Comment: GameStop saga highlights problem of boards’ reliance on stock prices

A new model of corporate governance that depends on human, board-level judgement is clearly needed

2nd February, 2021
Comment: GameStop saga highlights problem of boards’ reliance on stock prices
‘The real story is not who lost or made money in a series of stock trades, it is that the prevailing model of modern corporate governance is on the brink of a seismic change.’ Picture: Getty

Last week, a social-media-fuelled populist rebellion gripped capital markets. Retail investors purchased huge amounts of stock in struggling companies including GameStop, AMC and BlackBerry, among others. They wanted to make a buck. But, even more than that, they wanted to punish the financial elites, like hedge funds, that had been betting on the companies’ decline.

The punishment worked: on January 27, investors who had taken short positions on GameStop lost $14.3 billion. But the...

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