Thursday, July 3, 2014

Review of Barbarians at the Gate: The Fall of RJR Nabisco by Bryan Burrough and John Helyar

From y0ungmoney's review of Barbarians at the Gate

"Johnson was able to take over successively larger companies despite doing badly for shareholders because he excelled at corporate politics. RJR had become increasingly dysfunctional in the years leading up to its merger with Nabisco, and that made it the perfect environment for Johnson to rise to the top. Once there, he bought off the board and other executives with freebies and favors. Good to Great lionizes Philip Morris's management, but after reading Barbarians at the Gate one gets the impression that their success was largely the result of having a really dysfunctional competitor."
I won't bother to review it, but it's probably a 3/5 just for the scenes of corporate excess and the demonstration of the principal-agent problem at RJR under Ross Johnson.

Bryan Burrough is also the author of The Big Rich: The Rise and Fall of the Greatest Texas Oil Fortunes, another 3/5, although it did tell us that the Texas oil dynasties were the result of pure chance and the great depression.

1 comment:

Henry said...

Infinite checkbook => bad capital management. I'm not sure even Castle Berkshire can survive it, although for what it's worth I will say they have better odds than RJR.