Comments on: Even Universities Take Kickbacks! http://www.bargaineering.com/articles/even-universities-take-kickbacks.html personal finance blog with anecdotes, advice and commentary. Sun, 22 Nov 2009 02:01:03 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: dong http://www.bargaineering.com/articles/even-universities-take-kickbacks.html/comment-page-1#comment-82802 dong Mon, 23 Apr 2007 21:03:17 +0000 http://www.bargaineering.com/articles/even-universities-take-kickbacks.html#comment-82802 It's impossible to avoid all principal/agent problems unless everyone involved is the primary stakeholder, but there is a differenence shareholder/employee/management conflict and the conflict that sometimes exists between a company and it's client. I may represent my company and it's shareholder, but unlike a mutual fund I'm not investing a 3rd party person's fund. My interests are in general much more aligned with the shareholder than would be if I was working for company investing someone else's money. I don't want to imply that there isn't any conflict of interst, there always will be some, but there are degrees. It’s impossible to avoid all principal/agent problems unless everyone involved is the primary stakeholder, but there is a differenence shareholder/employee/management conflict and the conflict that sometimes exists between a company and it’s client. I may represent my company and it’s shareholder, but unlike a mutual fund I’m not investing a 3rd party person’s fund. My interests are in general much more aligned with the shareholder than would be if I was working for company investing someone else’s money. I don’t want to imply that there isn’t any conflict of interst, there always will be some, but there are degrees.

]]> By: Ben http://www.bargaineering.com/articles/even-universities-take-kickbacks.html/comment-page-1#comment-82757 Ben Mon, 23 Apr 2007 00:41:28 +0000 http://www.bargaineering.com/articles/even-universities-take-kickbacks.html#comment-82757 It seems any type of financial transaction that doesn't have appropriate transparency inevitably corrupts someone who thinks they can get away with making money at the expense of others. It seems any type of financial transaction that doesn’t have appropriate transparency inevitably corrupts someone who thinks they can get away with making money at the expense of others.

]]> By: Shadox http://www.bargaineering.com/articles/even-universities-take-kickbacks.html/comment-page-1#comment-81580 Shadox Sat, 21 Apr 2007 08:37:40 +0000 http://www.bargaineering.com/articles/even-universities-take-kickbacks.html#comment-81580 I disagree that there is no agency problem. The company is not representing itself, it is representing its shareholders, and as such there is an inherent conflict of interest / agency problem between employees & management who often have interests that diverge from those of the true owners of the company. I will concede that small business gifts, such as business lunches, pens etc. are a very common practice. I have no problem excepting these from vendors and regularly offer these to customers and prospects. When I offer these, I don't really do this in the hope of influencing decision making I do so because this is considered polite and appropriate business behavior. Just as you are expected to shake your host's hand when you walk into a meeting, you are expected to pay for dinner if you go out with a customer. Expecting that customer to then award you a multi-million dollar deal based on that? I know very few people that think that this is likely. More importantly, those dinners, golf games and joint outings are a way to bond and build a personal relationship with customers. The danger is not so much that a customer will award a contract based on a day of golf, but rather that he will award a contract based on the fact that he got to know and like the person who he spent a full day of golfing with. Does that make sense? I disagree that there is no agency problem. The company is not representing itself, it is representing its shareholders, and as such there is an inherent conflict of interest / agency problem between employees & management who often have interests that diverge from those of the true owners of the company.

I will concede that small business gifts, such as business lunches, pens etc. are a very common practice. I have no problem excepting these from vendors and regularly offer these to customers and prospects. When I offer these, I don’t really do this in the hope of influencing decision making I do so because this is considered polite and appropriate business behavior.

Just as you are expected to shake your host’s hand when you walk into a meeting, you are expected to pay for dinner if you go out with a customer. Expecting that customer to then award you a multi-million dollar deal based on that? I know very few people that think that this is likely.

More importantly, those dinners, golf games and joint outings are a way to bond and build a personal relationship with customers. The danger is not so much that a customer will award a contract based on a day of golf, but rather that he will award a contract based on the fact that he got to know and like the person who he spent a full day of golfing with. Does that make sense?

]]> By: dong http://www.bargaineering.com/articles/even-universities-take-kickbacks.html/comment-page-1#comment-81045 dong Fri, 20 Apr 2007 19:20:49 +0000 http://www.bargaineering.com/articles/even-universities-take-kickbacks.html#comment-81045 The problem isn't gift in themselves, it's a question of are you making decision on behalf of another party. I work in a industry (energy trading) where there is plently sales schmoozing. Tickets to games, dinner out, etc. However on the most part it's a non issue, because there isn't the same agent problem. While I do make the decisions on behalf of the company like your fiancee, the company is ultimately representing itself rather than another party. That's the problem with the Govt, Mutual Funds, etc. The decision makers are directly representing someone else. The problem isn’t gift in themselves, it’s a question of are you making decision on behalf of another party. I work in a industry (energy trading) where there is plently sales schmoozing. Tickets to games, dinner out, etc. However on the most part it’s a non issue, because there isn’t the same agent problem. While I do make the decisions on behalf of the company like your fiancee, the company is ultimately representing itself rather than another party. That’s the problem with the Govt, Mutual Funds, etc. The decision makers are directly representing someone else.

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