Why a great company can be a bad investment
Investors should weigh governance structure as part of their risk assessment
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INVESTORS deciding where to deploy their money ask questions that are familiar: How fast is the company growing? What are its margins? How strong is its balance sheet? What is the valuation?
But before looking at the price-to-earnings ratio, perhaps we should ask: Who is really in control?
A good business is not necessarily a good investment. Investors should consider the quality of a company’s governance as part of the risk-return equation, rather than treat it as a footnote to financial analysis.
