The Harvard Law School Corporate Governance Blog is showcasing an academic paper that explores how politically connected companies in the US fared in the days after the 2000 presidential election.

The researchers found that the result boosted shares in S&P 500 businesses whose board had a ”pure” connection to the victorious Republicans (that, for example, contained one or more former Republican members of Congress, and no such Democrats). Shares in large companies whose boards leaned to the losing Democrats suffered.

Of course, it doesn’t necessarily follow that the opposite will be true when US markets open today. But investors might find it useful to look up a few director biographies all the same.

So, what colour is your parachute? Better still, do you know any parachute makers who might be able to send you a new one? The market in rapidly updated résumés has soared. It is the only market showing any signs of health at the moment.

You know what you have to do at a time like this. Get out there and network. Network as though your very life depended on it. Get some extra business cards printed, fill up the diary, take a deep breath and dive into that roomful of strangers.

And relax. Working the room is so 1980s. You might as well just stand there, pull out a 5kg “mobile phone” and extend its telescopic aerial as far as it will go. There are ways to build a more valuable network of personal contacts, but scattering cards at random is not one of them.

Where do people go wrong with networking? Some seem to think that it is all about them, a question of projecting a winning version of themselves on to a potentially hostile, or at least highly sceptical, audience. But this is a simplistic and ineffective approach.

The remainder of this column can be read here. Please post comments below.

Another day, another business confesses that it has had a bad night at the casino. This time, it is Hong Kong’s Citic Pacific, which may lose up to $2bn from leveraged foreign exchange contracts.

How can corporate boards prevent managers from taking potentially-ruinous risks? Stephen Davis, a corporate governance expert, and Jon Lukomnik, a former deputy comptroller of the City of New York, have a novel suggestion.

In a column in Compliance Week, they suggest that executive pay be adjusted to reflect how much of the balance sheet executives have put at risk. If subsequently it emerges that managers played fast and loose in hitting their targets, this pay could be clawed back.

Of the 30 companies in the Dow Jones Industrial Average, 28 have claw-back policies to reclaim compensation awarded as a result of performance, which later needed to be restated. Similarly, we believe that if submerged risk surfaces years later to blow a hole in a corporate balance sheet, then executive compensation should be subject to a claw back.

Such a scheme could penalise those who gamble furtively with vast sums of shareholders money and get away with it. But are non-executive board directors up to this complicated new oversight role? Recent history would suggest otherwise.

John Quelch says recession will create a new type of consumer: “the middle-aged Simplifier”. She will shed her possessions and will collect “fleeting but expensive” experiences instead.

I feel like I’ve met her before. Years ago.

Elsewhere:

• Female executives thrive more in family companies;
• How to wangle an invite onto a company board;
• Corporate governance battles fought by foreign investors in Japan;
• A pay consultant picks through new curbs on executive compensation.

Why has JP Morgan come through this recent period of turmoil in better shape than almost all its major competitors? CEO Jamie Dimon (MBA class of ‘82) revealed all at the Harvard Business School centennial conference this morning.

“We suck less!” he declared.

This was perhaps one of his less controversial comments. If you have only one truly honest colleague out of ten around the top table with you, “Sack the other nine!”

Politicians had failed to get to grips with the energy crisis for over three decades. “We deserve $4 a gallon oil,” he said. (Sounds like a bargain to to my Brit ears.)

The whole mortgage business is “basically under-regulated”. CDOs were too complicated - “what were we thinking?!”

And he refused to accept the populist line of attack taken by politicians, that too many businesspeople were greedy and dishonest.

“These businesses are more charitable than the average Congressman - and probably more honest than the average Congressman”, he asserted.

This won the biggest round of applause of the morning.

We may never know who really wrote that internal Lehman Brothers memo of June 8 this year, but it certainly asked the right question. “Why did we allow ourselves to be so exposed?” it demanded.

By early June it was too late to start worrying about all that. And in theory it should never have been necessary to do so. When Dick Fuld, Lehman’s former chief executive, was interviewed by Euromoney magazine in July 2005, he explained why.

“I expect everyone at the firm to be a risk manager,” Mr Fuld declared. “All 12 of us [on the executive committee] are focused on all parts of the business. It’s all about risk management. If it’s just me then we’re in trouble.”

No wonder, if that statement was true, that Mr Fuld displayed such an air of pained bewilderment at his congressional committee hearing last week. His expression of regret at the collapse of his bank should be included in every MBA syllabus.

Continue reading “What failed? Ask management“.

That famous Harvard drop-out, Bill Gates, has just brought delegates to their feet with a discussion of his work trying to eradicate malaria and HIV/Aids.

At a time when capitalists are being forced to ask harsh questions of themselves, here was a successful multi-billionaire everyone could feel good about.

Were Harvard Business School’s alumni applauding out of a sense of admiration, or relief? Perhaps it was a bit of both.

• Why recruiters of Generation Y must also win over their target’s parents;
• The difference between coaches, mentors and managers;
• Mentoring for senior women in particular;
• How company boards get “captured” by the senior management team;
• The best way to react to a racist joke at work.