February 6, 1993, 13.
106. Investment Company Act of 1940, http://www.sec.gov/about/laws/ica40.pdf. The second quotation is from the commission's unanimous opinion in its Vanguard decision
107. The Vanguard Group, Inc., 47 S.E.C. 450 (1981).
108. Matthew P. Fink, ICI President's Report, speech before the Investment Company Institute's General Membership Meeting, Washington, D.C.: May 22, 2003.
109. Paul G. Haaga Jr., ICI Chairman's Remarks, speech before the Investment Company Institute's General Membership Meeting, Washington, D.C.: May 22, 2003.
110. From New York State Attorney General Eliot Spitzer's complaint against Canary Capital Partners, LLC, http://www.oag.state.ny.us/press/2003/sep/canary_complaint.pdf.
111. Reuters News Service, Fidelity Receives Subpoena, Houston Chronicle, October 7, 2003.
112. Judith Burns, Skepticism Rings Industry Cleanup, Wall Street Journal, December 28, 2004.
113. Hans Christian Andersen, Fairy Tales Told to the Children-Third Booklet. In The Emperor's New Clothes, ed. Rosemary Lanning and Eve Tharlet (illustrator) (New York: North-South Books, 2000).
114. Dennis K. Berman and Christopher Oster, Wells Fargo Nears Deal to Acquire Strong Financial, Wall Street Journal, May 26, 2004, C4.
115. Connelly Named Fund Leader Of The Year, Fund Action, March 10, 2003.
116. John Hechinger, Putnam Board Says 3 Officials Knew of Trades, Wall Street Journal, March 21, 2004, C1
117. John Hechinger, Putnam to Pay $110 Million, Try to Rebound, Wall Street Journal, April 9, 2004, C1.
118. David Swensen, Unconventional Success (New York: Free Press, 2005), 278-80.
119. Riva D. Atlas, NASD Says Fund Family Paid Improper Fees, New York Times, February 17, 2005.
120. Swensen, Unconventional Success, 6.
121. Stale Prices and Strategies for Trading Mutual Funds, Jacob Boudoukh, Matthew Richardson, and Marti Subrahmanyam, Financial Analysts Journal 58, no. 4 (July/August 2002): 70.
122. Financial Analysts Journal, November/December 2002, 17.
123. Warren E. Buffett, Chairman's Letter, Berkshire Hathaway 1985 Annual Report, March 1, 1986.
124. The article was entitled The Mutual Fund and Its Management Company: An Analysis of Business Incest, The Yale Law Journal 71, no. 1, 137.
125. Roger Lowenstein, The Purist, New York Times Magazine, December 28, 2003, 44.
126. Paul A. Samuelson, quoted in Notre Dame Lawyer (South Bend, Ind.: Notre Dame Law School, 1969), 956.
127. John C. Bogle, Deliverance, speech before Wellington Management Company's Partners, Boston: Wellington Management Company, September 9, 1971.
128. John C. Bogle, Important Principles Must Be Inflexible, keynote speech before the Society of American Business Editors and Writers, Chicago: Society of American Business Editors and Writers Annual Conference, November 11, 1996.
129. John C. Bogle, Important Principles Must Be Inflexible, keynote speech before the Society of American Business Editors and Writers, Chicago: Society of American Business Editors and Writers Annual Conference, November 11, 1996.
130. Investment Company Act of 1940, http://www.sec.gov/about/laws/ica40.pdf. The second quotation is from the commission's unanimous opinion in its Vanguard decision
131. The Vanguard Group, Inc., 47 S.E.C. 450 (1981).
132. John C. Bogle, Mutual Fund Industry Practices and Their Effect on Individual Investors, testimony before the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises hearing entitled
133. Mutual Fund Industry Practices and Their Effect on Individual Investors, U.S. House of Representatives, March 12, 2003.
134. Peter G. Fitzgerald, opening statement before the Subcommittee on Financial Management, the Budget, and International Security hearing entitled Mutual Funds: Trading Practices and Abuses That Harm Investors, U.S. Senate, November 3, 2003.
135. Securities and Exchange Commission final rule on Investment Company Governance, September 7, 2004, http://www.sec.gov/rules/final/ic-26520.htm.
136. Edward C. Johnson 3rd, 'Interested'-And Proud of It! Wall Street Journal, February 17, 2004.
137. Public Policy Implications of Investment Company Growth, Securities and Exchange Commission, H.R. Rep. No. 89-2337, 1966.
138. Stewart L. Brown and John P. Freeman, Mutual Fund Advisory Fees: The Cost of Conflicts of Interest, Journal of Corporation Law 26, 609.
139. Stephen LaBaton, SEC's Oversight of Mutual Funds Is Said to Be Lax, New York Times, November 16, 2003.
140. Richard B. Evans, Does Alpha Really Matter? Evidence from Mutual Fund Incubation, Termination, and Manager Change, job market paper, January 2004.
141. Thomas G. Donlan, Fun Management: Which Came First, the Dragons or the Sheep?, Barron's, November 17, 2003, 42.
142. John C. Bogle, The Economic Role of the Investment Company, senior thesis, Princeton University, 1951.
143. Warren E. Buffett, Chairman's Letter, Berkshire Hathaway 1994 Annual Report, March 7, 1995.
144. Paula A. Tkac, Mutual Funds: Temporary Problem or Permanent Morass? Federal Reserve Bank of Atlanta Economic Review, Fourth Quarter 2004, 89, no. 4, 5.
145. John C. Bogle, Common Sense on Mutual Funds (New York: Wiley & Sons, 1999), 392-93.
146. Eliot Spitzer, speech before Money Magazine's 2004 Money Summit. New York: June 8, 2004.
147. William C. Symonds, Online Extra: Husbanding that $27 Billion, Business Week, December 27, 2004, http://www.businessweek.com/@@kSYT7IYQ3RdgsQYA/magazine/content/04_52/b3914474.htm.
148. Is There Life After Babe Ruth? Barron's, April 2, 1990, 15.
149. Holman W. Jenkins Jr., Also Stalking the Fund Industry: Obsolescence, Wall Street Journal, December 10, 2003.
150. Justin Fox, Saint Jack on the Attack, Fortune, January 8, 2003, 112.
151. Henry Kaufman, On Money and Markets: A Wall Street Memoir (New York: McGraw-Hill, 2001), 304 -5, 307, 313.
152. Felix Rohatyn, Free, Wealthy and Fair, Wall Street Journal, November 11, 2003.
153. Alan Greenspan, Capitalizing Reputation, at the 2004 Financial Markets Conference of the Federal Reserve Bank of Atlanta, Sea Island, Georgia, April 16, 2004.
154. Adam Smith, The Theory of Moral Sentiments (1759; Cambridge, Eng.: Cambridge University Press, 2002), 158.
155. Joseph Schumpeter, The Theory of Economic Development (Cambridge, Mass.: Harvard University Press, 1934), 93-94.
156. John Maynard Keynes, The General Theory of Employment, Interest and Money (New York: Harcourt, Brace and Company, 1936), 161-62.
157. Smith, Theory of Moral Sentiments, 272.
158. Robert A. G. Monks and Allen Sykes, Capitalism Without Owners Will Fail, http://www.ragm.com/hottopics/2004/ragm_sykesPolicyMakersGuide.pdf, 29.
159. David Brooks, How to Reinvent the GOP, New York Times, August 29, 2004.
160. Louis D. Brandeis, Other People's Money and How the Bankers Use It (1914; New York: Bedford Books, 1995), 45 (as are the other Brandeis quotes that follow).
161. Richard Berner and Trevor Harris, Financial Market Implications of Pension Reform, Morgan Stanley Research, January 18, 2005.
162. Michael Schroeder, Pension Agency Faces a New Front, Wall Street Journal, May 26, 2005.
163. Joseph E. Stiglitz, Evaluating Economic Change, Daedalus 133/3, Summer 2004.