October 28, 2011
For-Profit vs. For the Public
An interesting thought experiment. Say you start a company, with the intent presumably of making money. You want to be “for profit” since companies that don’t make money don’t last very long. You do such a good job of convincing the market that your product is indispensible that pretty soon everyone wants it. There is competition, but not much of it, due to your brand management. Even Warren Buffett wants to invest in you.
Best case scenario? Sure. But what if the market says that your great company is so indispensible that you need to place “for the public good” over the desire to make money? Tough luck…
Welcome to the unusual state of rating agencies. Bloomberg had an article today headlined, “Credit Rating Companies Favor Firms Paying Most.” In any other industry it would be a “well, duh!” moment. It poses an interesting situation. When does a for-profit company become captive to its branding (i.e. “impartial, indispensible”)? Here’s the article:
Credit Rating Companies Favor Firms Paying Most
