Tronc is a publishing firm that owns several newspapers,
including the Los Angeles Times and the Chicago Tribune. In
early 2017, one of Tronc’s largest investors sent the corporation a letter stating that he was “troubled by the company’s corporate governance, or lack thereof.” In particular,
he was unhappy with a limit of 25 percent on how many
of the corporation’s shares he could own and with an
attempt to remove him from the board of directors.
a. What is corporate governance? In whose interest
should corporations be governed? Briefly explain.
b. Is limiting the percentage of a firm’s stock that one
person can hold an example of good corporate
governance or bad corporate governance? Briefly
explain.
Sources: Lukas I. Alpert, “Tronc’s Second-Largest Shareholder Raises
Corporate Governance Questions,” Wall Street Journal, March 27, 2017.