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The Essays of Warren Buffett: Lessons for Corporate America

Essays by

Warren E. Buffett

Selected, Arranged, and Introduced by

Lawrence A. Cunningham

Includes Previously Copyrighted Material Reprinted with Permission

THE ESSAYS OF WARREN BUFFETT: LESSONS FOR CORPORATE AMERICA

Essays by

Warren E. Buffett
Chairman and CEO Berkshire Hathaway Inc.

Selected, Arranged, and Introduced by

Lawrence A. Cunningham Professor of Law Director, The Samuel and Ronnie Heyman Center on Corporate Governance Benjamin N. Cardozo School of Law Yeshiva University

© 1997; 1998 Lawrence A. Cunningham All Rights Reserved Includes Previously Copyrighted Material Reprinted with Permission

TABLE OF CONTENTS INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PROLOGUE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5
27

I.

CORPORATE GOVERNANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . .

A. B. C. D. E.

Owner-Related Business Principles................ Boards and Managers............................. The Anxieties of Plant Closings An Owner-Based Approach to Corporate Charity. A Principled Approach to Executive Pay..........

29 29 38 43 47 54

II.

CORPORATE FINANCE AND INVESTING. . . . . . . . . . . . . . . .

A. B. C. D. E. F. G. H.
I.

63 Mr. Market........................................ 63 Arbitrage.......................................... 66 Debunking Standard Dogma 72 "Value" Investing: A Redundancy................. 82 Intelligent Investing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Cigar Butts and the Institutional Imperative 93 Junk Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Zero-Coupon Bonds. . . . . . . . . . . . . . . . . . . . . . .

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