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Corporate Governance

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How to analyze the management of a Company?

This writeup will discuss the key steps/tools that investors can use to find companies with good management & avoid bad management. One must read this carefully & inoculate them in his/her stock analysis process so as to avoid falling into the trap of unethical management that benefits at the expense of minority shareholders. 

"In evaluating a common stock, the management is 90%, the industry  9%, and all other factors are 1%. "

- Phil Fisher, Path to wealth through common stocks 

Investors would acknowledge that it is the management alone that acts as the 100x catalyst 

Simple steps to do Management Analysis:

  • Promoters’ background check
  • Promoters’ salary
  • Related party transactions
  • Warrants
  • Management's focus on stock price
  • Dividend payments
  • Accounting juggernauts
  • Competence

We will elaborately discuss each step in the subsequent sections.

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Units 11/19