Stanford University Graduate School of Business Professor David Larcker and his research associate, Brian Tayan, have developed a case study on the recent David Sokol – Berkshire Hathaway corporate governance slip-up. They emphasize, “The success of this system is predicated on the expectation that Berkshire Hathaway managers operate with high levels of integrity.” I don’t think Berkshire Hathaway’s leadership defines corporate governance the way everyone thinks they do. The bigger question is: Should that matter to their investors or anyone else?
On the way to writing this story, I realized some disturbing things about Berkshire Hathaway and how Buffet runs it. So anxious are some to annoint gurus, sages, and oracles, that they overlook some of the worst corporate governance practices I have ever seen. And Buffett’s Berkshire doesn’t like to be told how to do its accounting, either. I’m writing about that next for Forbes.