WPC - Major Red Flag: Value Transfer Between Entities
Corporate governance is particularly hard to analyze because paper and practice often do not coincide. Companies with good corporate governance on paper can still execute egregious acts and those with poor structural governance will sometimes still be good fiduciaries. The only real way to tell the difference is observation.
When acts of misalignment are observed, they should be noted and investors should adjust fair values accordingly. This article will discuss one of the most serious violations which is the transfer of value between entities. This has a massive impact on fair value, because when management