Tuesday, April 6, 2010

"Lost", Fu Manchu, and Corporate Governance

I'm one of those "Lost" fans that can't help themselves. The writers keep throwing out so-called explanations that just make less sense than the original nonsense but persist. I just want some closure.

Since I'm not a complete idiot, I realize the "Lost" writers will deny me that basic human need. So I'm forced to find meaning in my addiction through alternate means.

In the most recent episode, "Lost" reminded me of a bit of comparative corporate governance insight buried in the show's convoluted storylines. If you think this is a stretch, bear with me for just one second.

"Comparative corporate governance" is the study of how corporations are controlled in different legal systems. There are two major ways this is done; the Anglo-American and the German/Japanese models. In the Anglo-American model, corporations are owned by a large number of small shareholders (diverse ownership). In the German/Japanese model, a small number of large shareholders (particularly big banks) own the majority of shares in a public company.

These aren't the only ways to structure corporate ownership, they are simply the most common. There is a third model, though, that is particularly common in Asia; the Family ownership system. In the Family model, a small handful of family members own nearly all a corporation's stock. Not surprisingly, there's very little management oversight in this arrangement.

Now, back to "Lost." The two characters at the heart of the most recent episode are Sun and Jin. Sun and Jin are a South Korean couple. Critically, Sun's father is a shadowy Korean tycoon and Jin's boss. Jin's job is basically an enforcer for Daddy Tycoon and the stress of beating up Dad's rivals and underlings nearly destroyed the couple's marriage.

What do we make of Sun's nefarious pater familias? The easy answer is that he's just one more in the long line of stoic Asian criminal masterminds. That's one durable stereotype there.

But there is an interesting parallel between Sun's iron-fisted pops and South Korean corporate governance. As this article from the LA Times explains, there is a fine tradition of South Korean executives abusing the law with near immunity. Like the execs in the article, Sun's dad heads a giant and powerful conglomerate and wields serious influence even outside his corporation. Also, there is something of a cult of personality present in the South Korean corporate structure that mimics the fear Jin elicits as a known representative of his boss.

Are the "Lost" writers aware of corporate structure in South Korean companies? Do they realize that less-melodramatic versions of Sun's dad do exist for reasons peculiar to South Korean history? These companies, chaebols, that "thrived on their ties to South Korea's corrupt military governments in the 1960s, and . . . clung to power even after the country turned to democracy in 1987" are governed by boards "dominated by family members who are treated as near royalty." I doubt it. First, I doubt that the folks at the writers' table read papers like this. Second, they tend to make their other writing decisions by throwing darts, so work harder here?

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